Muyuan Foods adopts multiple measures to strengthen cyclical resilience, continuously reduce costs, and build a performance moat

On April 1, China’s hog futures flagship contract bottomed out to a new low of 9,605 yuan per ton. In the spot market, the average ex-farm selling price of hogs has already fallen below 10 yuan per kilogram, and the industry has entered the difficult stage of a cyclical bottoming out.

Although industry conditions have remained sluggish, as a leading hog farming company, Muyuan Co., Ltd. (002714) still delivered a strong full-year performance in its recently released 2025 annual report, reporting full-year attributable net profit of over 15 billion yuan, showing the capability of large-scale enterprises to respond to periodic fluctuations in industry cycles. At the company’s recent earnings briefing, it also revealed a series of measures for 2026—continuing cost reductions, optimizing its financials, expanding into markets, and other steps—to fend off risks from downside pressure during the cyclical downturn stage, sending confidence in steady development to the capital market.

Continuing cost reductions build a performance “moat”

In 2025, Muyuan Co., Ltd. achieved operating revenue of 144.15B yuan, up 4.49%. Against the backdrop of hog prices fluctuating at low levels, the company still recorded attributable net profit of 15.49B yuan.

Low cost is undoubtedly the “moat” that helps the current industry leader stabilize its performance.

At the earnings briefing held recently, executives from Muyuan Co., Ltd. said that thanks to the company’s ongoing innovative R&D and management empowerment, in 2025 all key production indicators improved steadily. The full cost of hog farming has been declining quarter by quarter, and the full-year average cost has fallen to around 12 yuan per kilogram, with a year-on-year cost reduction of 2 yuan per kilogram.

“Lower prices for feed raw materials contributed about one-third to the cost reduction, and the other two-thirds came from internal potential—including improving production efficiency, raising capacity utilization to dilute fixed costs, and implementing more refined control over various expenses.” Qin Jun, the company’s secretary to the board, said. The company is confident it can further reduce costs in 2026. Even considering that feed raw material prices may be slightly higher than in 2025, the company hopes to bring the full-year average cost down to below 11.5 yuan per kilogram.

As is understood, in 2025 Muyuan Co., Ltd. made preparations in advance for winter African swine fever and other disease prevention and control, including hardware readiness and personnel training, so that overall production conditions remained stable—laying the groundwork for the subsequent cost decline. Meanwhile, since last year, the company has continued to invest in R&D in breeding pigs, and strengthened management of replacement gilts to effectively improve breeding stock performance and the health level of its pig herd, which will gradually be reflected in this year’s hogs sold at the ex-farm stage costs. In addition, the company will continuously promote and replicate excellent management experience from individual pig barns within the organization, improve the operating performance of underperforming barns, and drive an overall reduction in costs through stronger internal management.

Regarding the path to achieve further cost reductions in 2026, the company also explained in a recently disclosed announcement: first, it will keep implementing the rollout of disease prevention and control technologies; second, it will optimize incentive schemes for employees and management cadres to maintain the cohesion of the internal core team; third, it will keep increasing investment in breeding pigs; and fourth, it will strengthen the R&D and application of intelligent technologies, transforming work that previously relied on experience-based judgment into algorithm models with clear logic and a basis to follow—so that new employees can quickly master core technologies and improve personnel efficiency.

Optimizing the financial structure to withstand cyclical shocks

Given the current situation of the hog cycle running at its bottom, a stable financial structure and solid cash flow reserves are essential “weights” that enable enterprises to get through the winter and then ride the next upturn in the cycle.

Muyuan Co., Ltd.’s net cash flow from operating activities in 2025 reached 30.06B yuan. Cash flow was abundant and stable. By the end of 2025, the company’s asset-liability ratio was 54.15%, down 4.53 percentage points from the beginning of the year. The total liabilities at year-end were down 17.1 billion yuan from the beginning of the year, exceeding the full-year target for reducing liabilities.

“In 2025, the company’s capital expenditures were 9.53B yuan (in 2024, 12.381 billion yuan). These mainly include payments for past project funds, repairs and upgrades and new equipment modifications, and investments in some added capacity. In 2026, the company’s capital expenditures are expected to be controlled within 10 billion yuan.” Qin Jun disclosed.

Specifically, compared with last year, the company’s capital expenditure plan on the slaughtering end was increased. The company’s slaughtered meat business was profitable last year and is still maintaining a good development momentum. The company will increase investment in the slaughtered meat business, raise the self-slaughter ratio, and carry out full-value management through linked management between the breeding side and slaughtering side, creating room for value-added benefits.

In an announcement recently disclosed, Muyuan Co., Ltd. frankly said that under current market conditions, the company will adopt a more prudent operating strategy, with cash flow safety and continuous operation as the top priority, ensuring the company has sufficient financial resilience during volatile market conditions and will not rush to reduce liabilities.

In addition, in response to current market conditions, the company has made ample preparations on both the production side and the financial side. First, it is confident in the cost declines this year, and will build its ability to get through the cycle by continuously reducing costs. Second, over the past two years it has kept optimizing its financial structure and reducing the scale of liabilities, maintaining stable cooperation relationships with banks and ensuring ample credit line reserves. The recent issuance results of debt instruments in public markets have also been strong, indicating investors’ recognition of the company’s financial soundness and cash flow safety. In addition, funds raised from its listing in Hong Kong also provide some supplementation to liquidity.

Expanding overseas markets to open up growth space

Faced with the sluggish hog market in China, listed companies have begun to step up efforts in overseas markets, seeking new growth opportunities for performance.

As early as September 2024, Muyuan Co., Ltd. signed a strategic cooperation agreement with BAF Vietnam Agricultural Joint Stock Company. The plan is to provide solutions and technical services to the BAF company in Vietnam, including hog farm design and construction, biosecurity, environmental protection, and to advance the application of artificial intelligence in the hog farming industry chain.

In March 2025, the cooperation was further deepened. According to the signed terms, BAF and Muyuan Co., Ltd. will cooperate to construct and operate high-tech multi-story pig farms, with an accompanying feed mill.

In February 2026, Muyuan Co., Ltd. successfully listed on the Hong Kong Stock Exchange, further opening up space to leverage global capital to empower industrial development.

“The company will take Southeast Asia as its first step in going global. On the one hand, Southeast Asia’s pork consumption market has broad growth potential; on the other hand, there is urgent local demand in African swine fever prevention and control, pigsty renovation, and biosecurity system development—highly aligned with the company’s technology advantages. Starting with Vietnam as the initial station, in the early stage the company will enter the local market using a light-asset model: it will sell smart equipment to partners and provide technical services. We achieved good results and this has strengthened the company’s confidence in going global,” Qin Jun said.

In a recent announcement, Muyuan Co., Ltd. also publicly stated that in 2026, its overseas business development goal is to implement breeding and farming capacity in Vietnam, connect the technical path for development locally, and set up a localized team. However, it expects the overseas business’s demand for capital expenditures to remain at a relatively low level. Of the funds raised from its Hong Kong listing, 60% will be used to expand overseas business. Going forward, it will make full use of the capital depending on business development.

The company also clearly stated that overseas business will be a key focus of the company’s long-term work. In addition to Vietnam, it will explore more markets and various cooperation models to turn the pigsty designs, nutrition R&D, disease prevention and control, smart equipment R&D and application, environmental management and related technologies that have already been fully validated domestically into complete, replicable technology solutions, and implement them in more countries and regions—creating tangible value for local hog farming industries and promoting the development of global hog farming.

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