Analysis Report on the Cost Reduction Potential of Hog Farming for Juxing Agriculture & Animal Husbandry (SH603477)

I have collected sufficient information and now provide you with a detailed analysis report on the cost reduction potential of hog farming for Juxing Agriculture & Animal Husbandry.

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According to the latest disclosed data, the full cost of commercial fattened hogs of Juxing Agriculture & Animal Husbandry was approximately

(about RMB 12.2 per kg) in October 2025, which has phasedly achieved the company’s 2025 annual cost target (within RMB 6.5 per jin) [1][2]. According to a research report from Southwest Securities, the company’s commercial hog farming cost was approximately RMB 6.16 per jin in the first half of 2025 [1].

From the historical trend, the company’s cost has shown a steady downward trend:

• Cumulative hog sales reached 3.3936 million head from January to October 2025
• Cumulative annual hog sales reached 4.5809 million head in 2025, achieving sales revenue of RMB 7.363 billion [3]

Time Node	Cost Target	Actual/Expected
2025	≤ RMB 6.5 per jin	Phasedly achieved (reached RMB 6.1 per jin in October)
2025 Hog Slaughter Volume	Over 4 million head	Completed 4.5809 million head for the whole year

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The cost level of Juxing Agriculture & Animal Husbandry is in the

among listed hog enterprises in China:

Enterprise	Cost Level	Remarks
Muyuan Foods	RMB 5.65-5.75 per jin (RMB 11.3-11.5 per kg) [4][5]	Industry leader, optimal production lines reach RMB 5.25 per jin
Wen’s Foodstuffs Group	Approximately RMB 6.1 per jin [2]	Comparable to Juxing Agriculture & Animal Husbandry
Juxing Agriculture & Animal Husbandry	RMB 6.1 per jin	Has met the annual target
New Hope	Approximately RMB 6.45 per jin (RMB 12.9 per kg) [6]	Q3 2025 data
Industry Average	Approximately RMB 6.5 per jin and above	Scale farming cost was RMB 2,066 per head in August 2025

The cost gap between Juxing Agriculture & Animal Husbandry and Muyuan Foods, the industry leader, is about

(about RMB 1-2 per kg). This gap is mainly reflected in:

• Muyuan Foods adopts an
  integrated self-breeding and self-raising
  model, with strong full-process cost control capabilities
• Juxing Agriculture & Animal Husbandry adopts a combination of the light-asset “company + farmer” model and integrated independent breeding [1], leaving room for improvement in refined cost control

• Muyuan Foods’ hog slaughter volume reached 77.98 million head in 2025 [4], with significant scale effects
• Juxing Agriculture & Animal Husbandry’s hog slaughter volume was 4.58 million head in 2025, accounting for about 6% of Muyuan’s scale, resulting in higher unit fixed cost allocation

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According to industry data, the cost of hog farming mainly consists of the following components:

Cost Item	Proportion	Impact on Juxing Agriculture & Animal Husbandry
Feed Cost	60-70%	High (direct impact from feed price fluctuations)
Piglet Cost	12-15%	Medium-High
Labor Cost	5-8%	Medium
Depreciation/Facilities	6-10%	Medium
Veterinary Medicine/Disease Prevention	3-5%	Medium-Low
Management/Other	3-5%	Low

Feed is the largest cost item in hog farming, and the cost reduction potential mainly comes from:

• Formula Optimization
  : The company’s Ya’an Smart Hog Farm is used for feed formula technology research, which is expected to optimize feed conversion rate [1]
• Procurement Scale Advantage
  : With the growth of slaughter volume, the bargaining power of centralized feed procurement will increase
• Precision Nutrition
  : Digital farming realizes stage-specific precision feeding, reducing waste

: Expected to contribute a cost reduction of RMB 0.2-0.3 per jin

• Chongzhou Linxiu Boar Station Project
  : Invested RMB 41.57 million, with 300 breeding boars in stock, producing 480,000 doses of pig semen annually [3]
• Breed Upgrading
  : High-quality gene output can improve PSY (number of weaned piglets per sow per year)
• Target
  : Breeding farm capacity of over 180,000 head, breeding pig stock of over 280,000 head [1]

: Through gene optimization, expected to contribute a cost reduction of RMB 0.1-0.2 per jin

• Digital and Intelligent Projects
  : Invested RMB 220 million, of which RMB 170 million is used for intelligent construction [1][3]
• Target
  : Improve refined management level and operational efficiency
• Implementation Path
  : Automated feeding, environmental monitoring, remote management, etc.

: Automation and intelligence are expected to reduce labor costs by approximately RMB 0.1 per jin

• Stopping New Breeding Farm Projects
  : The company has stopped new breeding farm projects and eliminated inefficient breeding pig capacity [2]
• Optimize Asset Structure
  : Reduce capital expenditure and lower depreciation pressure
• Light-Asset Model
  : Continue to leverage the advantages of the “company + farmer” model

Cost Item	Current Cost Proportion	Potential Reduction Range	Contributed Cost Reduction
Feed Cost	Approximately 64%	3-5%	RMB 0.2-0.3 per jin
Piglet Cost	Approximately 13%	5-8%	RMB 0.1-0.2 per jin
Labor Cost	Approximately 8%	10-15%	RMB 0.1-0.15 per jin
Depreciation/Operations	Approximately 8%	5-10%	RMB 0.05-0.1 per jin
Other	Approximately 7%	5%	Approximately RMB 0.05 per jin
Total	100%	-	Approximately RMB 0.5-0.8 per jin

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Juxing Agriculture & Animal Husbandry is advancing three core projects that will support cost reduction [1][3]:

Project	Investment Amount	Function	Expected Effect
Chongzhou Linxiu Boar Station	RMB 41.57 million	High-quality gene output	Improve breeding pig efficiency
Ya’an Smart Hog Farm	RMB 54.13 million	Feed formula and disease prevention research	Technology testing platform
Digital and Intelligent Projects	RMB 220 million	Refined management	Comprehensive cost reduction and efficiency improvement

The company’s strategy has shifted from

to :

• Adjustment of Private Placement Plan
  : Reduced from RMB 1.75 billion to RMB 227 million, focusing on technology upgrading projects [1][3]
• Capacity Optimization
  : Stopped new breeding farm projects and eliminated inefficient capacity
• Focus on Main Business
  : The revenue proportion of hog farming business has increased from 60% in 2021 to 91.7% in 2024 [3]

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Risk Factor	Impact Level	Description
Sustained Low Hog Prices	High	Scale farming suffered a loss of RMB 57 per head in August 2025 [1]
Feed Price Fluctuations	Medium-High	Costs are affected by raw material prices such as corn and soybean meal
Slow Capacity Decommissioning	Medium	Stock of productive sows reached 40.38 million head, flat year-on-year [1]

• Financial Pressure
  : As of Q3 2025, the asset-liability ratio was 66.62%, the highest since listing [3]
• Profit Pressure
  : Non-recurring net profit in the first three quarters of 2025 decreased by 68.64% year-on-year [3]
• Scale Gap
  : Insufficient scale effects compared with leading enterprises

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Scenario	2026 Cost Forecast	Assumptions
Conservative Scenario	RMB 5.8-6.0 per jin	Low hog prices, slow capacity decommissioning
Neutral Scenario	RMB 5.5-5.8 per jin	Technology projects are smoothly implemented, efficiency improved
Optimistic Scenario	RMB 5.3-5.5 per jin	Full realization of intelligentization, significant efficiency improvement

1. Short-Term Cost Reduction Potential
   : It is feasible for Juxing Agriculture & Animal Husbandry to reduce its cost from the current RMB 6.1 per jin to
   RMB 5.5-5.8 per jin
   (about RMB 11-11.6 per kg), corresponding to a cost reduction potential of approximately
   RMB 0.3-0.6 per jin
   .

2. Mid-Term Target
   : If the digital and intelligent projects are fully implemented and breed upgrading takes effect, the cost is expected to drop to
   RMB 5.3-5.5 per jin
   in 2026-2027, approaching the optimal production line level of Muyuan Foods.

3. Key Driving Factors
   :
   • Technology output capacity of smart farming parks
   • Improvement of refined management through digital projects
   • Improvement of production efficiency through breeding pig gene optimization

4. Marginal Improvement Difficulty
   : The current cost level of RMB 6.1 per jin is already close to that of second-tier leaders such as Wen’s Foodstuffs Group. The marginal difficulty of further cost reduction increases, requiring technological breakthroughs and refined management.

5. Relative Competitiveness
   : Against the background of widespread industry losses, Juxing Agriculture & Animal Husbandry has achieved phased results in cost control, but there is still a gap with industry benchmarks such as Muyuan Foods. Long-term competitiveness enhancement requires continuous investment in technology and efficiency optimization.

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[1] Wenxuan Finance - “Private Placement Shrank by Over 80%, Juxing Agriculture & Animal Husbandry Bets on Endogenous Growth in the Industry Downturn” (https://www.163.com/dy/article/KJL9I9O705568VEX.html)

[2] Da Xumu - “Juxing Agriculture & Animal Husbandry: The Full Cost of Commercial Fattened Hogs Was Approximately RMB 6.1 per jin in October” (https://www.dxumu.com/yangzhu/yzqiye)

[3] StockStar - “Private Placement Amount Shrank by Over RMB 1.5 Billion: Juxing Agriculture & Animal Husbandry’s Performance Hit Hard by Falling Hog Prices” (https://news.qq.com/rain/a/20260116A05QYB00)

[4] Caifuhao - “The RMB 270 Billion Hog Farming ‘No.1’, Accelerating the Pace of Global Expansion” (https://caifuhao.eastmoney.com/news/20260112092041876062940)

[5] Sina Finance - “A-Share Hog Farming Leader, Expected to Earn Over RMB 15 Billion in 2025!” (https://finance.sina.com.cn/roll/2026-01-16/doc-inhhmxri4258852.shtml)

[6] Sina Finance - “Hog Prices Fell Below the Cost Line Again in September: When Will the Hog Industry Welcome a Turning Point After Four Consecutive Years of Losses?” (https://finance.sina.com.cn/stock/observe/2026-01-16/doc-inhhnzar2532289.shtml)