In-Depth Analysis of the Capacity Expansion Strategy of Kingkey Zhinong (000048.SZ)

Based on the multi-dimensional data I have collected, I now present to you the

:

---

Kingkey Zhinong (Shenzhen Kingkey Zhinong Times Co., Ltd.) is a listed company with

as its core businesses. The company is positioned to serve the Guangdong-Hong Kong-Macao Greater Bay Area market, adopts the innovative , and is one of the representative enterprises in domestic high-rise pig farming[0][1].

Indicator	Value	Industry Comparison
Market Capitalization	USD821 million	Third Tier (<RMB10 billion)
P/E Ratio	20.31x	Medium Level
ROE	9.49%	Above Medium
Net Profit Margin	8.13%	Good
Current Ratio	0.49	Significant Short-Term Debt Repayment Pressure

According to industry analysis, domestic pig farming enterprises can be divided into three competitive tiers[3]:

Tier	Representative Enterprises	Market Cap Scale	Characteristics
First Tier	Muyuan Foods, Wen’s Foodstuffs	>RMB100 billion	Stable self-owned breeding stock, early layout
Second Tier	Haida Group, New Hope, Zhengbang Technology	>RMB10 billion	Stable, slightly increasing production capacity
Third Tier	Kingkey Zhinong , Tecon Animal Husbandry, New Wellful	<RMB10 billion	Cost control is the key to survival

: Kingkey Zhinong slaughtered approximately 2.15 million head, with a market share of about 0.4%, ranking among the top in the third tier[2].

---

The current pig market is in a

:

Indicator	Current Value	Trend
Average Pig Price (December)	RMB12.21/kg	28.3% YoY decrease
Breeding Sow Inventory	39.9 million head	1.1% MoM decrease, 2.1% YoY decrease
Industry Average Cost	RMB13.5/kg	Leading enterprises can reduce it to RMB11-12/kg
Loss per Head	Approximately RMB300	Deep Losses

Based on the consensus of industry research institutions[1][4][5]:

Time Period	Pig Price Forecast Range	Core Driving Factors
Q1 2026	RMB11.0-11.5/kg	Concentrated slaughter during Spring Festival, supply peak
Q2 2026	RMB11.5-12.5/kg	Bottom-fishing and bottom-building, transmission of capacity reduction
Q3-Q4 2026	RMB12.0-13.5/kg	Effects of capacity reduction emerge, peak consumption season

: A key inflection point is expected to occur from , with pig prices expected to fluctuate upward in the second half of the year[4][5].

---

Kingkey Zhinong has achieved

in recent years:

Year	Pig Slaughter Volume (10,000 head)	YoY Growth Rate	Breeding Sows (10,000 head)	Capacity Utilization Rate
2022	126.44	-	7.5	72%
2023	184.50	+45.9%	9.8	78%
2024	214.61	+16.3%	11.6	85%
2025	231.29	+7.8%	~12.0	88%

: 22.30%[0][1]

• Four-week batch all-in/all-out
  production method, improving herd health
• Equipped with intelligent systems such as automatic feeding, automatic water supply, automatic environmental control, and air filtration[1]
• In September 2024, the PSY was approximately 26 head, average number of weaned pigs per litter was about 10.7 head, fattening survival rate was around 90%, and feed-to-meat ratio was about 2.67, which is at the
  industry-leading level
  [2]

• Positioned in the Guangdong-Hong Kong-Macao Greater Bay Area, enjoying regional price premiums
• Sales prices are generally higher than peers, bringing excess revenue[2]

• Total R&D investment in 2024 was RMB52.11 million, a 20.89% YoY increase
• Cumulatively holds 34 national patents and 9 software copyrights[1]
• Collaborates with the Guangdong Academy of Agricultural Sciences, Chinese Academy of Agricultural Sciences, etc. to lay out “odor-free pig farms” and breeding innovation projects

Challenge Factor	Specific Performance	Impact Assessment
Capital Pressure	Current ratio 0.49, quick ratio 0.17	Significant short-term debt repayment pressure
Cost Disadvantage	Total cost of approximately RMB14.3 per kg	Higher than the industry average of RMB13.5 per kg
Scale Gap	Slaughter volume is only 3% of Muyuan’s	Weak bargaining power
Industry Position	Third Tier	Relatively weak risk resistance capability

---

• The current cost (RMB14.3 per kg) is higher than the industry average,
  no obvious cost advantage
• Leading enterprises have reduced their costs to RMB11-12 per kg (e.g., Muyuan), with a significant gap[2]
• Continuous cost reduction and efficiency improvement are required; otherwise, it will be difficult to obtain excess returns during the upward cycle

• Financial data shows tight liquidity
• During the industry’s deep loss phase, cash flow management is crucial
• Without sufficient capital support, production may be forced to reduce at the bottom of the cycle

• The current utilization rate is about 88%, with room for improvement
• Full-load operation can effectively dilute fixed costs
• Steadily promoting contract fattening business in 2025 is the right direction[0]

• The completed production capacity is 2.25 million head, which is basically matching the 2025 slaughter volume of 2.31 million head
• Future expansion should be
  focused on prudence
  , not radical
• Policies require leading enterprises to control capacity; blind expansion may face policy risks

Scenario	Assumptions	2026 Profit Forecast	Possibility of Excess Returns
Optimistic Scenario	Pig prices rebound to RMB14 per kg, costs drop to RMB13.5 per kg	Profit per head of approximately RMB60	Medium
Neutral Scenario	Pig prices remain at RMB12.5-13 per kg, costs remain at RMB14 per kg	Loss per head of approximately RMB50-75	Low
Pessimistic Scenario	Pig prices remain below RMB12 per kg, costs remain high	Loss per head of over RMB200	None

                    Upward Cycle       Downward Cycle
                   ┌──────────┬──────────┐
Obvious Cost Advantage │ High Elasticity │ High Defensiveness │
                   ├──────────┼──────────┤
Obvious Cost Disadvantage │ Low Elasticity │ High Risk │
                   └──────────┴──────────┘
  
Kingkey Zhinong's Positioning: Obvious Cost Disadvantage + Medium Scale
→ Limited elasticity during upward cycle, high risk during downward cycle

---

Evaluation Dimension	Rating	Explanation
Capacity Expansion Execution	★★★★☆	Slaughter volume has increased year by year, strong execution
Cost Control Capability	★★☆☆☆	Costs are higher than industry average
Financial Health	★★☆☆☆	Significant liquidity pressure
Regional Advantage	★★★★★	Precise positioning in the Guangdong-Hong Kong-Macao Greater Bay Area
Technological Innovation Capability	★★★★☆	Leading high-rise pig farming technology
Comprehensive Investment Value	★★☆☆☆	Need to pay attention to the progress of cost improvement

: Kingkey Zhinong’s capacity expansion strategy .

:

1. ✅
   Solid Capacity Foundation
   : Has formed a production capacity of 2.25 million head, with steadily increasing slaughter volume
2. ✅
   Advanced Technological Model
   : The “6750” high-rise pig farming model has long-term competitive advantages
3. ✅
   Clear Regional Positioning
   : The Guangdong-Hong Kong-Macao Greater Bay Area market has price premium advantages
4. ❌
   Obvious Cost Disadvantage
   : The cost of RMB14.3 per kg is higher than the industry average, limiting profit margins during the upward cycle
5. ❌
   Significant Capital Pressure
   : Liquidity indicators show short-term debt repayment pressure; need to pay attention to cash flow safety

Risk Type	Specific Risk	Response Recommendations
Cyclical Risk	Sustained low pig prices leading to expanded losses	Pay attention to capacity reduction progress and pig price inflection points
Cost Risk	Cost control falling short of expectations	Track the company’s progress in cost reduction and efficiency improvement
Financial Risk	Operational difficulties caused by liquidity pressure	Pay attention to the company’s financing progress and cash flow
Policy Risk	Tighter capacity regulation policies	Comply with policy guidelines, control the pace of expansion
Competitive Risk	Leading enterprises squeezing the market share of small and medium-sized pig farming enterprises	Pay attention to the trend of increasing industry concentration

1. Short-Term (1-6 Months)
   : Mainly wait-and-see, closely monitor pig price trends and the company’s cost control progress
2. Mid-Term (6-12 Months)
   : If the pig price inflection point is confirmed and costs improve, consider accumulating positions on dips
3. Long-Term (1-2 Years)
   : Pay attention to whether the company can reduce its costs to below RMB13 per kg, which is the key threshold for obtaining excess returns

---

[0] Jinling AI Financial Data API - Kingkey Zhinong Company Profile and Financial Data
[1] Sina Finance - “Kingkey Zhinong’s Gorgeous Transformation: Striking Results from Main Business Transformation, High-Rise Pig Farming Lays a Solid Foundation for Future Growth” (April 2, 2025)
[2] Eastmoney Securities Research Report - “2025 Updated Investment Framework for the Pig Farming Industry” (January 2025)
[3] Ecolagric - “China Pig Industry Development and Investment Research Report (2024-2025)” (January 2025)
[4] Sina Finance - “Pig Prices Rise Consecutively + Capacity Reduction Accelerates! Breeding Sow Inventory May Drop by Another 200,000+ Head” (December 31, 2025)
[5] Eastmoney - “Pig Enterprises Predict that Capacity Regulation Will Continue to Advance in 2026; Will the Pig Industry See ‘Dawn’?” (December 31, 2025)
[6] Sinolink Securities - “Pig Farming Enters a New Pattern of Cost Competition” (January 2025)