Muyuan Foods Co., Ltd. released its 2025 annual report on the evening of March 27, 2026. Despite the hog industry entering its sixth consecutive bear market, with half of the listed pig farming companies reporting losses, Muyuan stood out as the only enterprise maintaining a profit exceeding 10 billion yuan, achieving a historic sales volume of 77.98 million hogs and a net profit of 15.487 billion yuan. However, a 13.39% year-on-year decline in net profit and an over 80% quarter-on-quarter drop in fourth-quarter earnings highlighted the harsh reality that even industry leaders struggle to remain unscathed during cyclical downturns.
Balancing scale advantages from counter-cyclical expansion and optimized financial structures against profit compression from price pressures and rapidly cooling quarterly performance, Muyuan finds itself at a crossroads, embodying the industry narrative of "strength intensifying yet unable to withstand the cold."
The company's full-year revenue for 2025 grew by 4.49%, demonstrating resilience against market cycles. Nevertheless, net profit attributable to shareholders fell by 13.39%, with gross profit margin, net profit margin, and return on equity all declining, as sustained low hog prices squeezed profitability. Compared to peers like Wens Foodstuff Group and New Hope Group, which reported significant losses, Muyuan maintained profitability with the industry's lowest full cost of 12 yuan per kilogram. Although profit per head plummeted by 183 yuan from 2024 to 31 yuan, it remained a rare positive in the sector.
This achievement stemmed from Muyuan's rigorous cost-cutting measures: a 2 yuan per kilogram reduction in breeding costs, driven by effective implementation across breeding, intelligent systems, and disease prevention, widening its cost advantage. A major highlight in the report was the expansion of the industrial chain. In 2025, Muyuan's slaughtering and meat business achieved its first annual profit, processing 28.663 million hogs—a 128.9% year-on-year increase—and generating 45.228 billion yuan in revenue, up 86.32% year-on-year. With a capacity utilization rate of 98.8%, nearing full production, the synergy between breeding and slaughtering was fully realized.
The profitability of the slaughtering business holds strategic significance for Muyuan, marking a transition from a cyclical breeding enterprise to an integrated food company, mitigating profit fluctuations caused by hog cycle volatility. This segment has emerged as a second growth driver. Meanwhile, intelligent technologies are playing a crucial role in large-scale farming. At modern facilities in Henan and Shandong,轨道巡检机器人 operate 24/7, using AI audio models to detect coughing in pigs, providing 48-hour early warnings for diseases and reducing transmission rates by 60%.
Financially, Muyuan also delivered commendable results. By the end of 2025, its asset-liability ratio dropped to 54.15%, a decrease of 4.53 percentage points from the start of the year, with total liabilities reduced by 17.1 billion yuan. Net cash flow from operating activities reached 30.056 billion yuan. The self-breeding model, characterized by high non-cash costs, ensured stable cash flow despite low hog prices, building a defensive barrier of "profit under pressure but cash flow secure."
Beneath the impressive figures, underlying concerns are emerging. The most striking data in the 2025 report was the sharp decline in fourth-quarter performance: net profit attributable to shareholders plummeted over 80% quarter-on-quarter to just 708 million yuan. The report indicated that the accounts receivable-to-revenue ratio for the past three annual reports was 0.15%, 0.17%, and 0.41%, respectively, showing a continuous increase and suggesting slower fund recovery. Additionally, prepaid accounts grew by 33.56% compared to the beginning of the period, outpacing the 8.36% increase in operating costs. The ratio of prepaid accounts to current assets continued to rise, reflecting increased pressure on capital occupation.
In 2024, Muyuan revised its shareholder dividend policy, raising the minimum annual cash dividend payout from 20% to 40% of distributable profits. For 2025, total dividends amounted to 7.438 billion yuan, accounting for 48.03% of net profit, significantly exceeding the promised 40% threshold. However, while prioritizing shareholder returns, conflicts with internal employees intensified. According to Tianyancha, the company faced numerous labor disputes across multiple regions in 2025. The contrast between hefty dividends and the fourth-quarter profit crash raises market concerns about whether profit distribution during a cyclical low could impact future risk resilience.
With commercial hog sales reaching 77.981 million heads in 2025, a 26% year-on-year surge, and market share exceeding 10%, Muyuan solidified its position as industry leader. This scale is unprecedented in China's pig farming history, marking a milestone in expansion. Yet, this epic growth did not translate into proportional profit increases, instead exacerbating industry-wide involution.
The core issue behind profit decline is the continuous collapse in hog prices. According to Ministry of Agriculture and Rural Affairs data, the average live hog price for 2025 was 14.44 yuan per kilogram, down 9.2% year-on-year and the lowest since 2019. Muyuan's profit per head fell 85.5% to 31 yuan from 214 yuan in 2024. Incremental profits from additional sales were entirely offset by the sharp drop in per-head earnings, leading to a 13.39% decline in total profit—a classic case of "increased output without increased income."
This divergence between volume and price stems from persistently low hog prices and rigid cost pressures. Although prices of key feed ingredients like corn and soybean meal declined in 2025, hog prices fell more sharply, severely compressing industry-wide profit margins. Throughout 2025, the national inventory of breeding sows remained above the reasonable level of 39 million, ending the year at 39.61 million, still indicating oversupply. National hog sales hit a record 720 million heads, with over 20 listed pig companies contributing 205 million heads, or 29%, concentrating supply and sustaining price pressure.
Amid this backdrop, Muyuan leveraged its cost advantage to capture more market share. In 2025, small-scale farmers exited rapidly; ministry data estimates their number fell to 16.72 million by year-end, down 38.2% from 27.06 million at the end of 2018. Even leading firms like New Hope and Wens issued loss warnings. As Muyuan accelerated supply, it created a prisoner's dilemma: squeezing out smaller competitors while itself shifting from "high profits" to "thin profits," plunging the entire industry into a collective winter of losses.
Entering 2026, the industry's challenges—low prices, overcapacity, and intense competition—persist. However, with its deep moat, Muyuan is quietly positioning for a cyclical rebound. At the cycle's bottom, "increased output without increased income" is inevitable for all pig farmers. Through extreme cost control and prudent financial management, Muyuan has delayed this fate and minimized losses.
At the start of 2026, Muyuan faces its toughest moment yet is closest to dawn. The company has outlined its strategy: relentless cost reduction remains core, aiming for a target of 11.5 yuan per kilogram by sharing best practices, optimizing feed formulas, and deepening intelligent applications. It plans to enhance its food business, targeting 38 million heads slaughtered in 2026 and increasing the proportion of high-value-added products to boost value across the chain.
Concurrently, Muyuan is accelerating overseas expansion, with projects in Vietnam underway and initial capital expenditure capped under 1 billion yuan, steadily advancing global布局 to tap new markets. On February 6, 2026, the company completed its Hong Kong IPO, raising 10.684 billion Hong Kong dollars and entering a new phase of internationalization.
The industry is currently in its darkest hour. For Muyuan, this presents both a challenge and an opportunity; each cyclical trough offers a golden window for leaders to expand market share and reap industry benefits. However, this process inevitably involves the blood and tears of competitors.
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