Muyuan Foods swings to 1.22 billion yuan loss on falling hog prices

Muyuan Foods Co. (02714.HK) reported a net loss of 1.22 billion yuan for the first quarter, a sharp reversal from the prior year as declining hog prices eroded the pork producer’s revenue.

The company attributed the performance to "a decline in live hog prices which led to lower revenue," in its quarterly filing under China Accounting Standards.

Revenue for the three months ended March 31 fell 17.1% year-over-year to 29.89 billion yuan. The swing to a 1.22 billion yuan loss compares with a net profit of 4.49 billion yuan in the same period last year. Loss per share was 0.22 yuan.

The results highlight the severe impact of a supply glut and weak domestic demand in China, which has kept pork prices low. The Chinese government has been urging producers to reduce numbers to stabilize the market, creating a challenging environment for major suppliers.

The persistent weakness in pork prices reflects a broader issue of oversupply in the world's largest pork market. While Muyuan's scale is substantial, it remains vulnerable to the commodity price cycle that has squeezed margins across the industry. Following the results, Goldman Sachs cut its price target on the company's stock to HKD64. Investors will be watching for any signs of market stabilization or further government intervention in the coming months.

This article is for informational purposes only and does not constitute investment advice.