whydahblockchain| Hundreds of billions of giant Wen's shares lost a huge loss of 6.39 billion yuan last year. Will things be easier this year?

Interface News reporter | Yin Jingfei

As an agricultural and animal husbandry giant with a market capitalization of more than 100 billion yuan, Wen's shares (300498Whydahblockchain.SZ) the annual report for 2023 and the quarterly report for 2024 were disclosed on 28 April. In the aquaculture industry is not as expected in 2023, its performance also suffered a cold winter. The company suffered a huge loss of nearly 6.4 billion yuan in 2023, turning into a profit and loss compared with the same period last year. However, with the recovery of the industry, its loss area narrowed sharply in the first quarter of 2024.

The breeding track in 2023 is not as expected.

According to the announcement, Wen's shares had revenue of 89.902 billion yuan in 2023, an increase of 7.40 percent over the same period last year, and a net profit loss of 6.39 billion yuan, compared with a net profit of 5.289 billion yuan in the same period last year.

The company's operating income in the first quarter of 2024 was 21.842 billion yuan, an increase of 9.37% over the same period last year, and a net loss of 1.236 billion yuan, compared with a big loss of 2.749 billion yuan in the same period last year.

In 2023, the company sold 1.183 billion broilers (including hairy chickens, fresh products and cooked food), an increase of 9.51 percent over the same period last year, accounting for 9.1 percent of the total number of broilers (including white, yellow and small white-feathered broilers) in the country. 26.2622 million meat pigs (including hairy pigs and fresh products) were sold, an increase of 46.65 percent year on year, accounting for 3.6 percent of the total number of live pigs in the country.

Behind this is a big increase in the supply of agricultural and animal husbandry products in 2023.

According to the International Animal Husbandry Network, in 2023, 16.82 billion poultry were listed nationwide, an increase of 690 million, or 4.2 percent, over the previous year; poultry meat production was 25.63 million tons, an increase of 1.2 million tons, an increase of 4.9 percent.

The number of pigs in the pen keeps growing. According to the National Bureau of Statistics, there were 726.62 million live pigs in 2023, an increase of 26.68 million, or 3.8 percent, over the previous year; pork production was 57.94 million tons, an increase of 2.53 million tons, or 4.6 percent, the highest level since 2015.

In the context of insufficient consumption, the prices of agricultural and animal husbandry products have plummeted. To make matters worse, due to the turbulence of the international environment and the decline in raw material production and other factors, feed raw material prices have risen sharply in recent years, and the comprehensive cost of pig breeding has further increased significantly. According to the tracking data of Everbright Securities Research Institute, the spot prices of corn and soybean meal rose 64% and 44% respectively in 2023 compared with 2017.

According to Wen's shares, the overall level of producer prices of agricultural products across the country fell 2.3% from the previous year. By category, the prices of animal husbandry products decreased by 8.3% compared with the previous year; pig prices remained low, and pig prices dropped 14.0% compared with the same period last year.

Meat and poultry prices have continued to fall sharply since May 2023. According to the price tracking data of yellow feather chicken and white feather chicken by Everbright Securities Research Institute, the average price of yellow feather chicken, medium speed and native chicken in 2023 decreased by 14.50%, 13.86% and 14.55% respectively compared with 2022, and the average price of white feather chicken decreased by 2.40% compared with 2022.

The breeding track is not as expected, and the life of the listed companies on this track is not easy.

Pig enterprise Muyuan shares (002714.SZ) achieved operating income of 110.861 billion yuan in 2023, down 11% from the same period last year, with a net profit loss of 4.168 billion yuan, down 128% from the same period last year.

Pig enterprise New Wufeng (600975.SH) achieved revenue of 5.632 billion yuan in 2023, an increase of 12.52% over the same period last year, and its mother lost 1.203 billion yuan in net profit.

While pig enterprises suffer big losses, the performance of listed companies in broiler farming is not as expected one after another in 2023. Of the 8 listed companies in broiler breeding, 5 are in a state of loss.

For example, 300761.SZ has an operating income of 15.354 billion yuan in 2023, an increase of 6.28% over the same period last year; due to the drag on the market of its main products, it lost 437 million yuan in net profit.

The operating income of Minhe shares (002234.SZ) in 2023 was about 2.074 billion yuan, an increase of 28.96 percent over the same period last year; the net profit and loss attributed to shareholders of listed companies was about 386 million yuan.

Aquaculture industry picks up in 2024

Will the days of agricultural and animal husbandry enterprises pick up in 2024?

In terms of industry, the supply and demand of the industry may improve in 2024, and the market price may be better than that of the previous year as a whole.

Market participants pointed out that from the hatching of eggs laid by parents of breeder chickens to the breeding of commercial broilers, it generally takes 80-120 days for yellow-feathered broilers and 63-69 days for white-feathered broilers. Therefore, according to the change trend of the stock of parent breeder chickens at the end of last year, we can roughly speculate the change trend of the number of commercial broilers in the next year. According to statistics from the Poultry Branch of the China Animal Husbandry Association, the stock of parent breeder chickens has continued to decline since 2020, falling to the lowest level in the past four years by 2023 and 6.96 percent year-on-year in 2023. The stock of breeding chickens of parents of yellow-feathered chickens continues to be removed, and the supply of yellow-feathered broilers may decrease. In addition, withWhydahblockchainChina's economy and consumption recover in 2024, the supply and demand of yellow-feathered broilers may be improved in 2024, and the market price may recover.

From the calculation of the pregnancy of breeding pigs by parents to the breeding of commercial pigs on the market, the feeding process generally takes 10 months. From April of that year, we can roughly understand the changing trend of pig production in the following year. The end-of-term sow stock data released by the Ministry of Agriculture and Village show that the stock of fertile sows has been gradually declining since April 2023, and by January 2024, the stock of fertile sows has decreased by 1.81%, 6.87% compared with the same period last year, showing an accelerated downward trend. It is expected that the overall supply of the pig industry may decline in 2024, and the market situation may be expected to improve gradually.

Pig company 000735.SZ also reversed losses in the first quarter of 2024.

Luoniushan realized operating income of 1.008 billion yuan in the first quarter of 2024, down 27.35% from the same period last year. The net profit belonging to shareholders of listed companies was 110 million yuan, an increase of 128.81% over the same period last year. The net profit after deducting non-recurring gains and losses belonging to shareholders of listed companies was 129 million yuan, an increase of 273.58% over the same period last year. However, Luo Niushan said in the announcement that one of the reasons for the profit is to recover part of the equity disposal money of Nongxin financial institutions and turn back the corresponding credit impairment loss, involving 64.45 million yuan.

Lihua shares have reversed their losses in the first quarter of 2024.

On April 22, 2024, 300761.SZ released its first-quarter earnings report for 2024. The company achieved an operating income of 3.662 billion yuan, an increase of 7.34% over the same period last year, a net profit of 80.03 million yuan, a turnround from losses to profits over the same period last year, and a net cash flow generated by operating activities of 218 million yuan, a year-on-year increase of 3.15%, with an asset-liability ratio of 43.93%.