牧原食品2026年上半年业绩：亏损符合预期，成本控制与盈利复苏前景可期

recovery in sightPO:42.00HKDIPrice:34.62HKD 1H26loss inlinewithalert,sufficientcashonhand and largely in line with the earnings alert. And it implies a 2Q26 net loss of RMB4.9bn,vs.a loss of RMB1.2bn in 1Q26.The deeper loss in 2Q26mainly reflected continued pressure on hog prices. We estimate in Q2 average hog ASP fell to RMB9.6/kg, down33% YoY and 15% QoQ, driving unit losses to around RMB1.8/kg despite relativelystable operating metrics. Hog sales volume increased to 20.3mn head (+1% YoY, +10%QoQ),while average hog weight was around 126kg (-4% YoY,+2%QoQ).In 1H26,cumulative hog sales volume was 38.6mn head, up 1% YoY. After factoring in 1H26result, we cut our '26E NPAT by 95% while leaving '27E NPAT unchanged. Our H-sharePO declines to HKD42/sh from HKD48/sh, now based on 7.3x EV/EBITDA (vs. 10.0xpreviously), in line with the industry average, as we roll forward our valuation base fromthe average of FY26/27E to FY27E.Applying an updated 3-month average A-H premiumof 30% (vs.20% previously), our A-share P0 declines to RMB48/sh from RMB52/sh.Proactive capacity reduction strengthens cost leadership Key Changes Merrill Lynch (Hong Kong)+85235084001matty.zhao@bofa.comChen Luo, CFA >>Research Analyst Muyuan is increasingly focused on returns rather than volume growth. It achieved all-incost target of RMB11.5/kg in July,maintaining its industry-leading position.Assuming feed costs remain stable in 2H26, as mgmt. expects, all-in costs should continue to trendlower.Mgmt.is also taking advantage of the current production adjustment cycle tooptimize underperforming farms and strengthen biosecurity ahead of winter, whichshould help reduce seasonal mortality risk and mitigate the typical winter cost increase.Further efficiencygains are expected from farm health management, breeding upgrades,organizational improvements and Al-enabled digitalization. Beyond farming, slaughteringis becoming an earnings contributor, with 1H26 slaughter volume reaching 17mn head(+51% YoY),while overseas operations arealso beginning to contribute to earnings.Weremain constructive on hog prices and margin recovery into 2027.NDRC data showChina's sow inventory declined to 37.8mn head as of end-June (-3% QoQ, -7% YoY),indicating continued industry-wide capacity rationalization. Reiterate Buy. Muyuan- H isnow trading at 9.7x‘27E PER.Estimates (Dec) (CNY)2024A2025A2026E2027E2028E Merill Lynch (Hong Kong)+85235082009chen.luo@bofa.comYiming Wang >>Research Analyst Merrill Lynch (Hong Kong)+85235085037yiming.wang@bofa.com Rating (H Share) >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules.Refer to Other Important Disclosuresfor information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 7 to 10. Analyst Certification on page 4. PriceObjective Basis/Risk on page 4.13010659 2" Muyuan FoodsiQprofile(H/A)Key Income Statement Data (Dec)2024A2025A Food-Commodities Muyuan is the largest hog breeder in China and globally. accounting for 10.2% and 5.6% of market sharerespectively,as of 2024, according to Frost & Sullivan. Italso ranks first in China and fifth globally in hogslaughtering and processing by volume In 9M25, hogbreeding / slaughtering contributed 96% /3% of grossprofit. With over three decades of experience, Muyuan hasevolved into a technology-driven cost leader in the porkindustry, spearheading smart farming practices. Muyuan has evolved into a technology-driven cost leader. With R&D dedication, it keeps flexibility in feedformulation, reducing soymeal usage to just 7.3% vs. theindustry's 10-17% in 2024. Its self-developed smartfeeding system enables real-time adjustments to theingredient mix. This is particularly important amid theMiddle East tension and rising feedstock prices asfeedstock comprises c.60% of production cost. ASP:average sales price NPAT: net profit attributable to owners of parentNDRC:National Development and Reform Commission MuyuanFoods (XMFXF) We derive our H-share price objective of HKD42 by applying the industry peer average 2027E EV/EBITDAmultiple of 7.3x to our average 2027EEBITDAestimate.WhileMuyuan's position as the largest and most cost-competitive market leader wouldtypically warrant a valuation premium, we adopt the industry average multiple to accountfor the relatively limited liquidity of its H-shares. a) Higher hog prices, driven by 1) government intervention, 2) disease outbreaks which could reduce supply or 3) stronger demandb) Lower feedstock costs, due to 1) strong crop yields, 2) cheaper oil an