On the evening of April 25, Shennong Group (605296. SH) disclosed its 2023 annual report, which shows that the company will achieve operating income of 3.891 billion yuan in 2023, including 1.5204 million live pig sales and 1.7656 million slaughtered live pigs.
In recent years, Shennong Group has practiced the development strategy of "integration of the pig industry chain", implemented measures to reduce costs and increase efficiency, actively promoted the site selection and formalities of new projects, and the smooth construction and commissioning of projects under construction or technical transformation, and on this basis, laid out the downstream food deep processing industry, and has now formed a complete pig industry chain integrating feed processing and sales, pig breeding and sales, pig slaughtering and sales and food deep processing.
Lay out the food deep processing industry and realize the closed loop of the whole industrial chain
Industry insiders pointed out that the current industrial chain integration business model has become the development trend of the pig breeding industry, and the layout of the downstream food deep processing industry can effectively weaken the performance fluctuations brought about by the cyclical nature of the industry. Shennong Group continues to focus on building a leading enterprise in the integration of the pig industry chain, focusing on the Yunnan pig industry chain market, and developing and improving the company's pig industry chain.
Shennong Group began to enter the field of food deep processing in 2022, and Yunnan Chengjiang Shennong Food Co., Ltd. officially opened and put into operation in April 2023. So far, Shennong Group has formed a closed loop of the whole industrial chain from feed, breeding, slaughtering and food deep processing, and realized the safety and controllability of the whole process from land to table.
According to public information, Yunnan Chengjiang Shennong Food Co., Ltd. has a production capacity of 24,000 tons / year, and the first phase of research and development of low-temperature quick-frozen sausages, small crispy meat, luncheon meat, meat sauce, konjac rest series products have been put on the market. The company's existing breeding, slaughtering technology and management experience will further improve the overall production scale and quality.
In addition, Chengjiang Shennong Food has passed the ISO22000 and HACCP management system certification, and the products have obtained the export record qualification, with the production of high-quality and delicious deep-processed meat products with Yunnan characteristics as the core competitive products, and the sales channels have now covered Yunnan, Guizhou, Sichuan and Chongqing and other markets, creating the "Shennong Assured Meat" of Shennong Group's exquisite whole industry chain.
Take multiple measures to reduce costs and increase efficiency to help the industry lead in breeding costs
In the pig breeding industry, cost control is the core competitiveness of enterprises. Hong Tao, vice chairman of the China Consumer Economics Association, pointed out that the pig breeding industry will gradually enter the era of low profits, prompting enterprises to strengthen management, reduce costs, and increase investment in science and technology. Shennong Group clearly takes "improving quality, increasing efficiency and reducing costs" as the core of its operation, continuously optimizes the organizational structure and business decision-making mechanism, enhances the vitality of the organization, and lays a good foundation for the sustainable development of the breeding business.
Shennong Group's excellent performance in cost control is the combined result of efficient breeding pig breeding and biosecurity prevention and control management. According to reports, in 2023, the average annual breeding cost of Shennong Group will be about 15 yuan/kg, and the complete cost will be about 16.2 yuan/kg (including year-end bonus), which is significantly ahead of the industry average. In the first quarter of 2024, the average complete cost will be about 14.5 yuan/kg, ranking among the best listed pig enterprises. Shenwan Hongyuan pointed out that since the listing of Shennong Group, the complete cost of breeding has always been in the first echelon of listed companies in the same industry.
Shennong Group relies on the resources of PIC International Breeding Company (the world's largest pig breeding company) to introduce PIC great-grandfather core breeding pigs from the PIC core breeding group in the United States twice in 2017 and 2021, helping the company to further optimize and enhance the potential of the three-level pyramid breeding system of core group, multiplication group and commodity group.
It is reported that PIC breeding pigs have leading reproductive performance and are world-leading in genetic selection of breeding pigs for economic benefits. Benefiting from the excellent performance of PIC breeding pigs, Shennong Group has improved the grandparents and parents of L1050 and L1054 on this basis, which has obvious advantages in performance and production efficiency. Shennong Group further optimizes the pyramid supporting system of the production system (i.e., single-point core breeding farms and multi-point multiplication sow farms) to achieve a simple and efficient production model, highlight the core value of genetic improvement, and quickly empower the genetic value of other multiplication farms.
In terms of biosecurity prevention and control, Shennong Group adheres to the road of high health and purification of major epidemics, always adheres to the principle of "preventing major epidemics and purifying major epidemics in a planned manner", adheres to the management concept of "health-centered and biosecurity-oriented", builds its own large-scale, modern and biosecure pig farms, and realizes the effective prevention and control of animal diseases by building a three-in-one biosecurity management system of "periphery-factory-pig herd".
Through the strict biosecurity control and management of pig farms, we will continue to increase the number and proportion of blue ear double-negative sows, and further improve the production and health potential of upstream and downstream. At present, 70% of the sows in Shennong Group's herd are blue-eared double-yin pigs, and the cost of vaccines and animal protection related to health security will continue to decrease in the future, and the production speed of pigs will increase, and the cost is expected to further decrease.
Build a solid industrial foundation in Yunnan and promote the expansion of production capacity in the two regions
In order to accelerate the company's development strategy, further expand the production capacity of the slaughtering business, consolidate the production foundation of the Yunnan Theater, and strengthen the capacity development and cost control capabilities of the Breeding Division in the Guangxi and Guangdong theaters, Shennong Group will invest in the establishment of a wholly-owned subsidiary Guangdong Shennong Animal Husbandry Co., Ltd. in Guangdong Province in 2023, invest in the establishment of wholly-owned subsidiaries Honghe Maitreya Shennong Animal Husbandry Co., Ltd. and Luliang Shennong Food Co., Ltd. in Yunnan Province, and invest in the establishment of a holding subsidiary Yunnan Shennong Shanhai Supply Chain Management Co., Ltd. in Yunnan Province.
In addition, due to the needs of business development, Shennong Group will increase the capital of 6 wholly-owned subsidiaries, invest in 9 projects, and sign 1 investment agreement with the People's Government of Honghe Hani and Yi Autonomous Prefecture in 2023. The capital increase aims to enhance the company's main business capabilities, expand the company's industrial chain, implement the company's development strategy, accelerate the industrial layout of Yunnan, Guangdong and Guangxi, and expand the company's influence in the industry, so as to enhance the comprehensive competitiveness of the company.
It is worth mentioning that the social responsibility report disclosed by Shennong Group on the same day not only mentioned the introduction of automated feeding equipment to reduce carbon emissions and water consumption, but also disclosed the effectiveness of the company's energy conservation and emission reduction measures. As a major carbon emitter, animal husbandry has great potential for energy conservation and emission reduction. In 2023, Shennong Group will treat 170,000 cubic meters of sewage, with an average annual inlet COD of 8,000mg/L, ammonia nitrogen of 2,000mg/L, annual average effluent COD of 200mg/L, ammonia nitrogen of 80mg/L, annual emission reduction of COD of about 1,326 tons, and ammonia nitrogen emission reduction of about 326.4 tons.
Shennong Group said that the company has always adhered to the vision of "building a refined whole industrial chain and achieving high-quality development", further improved the production scale of the company's piglets, fattening pigs, fresh pork and deep-processed food, explored new consumption patterns in the pig industry chain, and is committed to developing into a leading national key leading enterprise in agricultural industrialization with a complete pig industry chain in China.