CMSC has released a research report maintaining its "Strongly Recommend" investment rating for DEKON AGR (02419). Integrating changes in national policies regulating hog production capacity and the bank's forecasts for hog and poultry prices, the company's projected fair value adjusted net profits for 2025-2027 are estimated at 1.44/3.09/5.08 billion yuan, with EPS of 3.7/8.0/13.1 yuan, respectively. DEKON AGR's livestock and poultry costs in 2025 are at an industry-leading level; its yellow-feathered chicken business turned profitable in Q4 and became the primary profit contributor; and its slaughtering and meat products segment showed significant marginal improvement in the second half of the year, with overall performance meeting expectations. CMSC's main viewpoints are as follows.
DEKON AGR's livestock and poultry operations demonstrate a clear leading cost advantage, and its yellow-feathered chicken business returned to profitability in Q4. The company is projected to achieve a pre-adjustment net profit of 1.3-1.5 billion yuan in 2025, with an estimated 27-227 million yuan for the second half of the year. Despite low livestock and poultry prices in H2, the company actively advanced cost reduction and efficiency improvements, resulting in a significant excess advantage. Breaking down by business segment: 1) Hogs: The company slaughtered 10.83 million hogs in 2025, a year-on-year increase of 23%, with 5.71 million head slaughtered in H2; approximately 3.1674 million head were slaughtered in Q4, with an average selling price of about 11.7 yuan/kg, and the annual profit per head also ranked at the industry's leading level. 2) Yellow-feathered chickens: The company slaughtered 88.14 million broilers in 2025, up 0.02% year-on-year, with 45.43 million yellow-feathered chickens slaughtered in H2; approximately 21.65 million were slaughtered in Q4, with an average selling price of about 15.33 yuan/kg. Estimated profit per bird in Q4 was 2-3 yuan, indicating a significant improvement in the poultry segment during Q4. Furthermore, the slaughtering and food business is still in a strategic investment phase. Overall, the company's livestock and poultry breeding business holds a clear leading advantage, and its profit performance is in line with expectations.
High-quality pig enterprises are focusing on cost optimization, while the yellow-feathered chicken industry is experiencing an upward trend in prosperity. 1) Hogs: Policy-driven production capacity control, combined with prolonged industry losses, may accelerate the reduction of the sow herd and further raise expectations for future hog prices. Currently, there is significant variance in industry costs; the value-optimization initiatives led by top enterprises are likely to be a multi-year process, and companies with cost advantages are still expected to capture excess profits. 2) Poultry: The current inventory of parent-generation breeding hens has fallen to historically low levels, and this supply contraction lays the foundation for subsequent price increases; the yellow-feathered chicken industry has entered an upward prosperity cycle since Q4 2025. DEKON AGR has long been deeply engaged in the hog and yellow-feathered chicken breeding industries, and its accumulated breeding advantages over the years have enabled its livestock and poultry costs to lead the industry. 1) Hogs: The company has long been committed to cost optimization, and its current full cost may have been reduced to approximately 12 yuan/kg, firmly placing it in the industry's first tier; further reduction potential is expected. The company plans to prioritize the development of its No. 2 family farm model, following policy guidance, partnering with farmers, actively responding to national calls, and demonstrating the responsibility of a leading pig enterprise. 2) Yellow-feathered chickens: DEKON AGR's yellow-feathered chicken business ranks third nationally, with high-end varieties, particularly the distinctive "Bearded Chicken," having a strong historical reputation and excellent profitability.
Risk warnings include livestock and poultry prices rising less than expected; natural disaster risks; risks of rising feed raw material costs; animal disease risks; and food safety risks.
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