Key Takeaways:
Muyuan Foods swung to a RMB 6.08 billion first-half net loss, versus a RMB 10.53 billion profit a year earlier, as hog prices plunged 23.1%.
"The path to further cost reduction will focus on disease prevention and control, employee incentives, breeding stock genetics, and smart farming applications," Muyuan management said, as full production cost fell to RMB 11.5 per kilogram in July.
Revenue fell 22.3% to RMB 59.41 billion, with basic loss per share of RMB 1.10 versus earnings per share of RMB 1.96 a year earlier. Excluding non-recurring items, the net loss was RMB 5.89 billion, down 155.2% year-on-year, pointing to losses from core operations. Operating cash flow swung from an inflow of RMB 17.35 billion to an outflow of RMB 2.22 billion, and the company declared no interim dividend.
The loss compresses Muyuan's debt-servicing buffer, with EBITDA interest coverage down to 3.42 times from 13.81 times and a RMB 9.54 billion convertible bond maturing in August 2027. National hog prices fell 23.1% in the first half even as pork output grew 3.3%, according to China's National Bureau of Statistics, and the breeding sow herd has dropped to 37.8 million head, near the normal retention level of 37.5 million, as the industry works through capacity reduction.
Muyuan sold 38.615 million commercial hogs in the first half, slaughtered 17.234 million hogs, up 50.98% year-on-year, and sold 1.9165 million tonnes of fresh and frozen pork. Slaughtering and meat revenue rose 14.04% to RMB 22.06 billion, maintaining profitability after the segment posted its first annual profit in 2025.
Cost control remains the key variable. Full production cost was approximately RMB 11.7 per kilogram in June, falling to RMB 11.5 in July, approaching the company's full-year average target. Depreciation and amortization and other non-cash costs account for more than 10 percent of full production cost, with cash cost slightly above RMB 10 per kilogram. Muyuan noted recent national hog prices have already exceeded its cash cost level.
Total assets stood at RMB 175.06 billion, up 1.93 percent from the end of last year, with net assets attributable to shareholders at RMB 80.19 billion, up 3.21 percent. The debt-to-asset ratio was 54.18 percent, essentially flat, while weighted average return on equity fell from 13.79 percent to negative 7.48 percent. Shares of Muyuan rose 4.1 percent in Hong Kong trading on the results.
The swing to a loss marks a sharp reversal for China's largest hog producer and reflects a sector-wide trough. Whether hog prices recover depends on the pace of capacity destocking, commercial hog slaughter, and consumption recovery, with cost-advantaged leaders expected to be the first to emerge from the cycle.
This article is for informational purposes only and does not constitute investment advice.
