Muyuan Foods 2025 Annual Report Review

Source: Yiliu Investment Research Notes

Disclaimer: This article is for research and discussion purposes only and does not constitute any investment advice. The stock market involves risks; decisions should be made independently, with your own logic framework and risk-control system in place—never follow the crowd blindly.

Muyuan Co., Ltd. released its 2025 annual report today. As one of the leading enterprises in the pork industry, the company’s stock price has been hovering for more than four years. Let’s see what this financial report says. First, we use Python to parse the PDF into a TXT file, and then use Deer-flow and the attached annual report review skills. However, this time it wasn’t so smooth—we went through repeated debugging (debug prompts + adjusting the skill.md file). Recently, the AI field has also come up with a term called Harness Engineering, meaning to harness engineering—used to handle the problem of large models not behaving. Finally, we manually checked the data and adjusted the formatting.

1. Financial Highlights: Steady revenue growth, profit under pressure—cost reductions are significant

In 2025, Muyuan Co., Ltd. achieved operating revenue of RMB 144.145 billion, up 4.49%; net profit attributable to shareholders of listed companies was RMB 15.487 billion, down 13.39% year over year; and net profit excluding non-recurring gains and losses was RMB 15.988 billion, down 14.71% year over year. The profit decline was mainly driven by the downward trend in hog market prices. The full-year average live hog price was RMB 14.44 per kilogram, down 9.2% year over year, which weighed on the industry’s overall profitability.

Although profit declined, the company’s cost control results were significant. In 2025, the fully allocated cost of hog farming was about RMB 12 per kg, about RMB 2 per kg lower than the same period last year, with a reduction of 14.29%. The cost reduction was mainly attributable to technology-innovation-driven efforts, including the application of intelligent environmental control systems, optimized feed formulations, improvements in production efficiency, and other measures—allowing the company to maintain strong cost competitiveness even during the industry’s downturn.

In terms of cash flow, net cash flow from operating activities was RMB 30.056 billion, down 19.94% year over year, but it still remained at a relatively high level, providing solid funding support for the company’s future development. By optimizing its debt structure, the company’s total liabilities at year-end decreased by RMB 17.1 billion compared with the beginning of the year. The asset-liability ratio fell by 4.53 percentage points to 54.15%, further optimizing the company’s financial structure.

2. Business Structure: Stable core hog-raising business, slaughter and meat food profitability breakthrough

The farming business remains the company’s core source of revenue. In 2025, it achieved operating revenue of RMB 140.207 billion, up 2.92%, accounting for 97.27% of total revenue. For the full year, the company produced and sold 77.981 million market hogs, up 19.1%. The scale continued to expand, and its market share further increased. Through the application of intelligent farming technologies and refined management, the company effectively improved production efficiency and the health level of its herd, laying a foundation for stable growth in its farming business.

The slaughter and meat food business became a new growth highlight. In 2025, it achieved operating revenue of RMB 45.228 billion, up 86.32%, and recorded annual profitability for the first time. For the full year, the company slaughtered 28.663 million hogs, up 128.9%, with production capacity utilization reaching 98.8%. By expanding sales channels, optimizing product structure, and enhancing brand influence, the company gradually built a nationwide pork sales network. By the end of 2025, it had established more than 70 sales branches across 20 provincial-level administrative regions. The synergy between the slaughter business and the farming business has gradually started to show.

Note: Combined, these two businesses exceed total revenue, mainly because there are internal transactions in between. The source of hogs for the slaughter and meat food business comes from the company’s farming operations.

The diversification of the business structure effectively enhances the company’s ability to withstand risks. The slaughter business not only absorbs production capacity from the farming side, but also increases added value through deep processing of products, smoothing the impact of industry-cycle fluctuations on the company’s performance. As consumer demand for high-quality pork products increases, the slaughter and meat food business is expected to become an important future profit-growth driver for the company.

3. R&D Update: Technology drives cost reduction; quality upgrades show results

In 2025, the company’s R&D investment was RMB 1.648 billion. Although it fell 5.67% year over year, it still remained at a relatively high level, accounting for 1.14% of operating revenue. R&D efforts focused on three major directions: cost reduction and efficiency improvement, quality enhancement, and intelligent transformation, achieving multiple key breakthroughs.

In cost reduction and efficiency improvement, nutrition research projects—by optimizing feed formulations and developing new ingredients—effectively lowered feed costs. The herd health management projects—through disease early-warning and prevention and control system development—improved herd health levels and survival rates, reducing farming costs. The digital transformation projects—by building a closed-loop data management system for the whole process—enabled management to reach the front line directly, improving farming performance.

In quality enhancement, the carcass value improvement project—through breeding technologies to cultivate leaner meat with richer intramuscular fat layers—produced higher-quality five-layer pork and enabled more refined cutting of pork products to meet demands across different consumption tiers. The intelligent veterinary project—by collecting data such as sound, posture, and feed intake—enabled early detection of diseases, early warnings, and early treatment, reducing disease losses and medication costs.

The results of intelligent R&D have been significant. The intelligent environmental control project achieved intelligent environment adjustment, meeting different herd groups’ environmental needs. The intelligent water-and-electricity project reduced purchased energy and energy-use costs through new energy supply and intelligent management and control. The air filtration pig-house project effectively lowered the risk of cross-transmission of diseases and improved hog-raising performance.

4. Core Competitiveness: An integrated industry chain builds cost barriers; end-to-end R&D drives upgrades

The company’s core competitiveness is reflected in multiple areas, including advantages in an integrated industry chain, advantages in end-to-end R&D across the whole industry chain, raw grain procurement advantages, and talent advantages. The integrated industry-chain model enables the company to achieve controllability across key links such as feed processing, breeding of breeding stock, feeding and raising market hogs, and slaughter and meat food—forming clear advantages in food safety, disease prevention and control, and cost control.

The company’s advantages in end-to-end R&D help it continue to break through technical bottlenecks. In hog breeding, the company has formed a breeding stock population with stable genetic performance through 30 years of selective breeding, and it cooperates with universities to conduct research on intelligent measurement and big-data genetic evaluation technologies. In nutrition technology, it realizes low-soybean meal diets and precise nutrition supply, lowering feed costs and nitrogen emissions. In intelligentization, it has developed key equipment such as intelligent environmental control, intelligent feeding, and intelligent inspections, improving production efficiency and stability.

In terms of raw grain procurement advantages, the company—through cooperation with major grain merchants at home and abroad, direct procurement of grain from the source, and flexible procurement strategies—has effectively reduced feed costs. In terms of talent advantages, the company has implemented multiple equity incentive plans, including operator shareholding plans and striving-for-success shareholding plans, covering nearly 5,000 core executives and backbone employees, thereby stimulating employees’ sense of mission and responsibility.

5. Shareholder Returns: Stable dividend policy; share buybacks demonstrate confidence

The company adheres to a stable dividend policy. In 2025, it carried out two distributions of equity-related dividends. The total dividend amount was RMB 8.085 billion, accounting for 51.1% of net profit for that year. The company’s proposed annual profit distribution plan is a cash dividend of RMB 4.27 per 10 shares (including tax), with a total dividend amount of RMB 2.435 billion. Adding the already implemented dividend distributions, the total dividends for 2025 reached RMB 10.52 billion, accounting for 66.5% of net profit.

The company also actively implemented share repurchases. In 2025, through centralized competitive bidding, it cumulatively repurchased 69.5865 million shares of the company, totaling approximately RMB 2.0 billion, to implement an employee stock ownership plan. The share repurchases not only reflect the company’s recognition of its own value, but also help optimize the equity structure and strengthen investor confidence.

The company has formulated a shareholder dividend return plan for the next three years (2024–2026). It commits that, while ensuring the company’s sustainable operations and long-term development, it will distribute each year in cash no less than 40% of the profit available for distribution achieved in that year, providing shareholders with stable return expectations.

6. Risk Warning: Cycle volatility still exists; the risk prevention and control system is improved

The hog farming industry has a strong cyclical nature and faces multiple risk challenges. Disease risk is the primary risk for the industry. Although the company has established a comprehensive disease prevention and control system, including intelligent pig houses, biosecurity measures, and diagnostic and testing platforms, if diseases occur frequently in surrounding regions or if the prevention and control systems are not effectively executed, it could still adversely affect the company’s production and operations.

Hog price fluctuation risk is an important factor affecting the company’s profits. In the future, if hog prices continue to decline or the magnitude of any price increase is lower than the magnitude of cost increases, the company’s performance may face further pressure. The company enhances its ability to withstand cyclical fluctuations through continuous cost reduction and efficiency improvement, expanding its slaughter business, and optimizing its debt structure. However, it still needs to closely monitor changes in market prices.

Risks related to raw material price fluctuations should also not be ignored. Major raw material costs such as corn, wheat, and soybean meal account for 55%–65% of operating costs, so price fluctuations have a significant impact on the company’s costs. The company reduces the impact of raw material price fluctuations through flexible procurement strategies, formulation adjustments, and direct procurement from the source.

In addition, the company also faces risks such as food safety and natural disasters. By establishing a comprehensive food safety control system, risk early-warning mechanisms, and emergency plans, it minimizes—at the greatest extent—the impact of various risks on the company’s production and operations.

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