Shennong is expected to have 130,000 sows this year, with a target of 2.5 million slaughtered and a cost advantage
On the evening of April 25, Shennong Group released its 2023 annual report. According to the report, Shennong Group will achieve operating income of 3.891 billion yuan in 2023, a year-on-year increase of 17.76%, but ushered in the first annual loss of 401 million yuan since listing, a year-on-year decrease of 257.04%.
In 2023, Shennong Group's live pig sales will exceed one million heads for the first time, that is, 1.5204 million heads, a year-on-year increase of 63.65%. Shennong Group has built a solid industrial foundation in Yunnan, promoted the expansion of production capacity in the two regions, and strengthened the replicable capacity and cost of pig breeding. With the production capacity of 24,000 sows in the Guangdong and Guangxi theaters put into operation in 2024, the basic sow inventory in the two Guangxi theaters will reach 40,500 heads, and the annual slaughter target will increase from 250,000 heads in 2023 to 800,000 heads in 2024.
In terms of long-term planning, the overall slaughter target is 2.5 million heads in 2024 and 3.5 million heads in 2025.
The first annual loss was 401 million
According to the data of the Ministry of Agriculture and Rural Affairs, the average price of live pigs in the country in 2023 will be 7.64 yuan per catty, which is significantly lower than the cost of pig breeding, and almost all listed pig enterprises are in a state of loss.
In 2023, Shennong Group will achieve an operating income of 3.891 billion yuan, a year-on-year increase of 17.76%, a record high, while a net profit loss attributable to the parent company will be 401 million yuan, a year-on-year decrease of 257.04%. This is the first annual loss since its listing in 2021. In the first quarter of 2024, pig prices have recovered, Shennong Group achieved operating income of 1.082 billion yuan, a year-on-year increase of 20.82%, and a net profit loss attributable to the parent company of 0.04 billion yuan, a year-on-year increase of 96.63%. If pig prices continue to recover, Shennong Group is expected to reduce losses or turn losses into profits.
Shennong Group, which started with feed business, has successively entered the pig breeding, pig slaughtering and food processing sectors from 2003 to 2022, and has long practiced the development strategy of "integration of the pig industry chain".
Today, pig breeding has become the main business of Shennong Group, with an operating income of 2.092 billion yuan in 2023, an increase of 36.82% from 1.529 billion yuan in the year of listing in 2021, and the proportion of the total revenue of the main business has increased from 35.33% in 2021 to 53.77% today.
Pig sales exceeded one million for the first time
The pig breeding cost of 7.3 yuan/kg ranked first Shennong Group's pig business started in 2003, advocating the expansion of the substitution model and light assets, and the overall development rhythm is relatively stable, and the company's asset-liability ratio at the end of the first quarter of 2024 is 29.53%, although it has more than doubled year-on-year, but it is still in the safe range.
In 2023, after 20 years of Shennong Group's involvement in pig raising, the sales volume of live pigs will officially exceed one million heads, that is, 1.5204 million heads in 2023, a year-on-year increase of 63.6%. In the first quarter of 2024, Shennong Group will slaughter 353,000 pigs, only 14.12% of the target in 2024, and an average of 720,000 pigs will be slaughtered every quarter to complete the target.
In the pig breeding industry, cost control is the core competitiveness of enterprises. According to the company's announcement data, the average complete cost of Shennong Group in 2023 will be about 16.2 yuan/kg (including year-end bonus). Starting in the second half of 2023, the complete cost of pig raising of Shennong Group has shown a downward trend, falling to about 7.3 yuan/kg in the first quarter of 2024, and currently ranks first among listed pig enterprises, down 1 yuan/kg from May 2023.
Shennong Group's ability to achieve the industry-leading level of cost is the comprehensive result of efficient pig breeding and biosecurity prevention and control management. It is reported that Shennong Group relies on the leading reproductive performance of PIC International Breeding Company's breeding pigs, and further optimizes and enhances the potential of the three-level pyramid breeding system (i.e., single-point core breeding farms and multi-point multiplication sow farms) of the core group, multiplication group and commodity group, so as to achieve a simple and efficient production model.
In addition, Shennong Group has made a lot of investment in the purification of major diseases such as blue ear and PED in recent years, and the proportion of blue ear double negative in the company's sows will account for 60% in 2023, and it has increased to 70% as of the first quarter of 2024.
Build a solid industrial foundation in Yunnan
In 2024, after the slaughter target of Liangguang is increased to 800,000 non-plague heads, Wen's, Dekang, Zhengda and other group pig enterprises have successively laid out pig breeding in Yunnan, making the local pig market in Yunnan more saturated, which means that the market competition faced by Shennong Group will intensify. As a result, on the basis of consolidating the production foundation of the Yunnan Theater, Shennong Group has strengthened the replicable capacity and cost of pig breeding. In 2022, Shennong Group divided the production area of the pig business into three war zones: Yunnan, Guangxi and Guangdong, and invested in the establishment of wholly-owned subsidiaries and holding subsidiaries in Guangdong Province and Yunnan Province in 2023.
As of the end of 2023, Shennong Group has established 21 pig breeding subsidiaries in Yunnan, Guangxi, Guangdong and other places, of which 17 are located in Yunnan Province.
As one of the largest pig enterprises in Yunnan, Shennong Group has about 90,000 sows in stock as of the end of March 2024. With the completion and production of pig farms under construction within the year, it is expected that the sow herd will reach 130,000 by the end of 2024. In terms of long-term planning, Shennong Group aims to slaughter 2.5 million heads in 2024 and 3.5 million heads in 2025. With the production capacity of 24,000 sows in the Guangdong and Guangxi theaters put into operation in 2024, the basic sow inventory in the two Guangxi theaters will reach 40,500 heads, and the annual slaughter target will increase from 250,000 heads in 2023 to 800,000 heads in 2024. It is worth mentioning that after the efforts of the relevant teams in 2023, the complete cost of the Liangguang Theater has been 0.5-1.00 yuan/kg lower than that of the Yunnan Theater, and with the commissioning of the Guangxi Daxin Feed Nutrition Plant with an annual output of 400,000 tons in 2024, the feed cost in the Guangxi Theater will be further reduced.
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【WeChat Editor】Meng Xuan
【Content source】Xu Yumeng
【Data Mapping】Chen Shumei
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