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Shares of a leading Chinese pig farming company surged after reporting a nearly 13-fold increase in profits for the first half of the year, mainly driven by effective cost reductions.
The company’s stock closed up 5.7% at CNY50.21 (around $7) per share in Shenzhen today, marking a 31% rise so far this year.
Revenue for the six-month period ending June 30 grew by 35%, reaching approximately CNY76.463 billion, while net profit skyrocketed by 1,170% to CNY10.53 billion (roughly $1.46 billion), according to a recent trading statement.
Recent government policies introduced broad controls on hog breeding to help stabilize supply and demand and maintain steady prices. As a result, the company is reducing its breeding sow herd, which is expected to decrease to about 3.3 million by the end of the year.
Additionally, the company has formed a dedicated international business team to explore overseas markets, identifying promising opportunities based on recent research. It has already established a profitable partnership with a large farming enterprise in Vietnam.
The company plans to tailor its international growth strategies to local market conditions, including adopting an asset-light approach, expanding production capacity abroad, and pursuing strategic mergers and acquisitions.
Since 2021, pork prices have declined, causing significant losses for hog breeders. The company’s earnings plummeted 75% that year to roughly CNY6.904 billion ($960 million).
Prices recovered in the third quarter of 2022, enabling the firm to report a profit of CNY13.3 billion, but prices fell again the following year, resulting in a CNY4.3 billion loss. Despite these fluctuations, last year’s strong cost controls helped the company achieve a net profit of CNY17.9 billion.
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