The opposite situation of pig companies and meat products companies in the pig cycle

 　　Live pig companies and meat products companies can be described as "everything is prosperous, and every one is damaged
.
" Pig companies suffered huge losses in the third quarter, and meat products companies also struggled
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　01 The price of live pigs is cut in half5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Recently, the price of pigs has fallen violently
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　"Pork plummeted and vegetables soared
.
Today, I went to the supermarket and sold spinach for 12 yuan a catty.
No wonder the hot pot restaurant is not selling spinach.
" "Sure it is kilograms?" Since the beginning of this year, the price of pigs has been falling .
Sigh
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Compared with pork prices in 2020, pork prices have fallen sharply, with a drop of nearly 50%
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Wen's (300498.
SZ) third-quarter forecast shows that in the first three quarters of 2021, the average selling price of pigs will be 18.
70 yuan/kg, a year-on-year decrease of 46.
09%
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Affected by the continuous decline in domestic pig prices, the pig industry fell into a full loss in the third quarter
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　In the third quarter of 2021, Wen's shares have a net loss of 7.
204 billion yuan, and a profit of 4.
088 billion yuan in the same period in 2020; Muyuan shares (002714.
SZ) has a net loss of 822 million yuan, and a profit of 10.
204 billion yuan in the same period in 2020; New Hope (000876) .
SZ) net loss of 2.
986 billion yuan, and a profit of 1.
921 billion yuan in the same period in 2020
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　The price of live pigs in 2020 is at the highest level in history, and the annual average price of live pigs is 34.
19 yuan/kg
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　However, rising pig prices may not necessarily bring high returns
.
In 2020, Wen's shares achieved revenue of 74.
923 billion yuan, a year-on-year increase of 2.
47%; realized net profit of 7.
426 billion yuan, a year-on-year decrease of 46.
83%
.
The main reason for the decline in performance was the impact of the epidemic on catering and the impact of the African swine fever epidemic
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　02 Meat products companies have mixed blessings and worries5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　The price of pigs has fallen, and all pig industry chains have been affected
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　This is true for upstream companies that raise pigs, and the same is true for the meat product industry, but for companies that focus on meat product processing, the decline in pig prices is good news
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Delis (002330.
SZ) is a food processing company.
Its main products include chilled meat and frozen meat, low-temperature meat products, quick-frozen prepared products, beef series products, and electric steam.
Its revenue from the food processing industry accounts for 97.
06 %
.
When the price of pigs is high in 2020, Delis immediately adjusted the price of its products sharply, and its performance has achieved good growth
.
When the price of pigs fell, Delis did not significantly lower product prices, but used this to increase gross margins
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　In the first half of 2021, the gross profit margin of Wen's shares from the breeding industry was 0.
96%, which was 21.
21 percentage points lower than the same period in 2020; the gross profit margin of Muyuan shares from the breeding industry was 34.
30%, which was 28.
97% lower than the same period in 2020
.
Delis’s gross profit margin from the food processing industry was 7.
94%, an increase of 1.
43 percentage points over the same period in 2020
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Delis’s three-quarter report shows that in the third quarter of 2021, Delis achieved revenue of 1.
157 billion yuan, an increase of 45.
71% year-on-year, and achieved a net profit of 19 million yuan, an increase of 11.
94% year-on-year
.
In the first three quarters of 2021, Delis achieved revenue of 2.
761 billion yuan, an increase of 6.
94% year-on-year; net profit was 41 million yuan, an increase of 53.
47% year-on-year
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　The main reason for the growth of Delisi’s performance is that since 2021, the price of live pigs has continued to be at a low level.
Delisz adjusted its management thinking and strengthened cost control in a timely manner
.
The gross profit margin of the slaughtering business has increased significantly compared with the same period in 2020 .
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　However, not all meat products companies have benefited from falling pig prices
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　The third quarterly report of Shuanghui Development (000895.
SZ) shows that in the third quarter of 2021, revenue was 16.
116 billion yuan, a year-on-year decrease of 16.
84%; net profit was 916 million yuan, a year-on-year decrease of 51.
73%
.
In the first three quarters of 2021, Shuanghui Development achieved revenue of 50.
958 billion yuan, a year-on-year decrease of 8.
56%; net profit was 3.
453 billion yuan, a year-on-year decrease of 30.
08%
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Shuanghui Development stated that the main reason for the decline in performance is that since 2021, with the continuous and rapid decline of pig and meat prices, it is conducive to the development of Shuanghui’s meat product industry to reduce costs and increase the scale of fresh frozen products.
However, domestic and imported frozen products With the rapid decline in the price of pigs and meat, the prices of goods in inventory have caused losses in sales.
At the same time, Shuanghui Development has made provision for impairment of inventory goods at the end of the period in accordance with the accounting standards, resulting in a net loss for the January-September and third quarters of 2021.
Profits fell year-on-year
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　03 Getting through the "pig industry chain" has become a trend5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　In recent years, it is becoming a trend for pig raising companies and meat products companies to open up the "whole industry chain"
.
Pig raising companies extend to the lower reaches of the industrial chain, forming a hedge against fluctuations in the price of pigs in the raising process
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Shanghai Meilin (600073.
SH) stated in the 2021 semi-annual report that with the advantages of the entire industry chain of pig breeding, slaughtering, processing and sales, and deep processing of meat products, it will strengthen internal coordination and smooth the impact of the pig cycle
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　On August 13, 2021, Qin Yinglin, Chairman and President of Muyuan Co.
, Ltd.
, told investors that in the future, meat products will also be more open, using multiple methods to expand production capacity, and actively expanding multiple sales channels to provide the public with safety and health.
Pork food
.
On September 13, Muyuan Co.
, Ltd.
established the head office Guannan Muyuan Meat Food Co.
, Ltd.
in Guannan County, Jiangsu Province to carry out pig slaughtering business
.
Muyuan shares stated that this is for the purpose of developing downstream from the breeding link
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　New Hope’s 2021 semi-annual report shows that in the first half of 2021, revenue from the pig industry accounted for 16.
55 percent; revenue from the food sector accounted for 7.
27%
.
At the beginning of 2021, New Hope Chairman Liu Chang once said that in the next five years, slaughter will be deployed appropriately according to the production capacity of live pigs, and it will cooperate with the upstream breeding system to make adjustments and food output.
C.
Both channels are coming at the same time
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　New Hope stated that the company has a slaughter and processing business in the downstream link of aquaculture and a feed business in the upstream link of aquaculture, which happens to form a hedge against the aquaculture link
.
When the price of livestock and poultry goes down, the cost of raw meat for the slaughter and processing business will also decrease, and its profit margin will increase; when the price of livestock and poultry goes down, it means that the amount of livestock and poultry breeding is at a high level, which will also help increase the profitability of the feed business
.
Such an industrial chain layout can moderately alleviate the impact of the decline in livestock and poultry prices on the company as a whole
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　While pig raising companies are developing downstream, downstream meat products companies are also developing upstream
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　Increasing the self-sufficiency rate of live pig supply can reduce the purchase cost of enterprises to a certain extent and improve the ability of enterprises to resist unstable supply of livestock and poultry
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　The 2021 semi-annual report of Huatong Co.
, Ltd.
(002840.
SZ) shows that although domestic live pig prices have fallen sharply in the first half of the Continue to promote the construction project of pig breeding
.
The subsidiaries Hangzhou Tongzhuang, Tiantai Animal Husbandry, and Huasheng Animal Husbandry have all begun to introduce pigs into production
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry

　　In the first half of 2021, Huatong’s revenue from the slaughtering and meat processing industries accounted for 94.
92%, a year-on-year decrease of 3.
06 percentage points; revenue from the livestock breeding industry accounted for 1.
85%, an increase of 1.
75 percentage points year-on-year
.
5r6 China Feed Industry Information Network-Based on feed, serving animal husbandry