Muyuan Foods Reports Net Loss of 6.08 Billion Yuan in H1 as Low Hog Prices Turn Operating Cash Flow Negative
Nashnova编辑部
China's largest hog farmer Muyuan Foods (002714) swung to a net loss of ¥6.08 billion in the first half, with operating cash flow flipping to negative ¥2.22 billion — months of hog prices pinned near cost are steadily eroding the giant's financial cushion.
How big is the loss, and where did the money go?
Net profit attributable to shareholders swung from a ¥10.53 billion gain a year earlier to a ¥6.08 billion loss — a 157.7% reversal.
Revenue fell 22.3% year-on-year to ¥59.41 billion, hit by both lower prices and weaker volumes.
This means → the damage is not from a one-off write-down. The core business of selling hogs is losing money. Net loss excluding non-recurring items was ¥5.895 billion, nearly identical to the headline figure — confirming the loss is operational.
How low have hog prices gone?
From March to June, Muyuan's average selling price for commercial hogs hovered around ¥10 per kilogram for most of the period.
In plain terms = feed, labor, and depreciation combined roughly equal — or exceed — the selling price. Every hog sold may be sold at a loss.
Hog farming dominates the company's profit structure, making depressed prices the single biggest driver of the massive loss.
What happened to cash flow?
Operating cash flow swung from a net inflow of ¥17.35 billion a year ago to negative ¥2.22 billion — from cash generation to cash burn in twelve months.
This means → day-to-day operations can no longer fund themselves. The company must tap financing or draw down reserves to cover the gap.
Muyuan also declared no cash dividend, no bonus shares, and no capital reserve conversion for the period — conserving every yuan.
How much debt cushion is left?
Weighted-average return on equity (ROE — how efficiently shareholder capital earns money) dropped from 13.79% to -7.48%, a fall of 21.27 percentage points.
The EBITDA interest-coverage ratio (how many times over earnings can cover interest payments) plunged from 13.81× to 3.42×. In plain terms = the company used to earn nearly 14 times its interest bill; now it earns just over 3 times — the buffer has shrunk by more than 70%.
The debt-to-asset ratio sits at 54.18%, roughly flat year-on-year. Total assets stand at ¥175.06 billion and net assets at ¥80.19 billion — the balance sheet has not yet contracted sharply.
Could the maturing convertible bond become a flashpoint?
Muyuan has an outstanding convertible bond — the "Muyuan Convertible" — with a current balance of ¥9.543 billion, issued in August 2021 and maturing in August 2027.
This means → if conversion rates remain low, the company will need close to ¥10 billion in cash to redeem the bond — at a time when operating cash flow is already negative.
This reflects a deeper concern: markets will watch Muyuan's refinancing arrangements and cash-flow management more closely than any single-quarter loss — that is the real observation window.
Has the hog cycle bottomed?
The hog market remains at the bottom of its cycle. Earlier capacity culling — retiring inefficient sows, shutting small farms — is starting to feed through to commercial hog supply.
Whether prices can meaningfully rebound hinges on three variables: the depth of further capacity cuts, the pace of slaughter, and the recovery of end-consumer demand.
In plain terms = supply is slowly shrinking, but it has not yet shrunk enough to push prices up past the tipping point — the bottom looks confirmed; the inflection point does not.
Content is for reference only, not financial advice.