Analysis of Muyuan Foods' Cost Advantage: Challenges and Coping Strategies Amid Swine Cycle Fluctuations

Now I will provide you with a systematic and comprehensive analysis report based on the collected data.

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In 2025, China’s pig breeding industry is in the in-depth adjustment phase of the sixth swine cycle, showing an abnormal trend of

[1]. According to data from the Ministry of Agriculture and Rural Affairs, the annual average price of lean-type hogs nationwide was RMB 13.8 per kg, down 17.66% year-on-year. The annual price dropped from RMB 16.39 per kg at the beginning of the year to RMB 12.4 per kg at the end of the year, a decrease of 24.34% [1].

Indicator	Data	Interpretation
Sow Inventory (October 2025)	39.9 million heads	2.3% higher than the normal inventory of 39 million heads [2]
Sow Inventory (June 2025)	40.43 million heads	3.5% higher than the normal inventory [1]
Slaughter Weight of Hogs	120 kg and above	Expands the actual supply scale [2]
Pork Consumption Share	54.2%	Decreased by 4.1 percentage points compared to 58.3% in 2024 [2]

Persistently weak demand is an important factor dragging down hog prices. Substitute products such as poultry, beef, and mutton have diverted pork demand by virtue of price advantages. Household and catering procurement have become more cautious, and the boosting effect of traditional consumption peak seasons has weakened significantly [1].

Muyuan Foods (002714.SZ), as the absolute leader in China’s pig breeding industry, had a market value of RMB 271.83 billion in 2025, ranking first in the industry [0]. The company’s current market value is USD 27.183 billion (equivalent to approximately RMB 195 billion), with a stock price of approximately USD 49.76, representing a 37.46% increase from a year ago [0].

• Price-to-Earnings Ratio (P/E)
  : 12.04x — Significantly lower than the industry average, with relatively reasonable valuation [0]
• Price-to-Book Ratio (P/B)
  : 3.48x — Reflects the market’s recognition of the company’s asset quality [0]
• Return on Equity (ROE)
  : 29.21% — Excellent capital return capability [0]
• Net Profit Margin
  : 14.50% — Maintains profitability amid widespread losses in the industry [0]
• Current Ratio
  : 0.79 — Short-term solvency requires attention [0]

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Muyuan Foods’ cost advantage is its core competitiveness. In 2025, the company successfully reduced the total cost of pig breeding from

, a decrease of RMB 1.5 per kg [1]. This level is leading in the industry:

Breeding Entity	Total Cost (RMB/kg)	Cost Gap
Muyuan Foods	11.3	Baseline
Wens Foodstuffs Group	12.2-12.4	RMB 0.9-1.1 higher
Other Listed Companies	12.5-13.0	RMB 1.2-1.7 higher
Smallholder Farmers	13.0-15.0	RMB 1.7-3.7 higher

The cost gap of RMB 1-2 per kg constitutes Muyuan’s

amid the overall industry downturn [1].

Muyuan Foods successfully reduced soybean meal usage by 15% through

. In 2024, the company’s soybean meal accounted for only 7.3% of its feed, far lower than the industry average of 13.7% [1]. This technological innovation not only reduces feed costs but also reduces dependence on imported soybeans, enhancing supply chain stability.

As of September 2025, Muyuan Foods has achieved remarkable results in the field of intelligent breeding [1][3]:

Indicator	Muyuan’s Data	Industry Level
Survival Rate from Weaning to Slaughter	93%	Approximately 85%
Overall Survival Rate	87%	Approximately 80%
PSY (Pigs Weaned per Sow per Year)	29	Approximately 24
Daily Weight Gain of Fattening Hogs	880g	Approximately 750g
Feed-to-Meat Ratio in Fattening Stage	2.64	Approximately 2.8

The company’s cumulative R&D expenditure exceeds RMB 20 billion, with over 1,200 core algorithm engineers. Its pig houses have been iterated to the 23rd generation, and it has obtained more than 1,000 patents [3]. Intelligent air-filtered pig houses effectively resist disease risks such as African swine fever, and the 30,000-ton annual output synthetic amino acid project further reduces dependence on feed costs.

Since 2019, Muyuan Foods has extended its industrial chain to slaughtering and meat processing businesses. By 2024, the company’s slaughtering scale ranked 5th globally and 1st in China [1]. In the third quarter of 2025, the slaughtering business achieved a profit of approximately RMB 30-32 million, marking the beginning of synergistic effects from the full industrial chain model.

Despite Muyuan Foods’ excellent cost control capabilities, its profit margin is facing severe challenges:

In December 2025, the average sales price of Muyuan Foods’ commercial hogs was

. Compared with the company’s total cost of RMB 11.3 per kg, , leaving extremely thin profit margins [1].

Month	Average Sales Price	Total Cost	Spread	Profit Status
October 2025	~RMB 12/kg	RMB 11.3/kg	~RMB 0.7/kg	Meager Profit
December 2025	RMB 11.41/kg	RMB 11.3/kg	RMB 0.11/kg	Extremely Meager Profit

1. Feed Cost Fluctuation Risk
   : Corn and soybean meal account for approximately 60% of the total cost of pig breeding. In the future, global climate change, cultivated land resource constraints, and the growth in demand for corn for biofuels may drive sharp fluctuations in raw material prices, further compressing profit margins [1].

2. Risk of Sustained Low Hog Prices
   : In 2025, hog prices dropped from RMB 16.39 per kg at the beginning of the year to RMB 12.4 per kg at the end of the year, a decrease of 24.34%. If hog prices continue to decline, the company will face losses even with its significant cost advantage [1].

3. Slow Capacity Decommissioning
   : The inventory of productive sows is still higher than the normal holding level, and supply pressure in the industry persists [2].

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In 2025, the pig breeding industry experienced a profound adjustment period, with breeding entities generally facing the dilemma of

[2].

Enterprise	Revenue (RMB 100 million)	YoY Revenue Growth	Net Profit (RMB 100 million)	YoY Net Profit Growth
Muyuan Foods	1117.90	+15.52%	147.79	+41.01%
Wens Foodstuffs Group	758.17	-0.04%	52.56	-18.29%
Shennong Group	39.23	-3.79%	4.62	-3.89%

Muyuan Foods achieved double growth in revenue and net profit in the first three quarters by virtue of its cost advantage, while other major competitors experienced varying degrees of decline or slowdown in growth, highlighting the key role of cost control capabilities during the downward cycle [1].

Currently, the focus of competition in pig breeding has shifted to

, and industry differentiation has further intensified [1]:

• Leading Enterprises
  : Leveraging scale and technological advantages, they continue to dilute rigid costs. Their self-breeding and self-raising costs have been controlled below RMB 12 per kg, giving them significant competitive advantages [2]
• Small and Medium-Sized Farmers
  : Restricted by multiple factors such as upgraded environmental protection policies and raw material price fluctuations, they face great difficulties in cost control, and operational pressure continues to intensify [2]
• Medium-Sized Enterprises
  : Face the awkward situation of “being stuck in the middle”, lacking both the scale advantages of leading enterprises and the flexibility of smallholder farmers

: Since 2025, enterprises such as Tecon Bio, Shennong Group, and Tech-Bank Food have successively announced the suspension or adjustment of pig breeding projects. Leading enterprises including Muyuan, Wens, Tangrenshen, and Jinxinnong have also announced the termination of multiple breeding projects [4].

Muyuan Foods’ December 2025 sales data shows [1]:

• Sales Volume
  : 6.98 million heads, down 14.75% year-on-year
• Sales Revenue
  : RMB 9.667 billion, down 36.06% year-on-year
• Average Sales Price
  : RMB 11.41 per kg, plummeting 25.38% year-on-year

The simultaneous decline in volume and price reflects the significant impact of the industry’s downward cycle on Muyuan Foods. Although the company remains profitable due to its cost advantage, its profit margin is narrowing rapidly.

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Muyuan Foods has built a complete industrial chain from feed production to terminal sales through a vertical integration strategy [1]:

• Advantages
  : Enables global controllability and traceability of food safety, reduces feed costs, and smooths the cyclical fluctuations of the breeding business through the slaughtering segment
• Challenge Warning
  : The full industrial chain model also means the risk of “a loss in one segment affects all” — a reduction in upstream slaughter leads to tighter hog supply and lower capacity utilization in downstream slaughterhouses, while higher pork prices suppress consumer demand [1]

• Reciprocal Binary Breeding System
  : Breaks dependence on external breeding stock and improves genetic efficiency
• Synthetic Biology Technology
  : Further reduces dependence on raw materials such as soybean meal
• Intelligent Equipment
  : The application of equipment such as needle-free injectors greatly reduces labor costs and improves management efficiency [1]
• R&D Investment
  : Cumulative R&D expenditure exceeds RMB 20 billion, with over 1,200 core algorithm engineers [3]

• Established a wholly-owned subsidiary in Ho Chi Minh City, Vietnam, and cooperated with BAF Vietnam Agriculture Joint Stock Company to build a high-rise intelligent breeding project and supporting feed factory [1]
• Restarted its Hong Kong stock listing plan, and submitted a second application to the Hong Kong Stock Exchange in November 2025, intending to raise funds to support overseas business expansion [1]
• Diversifies domestic cyclical risks through international layout and explores new growth space

Wens Foodstuffs Group adopts a

[1]:

• When hog prices are low, the broiler chicken market is relatively stable, providing the enterprise with stable cash flow and profits
• Pork and chicken have consumption substitutability. When hog prices are too high, the broiler chicken business can take over substitute consumer demand, smoothing overall performance fluctuations

This cross-species horizontal diversification layout shifts from “relying on a single cycle” to “managing multi-cycle balance”, enabling greater risk resistance [1].

• Track Core Indicators
  : Closely track data such as productive sow inventory and slaughter volume as important bases for production decisions
• Combine Seasonal Changes
  : Arrange production plans scientifically to avoid cost accumulation caused by blindly holding hogs for delayed slaughter
• Assess Own Capabilities
  : Avoid blind restocking during supply surplus cycles, and fully assess own breeding capabilities and market risks [2]

• Scientific Breeding Technology
  : Reasonably control breeding density, optimize feed ratio and breeding environment
• Refined Management
  : Introduce advanced breeding equipment to improve hog growth rate and immunity
• Disease Prevention and Control
  : Reduce the probability of disease occurrence and reduce unit breeding costs [2]

• Establish long-term and stable cooperative relationships with feed suppliers to ensure feed quality and supply stability
• Deepen cooperation with slaughtering enterprises and sales channels to enhance product premium capability and market share [2]

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• Affected by the lag of the high productive sow inventory in the second quarter of 2025, the pork market supply in the first half of 2026 will still be relatively sufficient [1]
• Coupled with the off-consumption season, market prices are under pressure
• The productive sow inventory is expected to drop to the range of 38.5-39 million heads [1]

• Judging from the capacity decommissioning trend in recent months, the pork market supply is expected to shrink in the second half of 2026 [1]
• Coupled with seasonal improvement in consumption, it may drive hog prices up
• Traditional festivals such as Mid-Autumn Festival and National Day will drive phased growth in consumer demand [2]

The industry has reached a consensus that hog prices in 2026 will be

[2]:

Period	Price Forecast	Driving Factors
First Quarter	Fluctuating around RMB 11.6/kg	Supported by the cost line of leading enterprises
End of Second Quarter	Phased Inflection Point	Effects of productive sow decommissioning become apparent
Second Half of the Year	Upward Shift in Price Center	Capacity decommissioning + peak season consumption

However, it should be noted that the overall background of weak demand remains unchanged, and

, limiting the upside potential of hog prices [2].

• The Ministry of Agriculture and Rural Affairs clearly takes “anti-involution” as the orientation, requiring leading enterprises to control production capacity [5]
• The National Development and Reform Commission, together with the Ministry of Agriculture and Rural Affairs and other departments, held a symposium on hog production capacity regulation, releasing a clear policy signal to reduce production capacity [5]
• The regulation path may show phased characteristics of “regulation - intensification - adjustment” [2]

• Cost reduction and efficiency improvement have become the core survival strategy for breeding entities [2]
• Intelligent breeding and full industrial chain layout will become the core focuses of industry competition [2]
• Large-scale and intensive breeding have become the mainstream development direction of the industry [1]

• Obvious cost advantage, with total cost leading the industry by RMB 1-2 per kg [1]
• Full industrial chain layout has achieved initial results, with the slaughtering business turning profitable [1]
• Leading intelligent breeding technology, with leading industry indicators such as PSY and feed-to-meat ratio [1][3]
• Global strategic layout is advancing, which is expected to diversify single-market risks [1]

• The capacity of the cost advantage to buffer cyclical fluctuations is gradually approaching its limit [1]
• The spread between average sales price and cost is only RMB 0.11 per kg, leaving extremely meager profit margins [1]
• Potential fluctuations in feed costs may erode profits [1]
• Systemic risks of the full industrial chain model [1]

• The current P/E ratio is 12.04x, which is at a historically low level [0]
• A 37.46% increase in the past year shows the market’s recognition of the company’s prospects [0]
• Considering the industry cycle position and the company’s competitive advantages, the valuation is relatively attractive [0]

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As the absolute leader in China’s pig breeding industry, Muyuan Foods has established a significant cost advantage through scale effects, intelligent breeding technology, and full industrial chain layout. However, this advantage is approaching its limit — the spread between the average sales price and total cost in December 2025 was only RMB 0.11 per kg, which fully illustrates the squeeze on the company’s profit margin from downward cyclical pressure.

1. Swine cycle fluctuations will become normalized
   — The supply-demand imbalance cannot be fundamentally reversed in the short term, and “weak peak seasons” may become the norm
2. Cost reduction and efficiency improvement are core competitiveness
   — Leading enterprises continue to reduce costs through technological innovation, compressing the living space of smallholder farmers
3. Full industrial chain/diversified layout has become a trend
   — Single-business models have insufficient risk resistance capabilities, requiring industrial chain extension or cross-field layout to smooth cyclical fluctuations

1. Need to continue to deepen intelligent breeding to further explore cost reduction potential
2. Accelerate global layout to diversify domestic market cyclical risks
3. Strengthen the synergistic effects of the full industrial chain to enhance overall risk resistance capabilities
4. Pay attention to changes in feed costs and do a good job in cost hedging management

At the critical stage of the pig breeding industry’s transformation from scale expansion to high-quality development, only continuous technological innovation, optimized operation strategies, and strengthened risk management can help break through during cycle adjustments and promote high-quality and sustainable development of enterprises.

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[1] Eastmoney.com - Muyuan Navigates a Tough Winter, Hog Industry Encounters Headwinds (https://caifuhao.eastmoney.com/news/20260109222110373425800)

[2] Jinzhibiao Information - In-Depth Review of the 2025 Hog Market (https://www.jbzyw.com/view/484477)

[3] Beidou Agricultural Science - Breeding Sector Layout: Expanding Capacity, Reducing Costs, and Transforming Models (https://www.ani-perfect.cn/index.php?m=home&c=View&a=index&aid=18335)

[4] 36Kr - Giants Hit the Brakes, Smallholders Exit: Who is “Manipulating” the Swine Cycle? (https://m.36kr.com/p/3599224628527622)

[5] Tencent News - Hog Prices Recover at the Start of 2026! How Long Will This Rally Last Before the Spring Festival? (https://news.qq.com/rain/a/20260107A02SGR00)

[6] Jinling API Data [0]