Wens Foodstuffs（300498）：Rise in Meat Pig Selling Price Beat Average； Per~Head Profit Leading

Rating (Maintain):BUYTarget price (RMB):25.53 Huatai Research Announcement Comment 13 August 2024 | China (Mainland) Agribusiness AnalystFAN JunhaoSAC No.E057052405001fanj.nhao@htsc.ccmSFC No.BDO986 Meat pig per-head profit neared RMB600 in July Wens Foodstuffs (Wens) saw sustained rises in pig and broiler output in July, withthe selling price of meat pigs at RMB18.95/kg. above the industry average. Weestimate its meat pig per-head profit at nearly RMB600. Given a potentialcontraction in hog supply in 2H24, tight supply of yellow-feather broilers (YFBs) onexpect buoyant demand for pigs and broilers in 2H24 to fuel sustained rises inWens"earnings.estimate2024/2025/2026attributableNPRMB10.0/13.4/13.1bn, with BVPS of RMB6.48/8.29/10.16. Given its solid costWeatadvantage, we value the stock at 3.94x 2024E PB, above its peers" average of3.46x on Wind consensus: Our target price is RMB25.53. BUY. Analys.XIONG Chenghui, PhDSAC No.S0570522120004SFCNoBPKC20sgegi@scm+(86) 10 6321 1186 Keydata MeatpigsellingpriceIncreasebeatindustryaverageinJuly industry average; we estimate its meat pig per-head profit at near RMB600. For2.32mn (+9% yoy. fat mom). while the live pig ASP was RMB18.95/kilo(+RMB4.74/kilo yoy. +RMB0.85/kilo mom), with the absolute ASP and yoy/momrises both beating the national average; we attribute this to hog supply falling insouthern sales areas, and stronger pig prices in southern China. As Wens is likelyto make further progress in breeding, production, and management, we estimateits total hog breeding cost dropping steadily and its meat pig per-head profit atnear RMB600 for July (average per-head profit for piglet breeding at RMB405). 2)with the ASP at c RMB13.2/kilo, down by low single digits yoy and mom. Weattribute the YFB price drop for July mainly to supply not shrinking significantly(total output from Wens and Jiangsu Lihua up by c 7.08mn mom in July) and theconsumption offseason. Sorox Wrd Demand forpigs and broilers to be buoyanton tight S/D dynamics For hog breeding, we expect a further notable rise in Wens' per-head profitsWens. We think Wens should expand its hog breeding profits and its advantage inper-head profits. For broiler breeding, given thorough early-stage YFB breederS/D dynsmics as the peak season for chicken consumption approaches in 2H24 Risks: lower live hog output; weaker hog prices than we expect; resurgent Africanswine fever; massive outbreak of animal diseases; a mismatch between capacityexpansion and market demand Disclaimers Analyst Certification IWe, FAN Junhao, XIONG Chenghui,hereby certify that the views expressed in this report accurately refect the personal viewsof the analyst(s) about the subject securities or issuers; and no part of the compensation of the analyst(s) was, is, or will be,directiy or indirectly, related to the inclusion of specific recommendations or views in this report. General Disclaimers and Disclosures This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter “Huatai") makes no guarantee as to the accuracy or completeness of such information. The opinions, assessments and projections contained herein only refliect the views and judgments at the issuance date. HuataiPast perfomance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.modified without notice by Huatal, and investors shall pay attention to such updates or modifications when necessary. registered/qualified as research analysts with FINRA the purchase or sale of any security or financial instrument and in any jurisdiction where such offer or solicitation would be llegal.conclusions and recommendations in this report are for reference only and are not to be construed as an offer or solicitation forSuch views and recommendations are not intended to provide personal investment advice and does not take into account thespecific investment objectives, financial situation and the particular needs of any specific person. Investors should give sufficientconsideration to their own particular circumstances, and fully understand and use the contents of this report, which should not beseen as the sole factor to rely on in making investment decisions. Huatai and the report's authors shall under no circumstance beheld liable for any direct, indirect or consequential losses or damages arising from or in connection with the use or reliance of thisreport or its contents. Any form of written or verbal commitment to share the proceeds or losses of any securities investment shallbe regarded as null and void. Unless otherwise indicated, the data quoted in this report represents past performance, which should not be used as a guide otfuture returns. Huatai does nnt promise or guarantee that any future retum will be realized. The forecast marde in the report is Huatai and the report's authors have no legally prohibited interest in