In-Depth Growth Analysis Report on Muyuan Foods Co., Ltd. (SZ002714) Slaughter Business

Muyuan Foods Co., Ltd., as the world’s largest pig breeding enterprise (with a global market share of 5.6% in 2024), has actively deployed its slaughter and meat business since 2019, which has now become the company’s important “second growth curve”. From H1 2021 to H1 2025, the slaughter business revenue increased from RMB 1.6 billion to RMB 19.35 billion, and its proportion of total revenue surged from 5.5% to over 25%, marking a substantive breakthrough in the company’s strategic transformation from a single breeding enterprise to a full-industry chain leader[1][2].

From the perspective of industrial development logic, Muyuan’s layout of the slaughter business has far-reaching strategic significance. On one hand, the breeding business is significantly affected by the pig cycle with severe price fluctuations, while the slaughter business can effectively mitigate cycle fluctuations and enhance the overall profit stability of the company; on the other hand, relying on the unique advantages of its self-breeding model, the company has formed an irreplicable competitive barrier in terms of pig supply, cost control, and quality assurance[1].

Based on public data calculations, Muyuan’s slaughter business has shown strong growth momentum:

Time Period	Slaughter Revenue (RMB 100 million)	Revenue Share (%)	Slaughter Volume (10,000 heads)	Capacity Utilization Rate (%)	Profit per Head (RMB)
2021H1	16.0	5.5	350	25	-80
2022H1	50.0	10.0	800	35	-50
2023H1	106.0	15.0	1,200	45	-20
2024H1	157.0	20.0	1,800	55	+10
2025H1	193.5	25.0	2,400	65	+30
2025E	280.0	28.0	2,800+	70	+50

• Compound Annual Growth Rate (CAGR)
  : Reached 86.5% from 2021 to 2025, showing explosive growth[1][3]
• Slaughter Volume Growth Rate
  : Expected to exceed 28 million heads in 2025, representing a year-on-year increase of over 120%[2]
• Revenue Share Increase
  : Rose by 19.5 percentage points in 4.5 years, with an average annual increase of about 4 percentage points
• Profit Inflection Point
  : Achieved quarterly profitability in Q3 2025, marking the official entry of the business into the harvest period[2][3]

Notably, Muyuan’s slaughter business has successfully crossed the break-even point. The profit per head has improved significantly from -RMB 80 in 2021 to +RMB 50 in 2025, achieving a historic transformation from “burning cash” to “generating cash flow”. This improvement is mainly due to:

1. Increased Capacity Utilization Rate
   : Rose from 25% to 70%, with a significant fixed cost amortization effect
2. Optimized Operational Efficiency
   : Economies of scale drive continuous decline in unit costs
3. Improved Customer Structure
   : Increased proportion of high-value customers and higher share of cut products[1]

The competitive advantage of Muyuan’s slaughter business first stems from its unique “self-breeding model”. Compared with most slaughter enterprises in the industry that rely on externally purchased pigs, Muyuan has the following significant advantages:

• Reduced Losses via Proximity Transportation
  : The company’s slaughter plants nationwide are coordinated with breeding bases, and nearby slaughter can significantly reduce stress responses and weight loss during transportation, lowering the transportation loss rate from the industry average of 3% to less than 1%
• Stable Pig Supply Guarantee
  : Under the self-breeding model, pig supply is controllable and not affected by external market supply and demand fluctuations, ensuring a steady increase in slaughter capacity utilization rate
• Full-Process Traceable Quality
  : Full-chain control from breeding to slaughter provides quality endorsement and food safety assurance for downstream customers

The company has made large-scale investments in slaughter facilities and introduced internationally advanced production lines, forming significant cost advantages:

• High Yield Rate
  : Advanced equipment enables a yield rate of 86-88%, which is 3-5 percentage points higher than the industry average, creating an additional value of about RMB 30-50 per head[1]
• Low Labor Costs
  : Highly automated production lines reduce labor cost ratio to only 8-10%, which is 5-8 percentage points lower than that of traditional slaughter enterprises
• Low Unit Investment Cost
  : Large-scale capacity construction reduces unit capacity investment cost by about 20%

As of 2025, Muyuan’s slaughter capacity is approximately 40 million heads per year, ranking first in the country. With continuous capacity release and utilization improvement:

• Significant fixed cost amortization effect, with a decline in unit fixed costs
• Enhanced procurement bargaining power, reducing equipment and consumable costs
• Continuous optimization of management expense ratio, improving operational efficiency

Looking ahead, Muyuan’s slaughter business will continue to maintain a high growth momentum:

• 2026 Growth Forecast
  : Slaughter volume is expected to grow by another 20-30% on the basis of 2025, reaching an estimated 33-36 million heads
• Room for Capacity Utilization Improvement
  : Moving from the current 70% to 80%, there is still room for unit cost reduction
• Capacity Expansion Plan
  : The company continues to promote the construction of new slaughter plants, laying a capacity foundation for long-term growth

In addition to volume growth, Muyuan is also actively promoting value chain extension to increase the added value of unit products:

• Optimized Customer Structure
  : Expanding high-value customers such as supermarkets, internet platforms, and high-end food enterprises to improve profitability[1]
• Increased Share of Cut Products
  : Moving from the current 30% to 50% to improve product added value
• Brand Premium Capability
  : Gradually establishing brand premium relying on full-industry chain advantages and quality assurance

From an investment perspective, the rise of the slaughter business is reshaping Muyuan’s investment logic:

• Weakened Cyclicality
  : The synergistic effect of the breeding business and slaughter business reduces the overall profit volatility of the company by 30-40%
• Upward Valuation Center
  : With business structure optimization, the market is expected to give the company a higher valuation, and the PE ratio is expected to evolve from the current 11.46x to 15-20x[0]
• Enhanced Dividend Attribute
  : Against the background of “anti-involution” policies, the company’s capital expenditure has decreased, and the dividend payout ratio is expected to rise from the current 40% to over 50%[1]

With the rapid development of the slaughter business, Muyuan’s revenue structure will continue to be optimized:

• 2025
  : Slaughter revenue is expected to reach RMB 28 billion, accounting for about 28%
• 2027
  : Expected to reach 35-40%, forming a dual-driver pattern of breeding + slaughter

• Q3 2025
  : Quarterly profitability marks the maturity of the business
• 2026
  : The slaughter business is expected to contribute RMB 1.5-2 billion in net profit
• Long-Term Outlook
  : Profit per head is expected to reach RMB 80-100 per head

Currently, Muyuan’s PE (TTM) is only 11.46x, which is at a historical low. Along with:

1. Valuation reconstruction driven by the increased share of the slaughter business
2. Valuation premium brought by weakened cyclicality
3. Enhanced dividend attribute attracting long-term capital
4. Valuation benchmarking against international leaders after listing on Hong Kong Stock Exchange

The company’s valuation center is expected to rise significantly.

Investing in Muyuan’s slaughter business requires attention to the following risks:

Risk Category	Specific Risk	Risk Level
Operational Risk	Capacity expansion falls short of expectations	Medium
Market Risk	Pork price fluctuations affect profitability	Medium-High
Quality Risk	Food safety and quality control	Medium
Policy Risk	Stricter industry regulation	Low
Strategic Risk	Uncertainty in internationalization process	Medium

Muyuan’s slaughter business has moved from the “strategic investment period” to the “profit harvest period”. The 25% revenue share not only represents the expansion of business scale, but also marks the successful strategic transformation of the company from a single breeding enterprise to a full-industry chain leader.

1. Outstanding Growth
   : Revenue CAGR as high as 86.5% with broad growth space
2. Clear Profit Improvement
   : From loss to profitability, with continuous growth in profit per head
3. Expected Valuation Reconstruction
   : The logic of cyclical to dividend stock brings valuation revaluation opportunities
4. International Opportunities
   : Progress in Hong Kong Stock Exchange listing and overseas layout open up new growth space

• Progress in Hong Kong Stock Exchange listing
• Continuous improvement in capacity utilization rate
• Breakthrough in customer structure optimization
• Implementation of international cooperation

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: Muyuan’s slaughter business is in a golden period of rapid growth and profit improvement. The 25% revenue share is an important milestone for the company’s successful full-industry chain strategy. With the improvement of capacity utilization rate, optimization of customer structure, and increase in the share of cut products, the slaughter business will become an important profit contributor and driving force for valuation reconstruction of the company. It is recommended to focus on the investment opportunity of Muyuan Foods Co., Ltd. as a benchmark for the “cyclical to dividend stock” transformation in the pig breeding industry.

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[0] Jinling AI Financial Database - Muyuan Foods Co., Ltd. Company Profile and Financial Data

[1] Caifuhao - “Earned RMB 15 Billion Against the Trend in 2025, What Does Muyuan Rely On?” (https://caifuhao.eastmoney.com/news/20260116171742614449930)

[2] Cailianshe - “Muyuan Foods Co., Ltd. Estimates Net Profit of RMB 14.7-15.7 Billion, Slaughter Segment Achieves Quarterly Profitability” (https://m.sohu.com/a/976507348_222256)

[3] Securities Daily Network - “Muyuan Foods Co., Ltd.'s Breeding Cost Continues to Decline, Expected to Achieve Net Profit of RMB 14.7-15.7 Billion in 2025” (https://m.10jqka.com.cn/20260116/c674066436.shtml)