Caixin News Agency, October 14th (Reporters Liu Jian and Wang Ping'an): Against the backdrop of a continuous rise in hog prices this year, the profitability of the breeding end has improved significantly month by month, entering a peak profit period in the third quarter. Following Muyuan Foods' (002714.SZ) earlier forecast of a net income exceeding 10 billion, Beijing Dabeinong Technology Group (002385.SZ) also forecasted in tonight's performance forecast that it expects to turn losses into profits in the first three quarters of the year.

Specifically, Beijing Dabeinong Technology Group expects to achieve a net income attributable to shareholders of the listed company of 0.12 billion yuan-0.16 billion yuan in the first three quarters of 2024, compared to a loss of 0.908 billion yuan in the same period last year.

Caixin News Agency reporters noted that the company's profits in the first three quarters are mainly contributed by the third quarter, with an expected profit of 0.28 billion yuan-0.32 billion yuan in Q3, compared to a loss in the same period last year. Beijing Dabeinong Technology Group also stated in the performance forecast, "The company's operational performance turned losses into profits in the first three quarters of 2024, with a significant reduction in losses in the first half of the year, profits in the third quarter, mainly due to the year-on-year increase in hog prices, and a decrease in the company's hog farming costs compared to the same period last year; at the same time, the company's operational efficiency has improved, with expenses decreasing compared to the same period last year."

The sales briefing also confirms this situation, with sales volume and prices both rising from January to September this year, totaling sales of 4.2763 million hogs by controlled and affiliated companies, compared to 4.1605 million hogs in the same period last year. Sales prices have also been increasing monthly since the beginning of the year, reaching a peak of 20.13 yuan/kg in August.

With the rise in hog prices, major commodity raw materials such as corn and soybean meal are currently in a downward trend, hitting near-year lows, leading to a significant reduction in breeding costs. Previously, Beijing Dabeinong Technology Group revealed during investor relations activities, "The breeding cost of hogs in July has returned to around 14.6 yuan/kg, and it is expected to continue to decline in the second half of the year."

Looking ahead, industry insiders interviewed by Caixin when talking to reporters said that the profitability of pig companies in the fourth quarter of this year will continue to remain within a reasonable range. Next year may also be overall not bad. Compared with this year, next year's annual farming profit may be more evenly distributed, without large profits or losses."Currently, the national average total cost level is around 15 yuan/kg. With the improvement in production efficiency in the future, it may decrease to around 14 yuan/kg. Even if the pig price drops to around 15 yuan/kg next year, the farming end can still achieve a balance between profit and loss, without incurring losses.

Of note, Beijing Dabeinong Technology Group's recent continued emphasis on the seed industry track may also provide support for the company's Q4 performance. According to reporters from Caixin, agricultural production has certain seasonal and long cyclical characteristics. Revenue and operating profit from the seed business are relatively concentrated in November-December of the same year and January-March of the following year. Beijing Dabeinong Technology Group previously stated, "It is expected that in 2024, the planting season for corn seeds will see an increase in planting promotion area year-on-year, with an increase of 15%-20%, and the overall planted area for both corn and rice seeds remains stable."