Analysis Report on Cost Control of New Hope's Swine Breeding Business

Based on professional materials and data analysis obtained through research, the following is a systematic analysis report on the role of New Hope’s swine breeding business in breeding cost control.

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As a leading domestic pig breeding enterprise, New Hope has established a relatively complete swine breeding system after years of development. The company

, which was [1][2]. Currently, the company has formed a , and the backcross reserve pool uniformly managed and dispatched by the Pig Industry Business Group has stabilized at a reasonable scale[2].

In terms of swine breeding renewal, the company continues to replace high-quality purebred sows with high-quality binary sows.

. Through efficient utilization and optimized management, the number of boar stations in 2024 compared to the end of last year, effectively reducing boar costs[2].

Indicator	2021	2022	2023	2024	Change Range
PSY (Heads)	21.5	22.3	23.0	24.7	+3.2 (+14.9%)
Average Number of Weaned Pigs per Litter (Heads)	9.8	10.1	10.5	10.8	+1.0 (+10.2%)
Fattening Survival Rate (%)	85	87	89	92	+7 percentage points
Feed Conversion Ratio	2.82	2.78	2.79	2.67	-0.15
Weaning Cost (RMB/Head)	450	400	380	290	-160 (-35.6%)
Fattening Cost (RMB/kg)	16.5	15.8	14.8	13.0	-3.5 (-21.2%)

Data Source: Company Annual Report, CCXI Credit Rating Report[1][2]

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The improvement of swine breeding efficiency directly reduces the cost of each weaned piglet.

[2].

1. Optimized Breeding Management of Reserve Pigs
   : The average age at which reserve pigs are transferred to fixed groups has been reduced from 250 days to 220 days, a decrease of nearly 30 days, effectively reducing the breeding cost of reserve pigs[2]

2. Precision Feeding of Pregnant Sows
   : By optimizing the feeding management of pregnant sows, feed waste is reduced, significantly lowering the weaning cost of piglets[2]

3. Improved Boar Management System
   : The replacement of high-quality boars and integration of boar stations have significantly reduced boar costs[2]

The quality of breeding pigs directly affects the performance of various indicators in the subsequent fattening stage:

• Increased Fattening Survival Rate
  : Increased from 85% to 92%, a 7 percentage point increase, directly reducing losses from mortality and culling[2]

• Improved Feed Conversion Ratio (FCR)
  : Reduced from 2.82 to 2.67, a decrease of 0.15, significantly improving feed conversion efficiency[2]

• Enhanced Epidemic Prevention Capability
  : In the winter of 2024, through positive pressure ventilation transformation and optimized epidemic prevention procedures, the incidence rate of pigs decreased by more than 70% year-on-year, significantly reducing losses from mortality and culling[2]

According to the CCXI Credit Rating Report, the company has realized a self-breeding system with good resource control capabilities.

[1]. A high proportion of in-house self-breeding (compared to purchasing piglets from outside) has obvious cost advantages:

• Under the self-breeding and self-raising model, piglet costs are fully internalized
• Integrated breeding reduces intermediate transaction links
• Facilitates the implementation of refined management and epidemic prevention and control

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Time Node	Total Fattening Cost (RMB/kg)	Remarks
Q1 2024	15.4	—
End of March 2025	13.0	Decreased by RMB 2.4 per kg compared to the beginning of 2024
Q2 2025	13.0	Average of normally operating farms
July 2025	Approximately 12.5	Some excellent farms can reduce it to below RMB 12 per kg

Data Source: CCXI Credit Rating Report, Company Announcements[1][2][3]

Calculated based on 2024 data:

• Annual Slaughter Volume
  : 16.5249 million heads (13.5229 million fattening pigs + 3.0020 million piglets)[2]
• Fattening Cost Reduction
  : RMB 3.5 per kg (from RMB 16.5 per kg to RMB 13.0 per kg)
• Average Slaughter Weight
  : Approximately 120 kg per head

Enterprise	Total Cost (RMB/kg)	PSY	Cost Ranking
Muyuan Foods Co., Ltd.	13.1	29.0	1
New Hope	13.0	24.7	2
Wen’s Group Co., Ltd.	13.4	27.0	3
Tecon Bio Co., Ltd.	13.3	27.0	4
Shennong Group Co., Ltd.	13.5	28.0	5
Giant Star Agriculture & Animal Husbandry Co., Ltd.	13.5	28.5	6

Data Source: Announcements of Listed Companies, Industry Statistics[3][4]

Although New Hope’s PSY indicator (24.7 heads) is at a medium level among leading enterprises, through refined management and optimization of the swine breeding system,

[1].

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According to the September 2025 Investor Relations Activity Record, the company’s production indicators have been further optimized[3]:

Indicator	2024	H1 2025	Change
Average Number of Piglets per Litter	10.8 heads	11.2 heads	+0.4 heads
Average PSY	24.7 heads	25.4 heads	+0.7 heads
Average Weaning Cost	290 RMB/head	Approximately 260 RMB/head	-30 RMB/head
Average Fattening Survival Rate	92%	94%	+2 percentage points
Average Feed Conversion Ratio	2.67	2.66	-0.01

The company will continue to reduce breeding costs through the following measures:

1. Continue to Optimize the Proportion of Self-Raising
   : The proportion of self-raised fattening pigs to outsourced fattening pigs in stock at the end of the year will be approximately 35:65, and the proportion of self-raising has increased compared to the end of 2023[2]

2. Improve Breeding Indicators such as PSY
   : With the continuous improvement of the high-quality swine breeding system, PSY is expected to further increase[1]

3. Introduce High-Quality Breeding Stock
   : By introducing excellent swine genes, continuously improve reproductive performance[1]

4. Control Capital Expenditure
   : Further control capital expenditure to expand profit margins and reduce financial pressure[1]

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1. Swine breeding business has a significant effect on controlling breeding costs
   : By building a complete “Pyramid + Backcross” dual swine breeding system, New Hope increased its PSY by 14.9%, reduced weaning costs by 35.6%, and lowered fattening costs by 21.2% from 2021 to 2024.

2. Cost control effect is at the leading level in the industry
   : In 2024, the total fattening cost dropped to RMB 13.0 per kg, the gap with industry leader Muyuan Foods has gradually narrowed, and New Hope ranks among the top in cost performance among leading pig breeding enterprises.

3. Optimization of the swine breeding system brings continuous improvement momentum
   : The implementation of measures such as replacement of high-quality boars, integration of boar stations, and precision feeding management has laid a solid foundation for the improvement of production indicators of subsequent breeding groups.

• Need to continue to pay attention to the impact of
  live pig price trends
  on the company’s performance improvement[1]
• The effectiveness of breeding efficiency improvement and cost reduction still needs to be observed[1]
• The cost gap among leading pig breeding enterprises is small, and competition is still fierce

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[1] China Chengxin International Credit Rating Co., Ltd. (2025). 2025 Credit Rating Report on New Hope Group Co., Ltd. http://qxb-pdf-osscache.qixin.com/AnBaseinfo/4ac5108d64d2a73e79ce511b88279b9e.pdf

[2] New Hope Liuhe Co., Ltd. (2025). 2024 Annual Report Summary. https://file.finance.qq.com/finance/hs/pdf/2025/04/26/1223314073.PDF

[3] New Hope Liuhe Co., Ltd. (2025). Investor Relations Activity Record. https://www.thepaper.cn/newsDetail_forward_31530703

[4] Sina Finance. (2025). Latest Live Pig Costs of 13 Listed Pig Breeding Enterprises including Muyuan, Wen’s, and New Hope. https://finance.sina.com.cn/stock/relnews/cn/2025-01-06/doc-inecyvzz1931969.shtml