Investment Value Analysis of Muyuan Co., Ltd. (002714.SZ): Can Cost Advantages Sustain It Through the Downward Phase of the Hog Cycle?

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Muyuan Foodstuff Co., Ltd. (referred to as “Muyuan Co., Ltd.”) is one of China’s largest pig breeding enterprises, known as the “Pig King”. According to the latest data, the company’s current market capitalization is approximately RMB271.827 billion, with a closing share price of HK$49.76 per share, and a trailing twelve months (TTM) price-to-earnings (P/E) ratio of only 12.04x, which is in the historical low valuation range [0].

From the perspective of sales scale, Muyuan Co., Ltd. sold a total of 77.981 million commercial pigs in 2025, 6.379 million more than in 2024, representing a year-on-year increase of 8.91%, and has maintained the top position in national pig slaughter volume for many consecutive years [1]. Despite the sales growth, due to the sharp year-on-year decline in hog prices in 2025, the company’s annual operating revenue was RMB132.811 billion, a year-on-year decrease of 2.51%, equivalent to a reduction of approximately RMB3.414 billion.

Indicator	Value	Industry Position
Market Capitalization	RMB271.827 billion	Industry No.1
P/E (TTM)	12.04x	Below Industry Average
ROE	29.21%	Industry Leading
Net Profit Margin	14.50%	Top Tier in Industry
Gross Profit Margin	16.2% (2024)	Highly Volatile

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Muyuan Co., Ltd.'s most prominent competitive advantage lies in its industry-low breeding cost. According to the company’s disclosure, the full cost of pig breeding of the company has dropped to

in October-November 2025, a decrease of approximately RMB0.3 per kg compared to the beginning of the year, showing a significant month-on-month improvement [1][2]. This cost level is leading in the industry:

Enterprise	2025 Breeding Cost (RMB/kg)	Gap vs. Muyuan
Muyuan Co., Ltd.	11.3	Benchmark
Shennong Group	12.0	+0.7
Wens Co., Ltd.	12.2-12.4	+0.9-1.1
New Hope Group	Approx. 13.0	+1.7
Small and Medium-sized Farmers in the Industry	Approx. 14.0	+2.7

1. Continuous Improvement in Production Performance
   : Since 2025, the company’s core indicators such as survival rate, daily weight gain, and PSY (Piglets per Sow per Year, number of weaned piglets provided by each sow annually) have improved quarter by quarter [1]
2. Emergence of Expense Amortization Effect
   : With the expansion of breeding scale, the fixed cost dilution effect is significant
3. Feed Cost Optimization
   : The company reduces the impact of feed cost fluctuations through methods such as futures hedging and raw material procurement advantages

As of October 2025, the proportion of slaughter volume from Muyuan Co., Ltd.'s farms with a cost of less than RMB11 per kg has reached approximately

, which means a considerable proportion of the company’s production capacity has strong anti-cycle capabilities [1].

Muyuan Co., Ltd.'s cost advantage not only comes from the breeding link, but also benefits from its

:

• Breeding Advantage
  : The company has a complete breeding system, and the self-breeding and self-raising model reduces the fluctuation of piglet costs
• Self-produced Feed
  : It produces millions of tons of feed annually, with feed costs accounting for approximately 60% of breeding costs; self-produced feed brings significant cost advantages
• Slaughtering Extension
  : The company actively extends to downstream slaughtering and meat product processing. In 2025, it sold 3.39 million commercial pigs to its subsidiary Muyuan Meat Products Co., Ltd., accounting for approximately 48.5% of total sales, which helps to mitigate the impact of price fluctuations [1]

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In 2025, hog prices showed a

trend, with an annual decline of over 20%:

• Beginning of the Year (January)
  : Hog prices were approximately RMB16.1-16.4 per kg
• End of the Year (December)
  : Hog prices fell to RMB11.7-12.4 per kg
• Annual Decline
  : 24-27%

The average sales price of commercial pigs of Muyuan Co., Ltd. fell from RMB14.76 per kg at the beginning of the year to RMB11.41 per kg at the end of the year, a decline of 22.70% [1][2].

1. High-capacity Release
   : The inventory of breeding sows has remained above 40 million heads for a long time, which is higher than the normal stock of 39 million heads
2. Increased Slaughter Weight
   : The average weight of slaughtered pigs in 2025 was approximately 127 kg, an increase of approximately 2 kg compared to the previous year, increasing market supply by approximately 5-8%
3. Insufficient Demand Follow-up
   : The recovery on the consumer side is slow, exacerbating the supply-demand imbalance

As hog prices continued to decline, the industry entered a

state from mid-September 2025:

Time Node	Profit of Self-breeding and Self-raising (RMB/head)	Industry Status
January 2025	+309.71	Profitable
September 2025	Entered Loss	Watershed
December 2025	-184.95	Deep Loss

According to data from China Galaxy Securities, as of December 26, 2025, the profits of self-breeding and self-raising, and outsourced piglet breeding were

and respectively [3].

Against this backdrop, Muyuan Co., Ltd. still maintains relatively strong profitability relying on its cost advantage. The company’s average sales price of commercial pigs in December was RMB11.41 per kg, which, although lower than the level at the beginning of the year, is still above its marginal cost line of RMB11.3 per kg [1].

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The financial performance of Muyuan Co., Ltd. in the past five years shows obvious

:

Year	Operating Revenue (RMB100 million)	Net Profit (RMB100 million)	Gross Profit Margin	ROE
2020	562.8	274.5	60.2%	54.5%
2021	788.9	692.2	30.3%	39.0%
2022	1,248.3	149.3	18.9%	7.8%
2023	1,108.6	-41.6	7.8%	-2.1%
2024	1,385.5	178.4	16.2%	29.2%

• The company incurred losses at the bottom of the industry cycle in 2023, but quickly returned to profitability in 2024
• The ROE recovered to an excellent level of 29.21% in 2024, demonstrating strong asset turnover and profit recovery capabilities
• The operating revenue scale continues to grow, and the market share is continuously expanding

Indicator	Value	Evaluation
Current Ratio	0.79	Weak Short-term Solvency
Quick Ratio	0.31	High Inventory Proportion
Free Cash Flow	RMB25.16 billion	Sustained Positive
Financial Attitude	Conservative	High Depreciation/Capital Expenditure Ratio

• The company’s free cash flow is continuously positive, indicating strong cash generation capability from its main business [0]
• The financial policy is conservative, and the high depreciation policy means there is room for profit release in the future
• The low current ratio is a characteristic of the breeding industry (caused by the measurement method of biological assets), which needs to be understood in combination with industry characteristics

Muyuan Co., Ltd. actively responds to the industry’s capacity reduction policy:

• The inventory of breeding sows at the end of December 2025 was
  3.232 million heads
  , a decrease of 280,000 heads compared to the same period in 2024
• The company decided not to sell commercial pigs to secondary fattening customers to cooperate with industry supply-side regulation
• The average slaughter weight decreased from 126.4 kg in Q3 2025 to 121.4 kg in Q4 2025, actively compressing supply [1]

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According to the DCF model (based on 2024 annual report data) [0]:

Scenario	Intrinsic Value	Increase vs. Current Share Price
Conservative Scenario	HK$492.80	+890.4%
Base Scenario	HK$569.33	+1,044.2%
Optimistic Scenario	HK$888.95	+1,686.5%
Probability-weighted	HK$650.36	+1,207.0%

• WACC (Weighted Average Cost of Capital): 8.6%
• Beta Coefficient: 0.77 (low correlation with the market, anti-cyclical attribute)
• Compound Annual Growth Rate (CAGR) of Revenue: 25.1% (5-year average)
• Terminal Growth Rate: 2.0-3.0%

The current P/E valuation of 12.04x is at a historical low, mainly reflecting the market’s pessimistic expectations for the hog cycle. However, from several dimensions, the current valuation may have fully priced in negative factors:

1. Cycle Position
   : Hog prices are in the cycle bottom area, with upward elasticity greater than downward risk
2. Cost Advantage
   : The industry’s lowest cost provides a margin of safety
3. Growth Potential
   : Market share continues to expand, and the leading position is consolidated
4. Dividend Potential
   : The peak period of capital expenditure has passed, and free cash flow is expected to improve in the future

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According to industry analysts’ forecasts [1][2][3]:

• H1 2026
  : Hog prices will still maintain an oscillating downward trend overall, with a short-term rebound possible around the Spring Festival
• May 2026
  : Hog prices are expected to reach a phased inflection point
• July 2026
  : As the effect of breeding sow capacity reduction becomes apparent, the industry may enter a new profit cycle
• H2 2026
  : The decline in breeding sow inventory will lead to a reduction in pig supply, and the price center will move upward

• Changes in breeding sow inventory (monthly data)
• Changes in average slaughter weight of pigs
• Dynamics of secondary fattening
• Intensity of policy regulation

1. Risk of Further Hog Price Decline
   : If capacity reduction is less than expected, hog prices may fall below the cost line
2. Epidemic Risk
   : Epidemics such as African swine fever may still affect breeding performance
3. Policy Uncertainty
   : Regulatory measures such as environmental protection policies and reserve meat release affect prices
4. Debt Pressure
   : Although cash flow is healthy, high debt ratio needs attention at the bottom of the cycle

Dimension	Evaluation
Cost Advantage	★★★★★ Industry-leading, RMB11.3 per kg cost provides a strong margin of safety
Cycle Position	★★★★☆ At the cycle bottom, upward elasticity is greater than downward risk
Growth Potential	★★★★☆ Slaughter volume continues to grow, market share expands
Valuation	★★★★★ P/E is only 12x, DCF shows a huge discount
Risk	★★★☆☆ Need to pay attention to the risk of further hog price decline

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As the absolute leader in China’s pig breeding industry, Muyuan Co., Ltd.'s

. The company’s full cost of RMB11.3 per kg is not only significantly lower than the industry average (approximately RMB14 per kg), but also allows it to maintain marginal profitability even when hog prices fall to RMB11.4 per kg.

1. Deep Cost Moat
   : Muyuan’s integrated breeding model, scale effect, and refined management have built an irreplicable cost advantage, and there is still room for cost reduction in 2025
2. Good Opportunity to Lay Out at the Cycle Bottom
   : The current P/E ratio is only 12x, implying the market’s extremely pessimistic expectations for the hog cycle, with large upward elasticity
3. Increased Concentration of Leading Enterprises
   : The industry trough is conducive to Muyuan further expanding its market share through low-cost expansion
4. Emerging Cash Cow Attribute
   : The peak period of capital expenditure has passed, and free cash flow and dividend capacity are expected to improve in the future

: It is necessary to continuously track the hog price trend in H1 2026 and the progress of breeding sow capacity reduction. If hog prices remain depressed longer than expected, it may put pressure on the company’s short-term performance.

: Muyuan Co., Ltd. is a typical cyclical growth stock, with a favorable risk-return ratio during the industry trough. Considering its cost advantages and industry status, the current valuation has a good margin of safety, and it is recommended to pay attention to investment opportunities brought by the cycle inflection point.

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[0] Jinling AI Securities API Data - Muyuan Co., Ltd. Company Overview, Financial Analysis, DCF Valuation and Technical Analysis Data (January 10, 2026)

[1] 21st Century Business Herald - “Hog Prices Fell by Over 20% Last Year, Henan’s Top Pig Farmer’s Revenue Decreased by RMB3.4 Billion” (January 8, 2026) https://www.21jingji.com/article/20260108/herald/1ff3556d8799603917c0867c72507666.html

[2] Time Weekly - “Hog Prices Fell by Over 20% Last Year, ‘Pig King’ Muyuan Co., Ltd. Sold 6.38 Million More Pigs But Saw Revenue Decrease by RMB3.4 Billion” (January 6, 2026) https://time-weekly.com/post/326638

[3] China Business Journal - “Supply-Demand Imbalance in Pig Breeding Industry, Integrated Industrial Chain Layout Becomes Key” (January 10, 2026) https://finance.sina.com.cn/jjxw/2026-01-10/doc-inhfuete0958596.shtml