LIHUA(SZ:300761)2025-10-27 15:22Summary of the Conference Call for Lihua Co., Ltd. Industry Overview - The conference call primarily discusses the performance of Lihua Co., Ltd. in the poultry and pork sectors, particularly focusing on the yellow feather chicken and pork production segments. Key Points and Arguments Financial Performance - In Q3 2025, Lihua Co., Ltd. achieved a profit of approximately 1.38 billion yuan, with a cumulative profit of 2.87 billion yuan for the first three quarters. However, the overall performance was only marginally profitable due to significant losses in July and June, resulting in a net profit of about 10 to 20 million yuan for the quarter [2][3][14]. - The yellow feather chicken segment experienced a U-shaped recovery, with severe losses in July, returning to breakeven in August, and achieving better profitability in September [3]. Cost and Pricing Dynamics - The production cost for yellow feather chickens increased due to rising feed prices, averaging close to 5.7 yuan per chicken in Q3. It is expected that the feed-to-meat ratio will decline in Q4, but costs are unlikely to return to the lower levels seen in the first half of the year [2][4]. - Pork production costs have been decreasing, reaching 12.61 yuan per kilogram in September, with expectations to drop further to around 6.6 yuan per kilogram by December [2][4]. Asset Impairment - The company recorded a total impairment of approximately 40 million yuan in Q3, with two-thirds attributed to leasing assets and the remainder related to yellow feather chicken and goose assets [2][5]. Production Capacity and Sales Strategy - The company has an ice-fresh chicken production capacity of 150 million chickens, with a sales target of 100 million chickens for the year. Plans to enhance product quality, expand brand market presence, and improve processing and packaging are in place to increase profit margins [2][6]. - The company aims to reduce the complete cost of live pigs to around 12 yuan per kilogram by improving production metrics such as farrowing rates and PSY (Pigs Sold per Year) [2][7]. Market Outlook - The outlook for Q4 2025 and H1 2026 indicates that while pork prices are expected to remain stable, the supply of chicken may be affected if pork prices do not rise significantly. The likelihood of a repeat of the severe price drops experienced in the previous summer is considered low [4]. Government Subsidies and Farmer Engagement - Increased government subsidies are anticipated in 2025, potentially disbursed earlier than usual. The fee for farmers raising chickens is currently between 3.2 to 3.3 yuan per chicken, with a growth rate of about 8% to 10% in the number of farmers compared to the previous year [2][15]. Market Dynamics - The low prices of yellow feather chickens in June and July led to some small and medium-sized farms exiting the market. However, the overall growth in larger enterprises has mitigated the impact of these exits [2][16]. Additional Important Information - The company has been cautious in its financial assessments, leading to impairment provisions even when certain products show profitability. This reflects a conservative approach to managing financial risks [9][10]. - The slaughtering segment reported a profit of around 2 to 3 million yuan in Q3, with a slaughter volume of approximately 25 million chickens [12]. This summary encapsulates the critical insights from the conference call, highlighting the financial performance, cost dynamics, production strategies, and market outlook for Lihua Co., Ltd.