How to gain the strength to transcend cycles? Muyuan Foods has a "trick"!

(Source: China Business News)

Transferred from: China Business News

China Business News (Reporter Ma Jia) The annual report of Mufeng Agricultural shares, a leading company in the hog farming industry, shows that affected by the decline in hog prices, the company achieved net profit of 15.812 billion yuan in 2025, a year-on-year decrease of 16.45%. At the 2025 annual performance communication meeting of Muyuan Agricultural shares held on the evening of March 27, its executives said that in 2025, the hog farming industry faced “the worst stretch in the past several cycles,” but the company’s full-year hog farming cost had been reduced to 12 yuan per kilogram, and its slaughter and meat processing business achieved annual profitability for the first time. In 2026, its cost target is set at below 11.5 yuan per kilogram. Regarding overseas business, this year the company will build its own production capacity in Vietnam.

Hog farming costs decline again

According to the annual report, in 2025, Muyuan Agricultural sold 77.981 million head of commercial pigs and achieved operating revenue of 144.145 billion yuan, up 4.49% year on year; net profit was 15.812 billion yuan, down 16.45% year on year. The company explained that the main reason for the decline in net profit was the drop in hog prices.

Cost control became the focus of this communication meeting. Financial report data show that in 2025, the company’s full hog farming cost showed a steadily declining trend quarter by quarter, with the full-year average cost falling to 12 yuan per kilogram, a year-on-year decrease of 2 yuan per kilogram. Muyuan Agricultural’s chief financial officer Gao Tong said that this achievement was the result of the company’s continued investment in disease prevention and control, nutrition formulas, breeding of breeding stock, and intelligent equipment, among other areas.

Gao Tong revealed that the 2026 hog farming cost target is “to reduce it to below 11.5 yuan per kilogram.” “This year’s reduction will definitely not be as large as last year,” he said frankly. He noted that there is pressure for higher costs for feed raw materials, and in the company’s cost assumptions it has already estimated that corn will rise by about 150 yuan per ton.

Muyuan Agricultural’s chairman Qin Yilin previously said in public remarks: “If you bring the costs down, you won’t be afraid of the pig cycle. For each pig, there is at least 600 yuan of cost reduction room.”

Gao Tong said that currently, the costs among the company’s various breeding farms are uneven. The excellent farm lines have already achieved “more than 400 yuan of cost reduction room per pig,” and even some farm lines have cost reductions close to 500 yuan, but the lagging farm lines have not even reached 300 yuan. The company is planning to narrow the gap by tilting resources and dispatching outstanding leaders to support the lagging farm lines.

Slaughter business achieves annual profitability for the first time

According to the financial report, in 2025, Muyuan Agricultural slaughtered 28.663 million head of hogs, doubling year on year, with capacity utilization reaching 98.8%. This segment achieved its first annual profit since the company’s establishment, and both the third and fourth quarters were profitable.

Muyuan Agricultural’s spokesperson for the board of directors, Qin Jun, said that the slaughter business has moved beyond the start-up stage and entered a new development phase. In 2026, the company expects slaughter volumes to continue growing and plans to allocate 1 billion to 1.5 billion yuan in capital expenditure for new construction projects and capacity upgrades on the slaughter side.

Regarding the role of the slaughter business during the low point of the cycle, Gao Tong responded that with hog prices continuing to fall and downstream slaughter companies generally reducing volumes, Muyuan’s own slaughter side can effectively take over hog sales from the farming side. “Slaughter and farming form an interactive cooperation effect, and this effect is relatively evident during the downturn and the price-cut cycle.”

For the 2026 operating plan, Gao Tong said the company’s most important goal at present is to keep cash flow stable and continue to reduce costs during the downturn—“to gain the capability to get through the cycle.” This year, overall capital expenditure is about 10 billion yuan. While capital expenditure on the farming side will be somewhat reduced, the allocation of funds to the slaughter side will increase.

In addition, Gao Tong said that the company’s overseas expansion starts with Vietnam as its first stop. This year’s goal is to land operations there and establish its own production capacity, with the expected capital expenditure within 1 billion yuan. The company was listed on the Hong Kong Stock Exchange in February 2026, and 60% of the fund-raising proceeds will be used for overseas business expansion.

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