2024-07-16
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Produced by | MiaoTou APP
Author | Ding Ping
Header image | Visual China
Superstar Agriculture and Animal Husbandry may not be as glamorous as it appears.
As a pig farming stock, Juxing Agriculture and Animal Husbandry once had an independent market trend during the downward phase of the pig cycle. From August 2021 to March 2024, Juxing Agriculture and Animal Husbandry's stock price rose by more than 270%, far outperforming the pig farming sector.
This achievement is mainly attributed to its industry-leading low breeding costs - the full cost in 2023 is only 15.9 yuan/kg, as well as the rapid growth in live pig output and its low asset-liability ratio. The market even regards Superstar Agriculture and Animal Husbandry as a "small Muyuan", expecting it to replicate Muyuan's successful model in the pig breeding field.
Even so, doubts about Superstar Agriculture and Animal Husbandry's finances continue to linger in the stock market.
(Photo source: Eastmoney)
This is because such an excellent company never discloses its monthly operating data (which is rare among pig companies), and its business is diversified. In addition to pig farming, it also has leather and feed businesses, all of which can provide space for financial operations.
In the capital market, the main point of doubt for being bearish on Superstar Farmers and Herders lies here.
Based on these doubts, we carefully read the financial reports of Juxing Agriculture and Animal Husbandry for the past two years and found some "unpleasant" clues. These clues point to the core "advantage" of Juxing Agriculture and Animal Husbandry that is most praised by the outside world - the pig breeding cost is lower than that of its peers.
Today, let us take everyone to uncover the financial mystery of Superstar Agriculture and Animal Husbandry.
So, what secrets did we discover about Superstar Agriculture and Animal Husbandry?
Through the 2023 financial report of Superstar Agriculture and Animal Husbandry,We found that the data on feed costs and pig output did not match.
This is very strange.
In 2023, Juxing Agriculture and Animal Husbandry will slaughter 2.67 million pigs, including 1.78 million fattening pigs, with an average annual sow inventory of 110,000 sows; the disclosed feed cost of the pig breeding sector is 2.397 billion yuan.
According to actual breeding experience, the average annual feed consumption of each sow is about 1.1 tons, while the annual feed consumption of each fattening pig is 0.314 tons.
[Note: According to the 2.6 feed-to-meat ratio and 120 kg average slaughter weight disclosed by Juxing Agriculture and Animal Husbandry, assuming a 98% survival rate in the fattening stage, of which 2% of the average weight is 50 kg, and the feed-to-meat ratio is 2.0, then the average feed consumption per slaughtered pig after amortization of the damaged part is: (120*2.6*98+50*2*2)/98=314 kg. A 98% fattening survival rate and a 2.6 feed-to-meat ratio throughout the process are already the most efficient in the pig farming industry. We see that 3.2 fattening pigs can be slaughtered with 1 ton of feed].
Based on the above data, we estimate that the total annual feed consumption of Juxing Agriculture and Animal Husbandry should be 680,000 tons, including 121,000 tons of sow feed and 559,000 tons of fattening pig feed. According to the company's disclosed feed cost of 2.397 billion yuan, we calculate that its average feed cost in 2023 is about 3,525 yuan/ton. Using the same deduction method, we calculate that the average feed cost of Juxing Agriculture and Animal Husbandry's pig farming sector in 2022 is 3,690 yuan/ton.
(Data source: company announcement)
However, the prices of pig feed for export in 2022 and 2023 disclosed by Juxing Agriculture and Animal Husbandry in its financial report were RMB 4,298.46/ton and RMB 4,185.09/ton, respectively. Based on the gross profit margins of 10.76% and 10.04%, it can be inferred that the cost price of export feed of Juxing Agriculture and Animal Husbandry in 2022 and 2023 was RMB 3,836/ton and RMB 3,800/ton, respectively.
According to Wind data, the retail price of fattening pig feed in Chongqing in 2023 is 4,250 yuan/ton, which is basically consistent with the export feed price disclosed by Juxing Agriculture and Animal Husbandry in its financial report - the export feed prices of Juxing Agriculture and Animal Husbandry in 2022 and 2023 are 4,683 yuan/ton and 4,728 yuan/ton respectively, and the corresponding cost prices are 4,298 yuan/ton and 4,356 yuan/ton respectively.
Obviously, there are differences in the average feed cost price and export feed cost price of the pig farming sector of Superstar Agriculture and Animal Husbandry in 2022 and 2023, which differ by 146 yuan/ton and 275 yuan/ton respectively.
What is the secret behind this mismatched data?
If there is no problem with the export feed costs disclosed by Superstar Agriculture and Animal Husbandry, we have constructed two assumptions based on the 2023 data:
First, Juxing Agriculture and Animal Husbandry deliberately concealed part of the feed costs of its pig breeding sector; second, the feed costs disclosed by Juxing Agriculture and Animal Husbandry could not support the output of 1.78 million fat pigs, and its pig breeding business revenue was inflated.
Let’s look at these two assumptions separately. First, if the former question is true, how much cost has Superstar Agriculture and Animal Husbandry hidden?
According to the announcement, Juxing Agriculture and Animal Husbandry purchased 470,000 tons of major feed raw materials (soybean meal, corn, wheat and bran) in 2023, with a total cost of 1.533 billion yuan; the proportion of small feeds (such as amino acids) in the complete feed for fattening pigs is 5%, which requires about 25,000 tons. At a price of 11,000 yuan/ton, this part of the cost is about 275 million yuan.
(Data source: company announcement)
Further analysis shows that the total amount of feed raw materials in 2023 can be processed into 495,000 tons (47/0.95) of fattening feed, with a total raw material cost of 1.808 billion yuan. Combined with a processing fee of 100 yuan per ton, the annual feed cost totals 1.858 billion yuan, and the corresponding average cost is 3,752 yuan/ton.
As mentioned above,The feed cost disclosed by Juxing Agriculture and Animal Husbandry is 2.397 billion yuan. In order to achieve self-consistency between the output caliber and feed cost disclosed in the financial statements, Juxing Agriculture and Animal Husbandry also needs to use 539,000 (2.397-1.858) million yuan to purchase 64,000 (559,000-475,000) tons of fattening feed and 121,000 tons of sow feed.
However, according to the cost of self-processed fattening feed (3,752 yuan/ton) and sow feed (4,500 yuan/ton), the total cost of this part of external procurement is 785 million yuan, while the above calculation is 539 million yuan.There is a funding gap of 246 million yuan。
If a more conservative price estimate is used - 4,000 yuan/ton for fattening pig feed and 6,000 yuan/ton for sow feed, the total expenditure will reach 982 million yuan, and the gap will expand to 443 million yuan.
It is obvious thatThe overall funding gap of Juxing Agriculture and Animal Husbandry is 200-500 million yuan。
As for how Superstar Agriculture and Animal Husbandry adjusted its financial funding gap, we can analyze in depth the operating conditions of its main business segments.
The business of Juxing Agriculture and Animal Husbandry is mainly divided into three major sectors: breeding, feed (export) and leather:
Leather business: In 2023, the revenue will be 86 million yuan, which is significantly smaller than the previous revenue of 300-500 million yuan; the operating cost is 87 million yuan. Feed business: In 2023, the revenue will be 457 million yuan, which has been relatively strong in the past three years, and the operating cost will be 422 million yuan; Breeding business: In 2023, the broiler segment will achieve revenue of about 26 million yuan and the cost will be 40 million yuan; the pig farming segment will have revenue of 3.463 billion yuan and the cost will be 3.5 billion yuan.
(Data source: Eastmoney)
In the feed business, there are several key issues that require clear answers from Superstar Agriculture and Animal Husbandry:
first,The imbalance between export and self-use: Superstar Agriculture and Animal Husbandry needs to purchase 185,000 tons of feed (680,000 tons of demand minus 495,000 tons of self-production), but at the same time claims that the revenue from exported feed reached 450 million yuan, corresponding to about 100,000 to 120,000 tons of feed. Is there any unreasonable financial operation here?
Secondly,Mismatch between purchases and sales: The purchase scale of major feed raw materials of Juxing Agriculture and Animal Husbandry in 2023 is 470,000 tons, but the sales volume of feed reaches 685,800 tons, with a difference of 246,000 tons. What is the reason for this difference? Is it that the feed raw materials are purchased but not disclosed in the financial statements, or are the purchased raw materials other than corn, soybean meal and wheat bran listed in the company's financial statements? Or is the sales volume of export feed inflated?
at last,How great is the pressure of the competitive environment?: In Sichuan and other regions, the concentration of large-scale breeding is increasing, and the market share of traditional feed manufacturers such as New Hope and Tieqi Lishi is also growing. In this market environment, how can the feed business of Superstar Agriculture and Animal Husbandry remain strong?
If Superstar Agriculture and Animal Husbandry really concealed the feed costs of 200-500 million yuan in the pig farming sector,It may transfer this part of the cost to the feed business, and at the same time inflate the feed business through related-party transactions to achieve financial balance., which explains the above question.
Of course, there is another hypothetical situation, that is, the feed cost of 2.397 billion yuan disclosed by Superstar Agriculture and Animal Husbandry is not enough to support the output of 1.78 million fat pigs, which means that the number of fat pigs slaughtered may be exaggerated.
As mentioned above, Superstar Agriculture and Animal Husbandry spent 1.858 billion yuan on raw material procurement to produce about 495,000 tons of feed. According to the company's announcement, the pig farming sector spent 2.397 billion yuan on feed costs.
After deducting the cost of producing feed, the remaining 539 million yuan was used to purchase feed from outside. Based on the cost of sow feed of approximately 4,500-5,000 yuan per ton, it is estimated that Superstar Agriculture and Animal Husbandry purchased approximately 110,000 to 120,000 tons of sow feed from outside, which is just enough to feed 110,000 breeding sows.
Assuming that each fattening pig consumes 0.314 tons of feed per year,495,000 tons of feed can only support the production of 1.59 million fattening pigs.。
In fact,The report of Superstar Agriculture and Animal Husbandry shows that 1.78 million fattening pigs were sold, of which the difference is 200,000. We think that it may be replaced by piglets.. Assuming a fattening survival rate of 90%, the actual number of piglets needs to reach 1.98 million. According to the piglet sales of 870,000 disclosed in the Superstar Agriculture and Animal Husbandry report, it can be inferred that the actual piglet production in 2023 may be as high as 2.85 million, which means that each sow can provide 26 piglets per year, that is, the PSY (the number of weaned piglets that each sow can provide per year) is 26, which is basically consistent with the 27 disclosed in the Superstar Agriculture and Animal Husbandry announcement.
If 200,000 piglets were sold at the market price of fattening pigs, the difference would be 277 million yuan (350 yuan per piglet, 1,733 yuan per fattening pig) [(1,733 yuan - 350 yuan) x 200,000], which coincides exactly with the funding gap above. Does this mean that the difference between feed costs and output data of Superstar Agriculture and Animal Husbandry was deliberately adjusted by it?
in the case of，Superstar Agriculture and Animal Husbandry may be transferring income from the leather sector to the pig breeding sector。
The revenue of Juxing Agriculture and Animal Husbandry's leather business has been declining year by year in recent years, from 547 million yuan in 2019 to 86 million yuan in 2023.
Whether it is the shrinking scale of leather business revenue, the difference between fat pigs and piglets sold, or even the mismatch between feed raw materials and output in the company's breeding business, the gap is between 200 million and 500 million yuan. Is this a coincidence?？
A possible scenario is that the number of fattened pigs slaughtered by Juxing Agriculture and Animal Husbandry was inflated, and the difference in income between piglets and fattening pigs was allocated to the leather business. At the same time, the cost of the leather business was transferred to the cost of the feed business, and the income from the feed business was inflated through related transactions. In other words, the income from both the pig breeding business and the feed business was inflated.
In short, there is a gap of 200-500 million yuan between the feed cost disclosed in the 2023 financial report of Juxing Agriculture and Animal Husbandry and its live pig output. Behind this mismatched data, it may be that Juxing Agriculture and Animal Husbandry deliberately concealed the feed cost of the live pig breeding sector, or perhaps the 2.397 billion yuan feed cost disclosed by Juxing Agriculture and Animal Husbandry is not enough to support its 1.78 million fat pigs slaughtered, resulting in the false increase of the live pig breeding business revenue.
In either case, it reveals Superstar Farming's intention to whitewash its breeding costs.。
After all, breeding costs are the core factor that determines the competitiveness of pig companies. The full breeding cost disclosed by Superstar Agriculture and Animal Husbandry in 2023 is about 15.9 yuan/kg, which is at the leading level in the industry. Now it seems thatThis cost may be optimized by 1-2 yuan/kg。
The above is the process of our reasoning based on the financial report of Giant Star Agriculture and Animal Husbandry. As for whether the doubts are valid, we very much hope that Giant Star Agriculture and Animal Husbandry can respond positively to the following three questions and give an answer to the capital market.
1. The average feed cost price of the pig farming sector of Juxing Agriculture and Animal Husbandry in 2023 is about 3,525 yuan/ton. Why is it much lower than the cost price of 3,800 yuan/ton of its export feed? 2. The purchase scale of Juxing Agriculture and Animal Husbandry's main feed raw materials in 2023 is 470,000 tons, but the feed sales volume reached 685,800 tons, with a difference of 246,000 tons. What caused this difference? How much feed do 31,780 commercial pigs and 110,000 sows need to consume?
Note: This article is based on the article "Xiaomuyuan, the agricultural and animal husbandry superstar, is about to fail" published on MiaoTou APP, and has been supplemented and modified based on two key questions raised by users.
Data Sources:
"2022 Leshan Superstar Agriculture and Animal Husbandry Co., Ltd.'s 2024 Tracking Rating Report on Publicly Issued Convertible Corporate Bonds";
"2023 Annual Report of Leshan Superstar Agriculture and Animal Husbandry Co., Ltd."
Disclaimer: The content of this article is for reference only. The information or opinions expressed in the article do not constitute any investment advice. Readers are advised to make investment decisions with caution.
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