Muyuan forecasts a first-half loss of 5.7 to 6.7 billion yuan; cost reduction and slaughtering business provide a buffer.

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The price of live pigs continues to remain at a low level, and leading pig breeder Muyuan Foods experienced a temporary loss in the first half of the year.

On July 11, Muyuan Foods released its 2026 semi-annual performance forecast. The company expects a net loss attributable to shareholders of 5.7 billion to 6.7 billion yuan in the first half of the year, compared to a profit of 10.53 billion yuan in the same period last year.

From an operational perspective, pig prices remain the core variable affecting Muyuan’s performance. Since the start of this year, Muyuan’s average selling price for commercial pigs has remained at a low level, hovering around 10 yuan per kilogram for most of the period from March to June.

However, amid industry-wide pressure, Muyuan’s cost improvements are still ongoing.

The company disclosed that as of May this year, the total cost of pig farming had fallen to 11.6 yuan per kilogram, further approaching the annual target of reducing costs to below 11.5 yuan per kilogram. The cost at the company’s best farms has been stably controlled under 11 yuan per kilogram, with the top-performing farms below 10.5 yuan per kilogram.

Muyuan Foods President Gao Tang stated that the company set a target in 2022 to reduce the cost per pig by 600 yuan; as of the end of May this year, 323 yuan had been achieved, leaving a further 277 yuan in cost improvement potential.

Next, the company plans to further standardize and replicate the best farm practices in health management, feed efficiency, and production performance to more farms through technological innovation and management optimization.

Muyuan’s current operational focus has shifted towards improving the operational quality of existing capacity. For large-scale breeding enterprises, slight improvements in feed-to-meat ratio, survival rate, daily weight gain, and disease prevention can translate into significant cost changes when amplified over tens of millions of pigs marketed.

Besides its main breeding business, the slaughter and meat business has also become an important supplement for Muyuan during the industry’s low cycle.

Muyuan began to layout its slaughter and meat business in 2019 and achieved its first annual profit in 2025. According to company disclosure, the slaughter and meat sector was profitable in both the first and second quarters of 2026.

Qin Muyuan, CEO of Muyuan Meat, revealed that the company’s self-slaughter rate was 36.75% in 2025, indicating significant room for growth and future profitability in the slaughter business.

Moving forward, Muyuan will continue to optimize sales channels and product structure, increase the proportion of cut products, and promote further growth in slaughter scale and profitability.

At this stage, the significance of the slaughter and meat business for Muyuan mainly lies in extending the industrial chain and buffering fluctuations in the breeding cycle.

Since the breeding business still dominates overall company profits, the slaughter sector is not enough to fully offset pressures from low pig prices. However, continued profitability indicates that the slaughter capacity built previously is gradually being released.

Improvements in the financial structure have also provided Muyuan with a safety cushion to cope with the industry downturn.

As of the end of the first quarter of 2026, Muyuan's asset-liability ratio was 50.73%, down 3.42 percentage points from the beginning of the year; total liabilities decreased by over 3.1 billion yuan compared with the beginning of the year, and the balance of monetary capital reached 14.27 billion yuan.

The company stated that it has basically completed the large-scale construction of pig farming capacity, and capital expenditure in the domestic breeding business will gradually decrease in the future, while additional capital expenditure requirements for the slaughter and meat business will also be relatively limited.

From the industry perspective, the current live pig market is still at the bottom of the cycle, but marginal changes have occurred. As continuous losses in the industry drive a gradual reduction in fertile sow inventory, previous capacity reductions are increasingly being transmitted to the commercial pig supply side.

However, whether the rebound in pig prices can be sustained depends on the extent of subsequent capacity reduction, the pace of pig marketings, and the recovery of end consumer demand.

From a longer-term perspective, progress in cost reduction, slaughter business profitability, and financial structure optimization will determine Muyuan’s profit flexibility in the next industry recovery cycle.

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