温氏股份深度报告：行稳致远，厚积薄发

Investment Rating - The report maintains a Buy rating for Wens Foodstuff Group (300498 SZ) [5] Core Views - Wens Foodstuff Group has demonstrated resilience through cycles with its "steady expansion, cost reduction, light assets, and high liquidity" strategy, enabling it to accumulate cost advantages over time [2][5] - The company's integrated approach to breeding and feed formulation, along with its innovative farming models, has been the source of its cost competitiveness [2][5] - Since 2023, Wens' pig farming costs have entered a rapid downward trend, with comprehensive costs dropping from 18 RMB/kg at the beginning of 2023 to 13 8 RMB/kg by July 2024, positioning it back in the industry's top tier [2][5] - The company is expected to exhibit strong profit elasticity in the context of a favorable pig and poultry cycle, with its current per-head market capitalization at the 0th percentile of historical levels, indicating significant undervaluation [2][5][7] Historical Performance and Development - From 2016 to 2018, Wens adopted a steady expansion strategy post-IPO, achieving an average ROIC of 25%, significantly outperforming the industry [5] - During 2019-2021, the company faced challenges due to disease outbreaks, leading to increased capital expenditures and a rise in debt-to-asset ratio, though liquidity ratios remained industry-leading [5] - Since 2022, Wens has returned to a high-quality development phase, with its valuation gradually rising and achieving continuous growth in output for three consecutive years while maintaining a stable debt-to-asset ratio of around 60% [5] Cost Optimization and Efficiency - Wens' cost optimization since 2023 is attributed to long-term experience and R&D, including improvements in the "company + farmer" production system, breeding advancements, and feed formulation [6] - The company has reduced the cost of weaned piglets from 450 RMB/head in early 2022 to 320 RMB/head, and improved the survival rate of fattened pigs from 88% to 92% [6] - Wens has also made significant progress in feed formulation, reducing soybean meal usage to 8 3% of raw material purchases, and lowering feed production costs by approximately 600 RMB/ton compared to early 2023 [6] Investment Value and Market Outlook - With the pig and poultry industry's capacity reduction, profitability has rapidly recovered since Q2 2024, and Wens is expected to further benefit from cost improvements and regional price premiums [7] - The company's per-head profit in Q2 2024 reached 256 RMB/head (238 RMB/head including headquarters costs), ranking first among listed pig farming companies [7] - The current per-head market capitalization of Wens is at the 0th percentile of historical levels, indicating a significant mismatch with its profit potential, making it a strong recommendation [7] Breeding and Feed Innovations - Wens has been engaged in pig breeding for over 20 years, and its independent breeding company, Zhongxin Breeding, has accelerated the integration of industry, academia, and research [6] - The company's PSY (pigs per sow per year) has improved from 20 in early 2022 to 23, and the feed-to-meat ratio has decreased from 2 8 to 2 6, with further cost reduction potential of 270 RMB/head [6] - Wens has also made significant progress in feed formulation, reducing soybean meal usage and lowering feed production costs by approximately 600 RMB/ton compared to early 2023 [6]