Affected by the sluggish pig market, Da Bei Nong’s pig business suffered losses in 2022Q1.
Despite the sharp rise in feed ingredients cost and weak demand for high-quality pig feed, the feed business maintained relatively stable.
Feed business remained stable, with excellent ruminant feed performance
DBN sold around 1.2 million tons of feed in 2022Q1, down 11.1% YOY. Its gross profit margin was 12.8%, down 1.4% YOY.
Specifically, it sold 960,000 tons of pig feed, down 11.1% YOY. Pig feed revenue was about CNY 4 billion ($588.40 million), down 9.1% YOY, accounting for 85% of feed revenue.
Two factors led to the decline in revenue and sales of pig feed:
• Affected by sluggish pig prices, farmers suffered severe losses and reduced demand for high-quality pig feed.
• Pig stock declined and reduced demand for feed.
However, ruminant feed achieved outstanding performance, with revenue of CNY 500 million ($73.55 million) (up 25% YoY) and sales of 150,000 tons (up 15.4% YoY). It’s expected to drive the feed business growth in the future.
With the mergers and acquisitions of Jiuding Group and Zhengbang’s feed business in southwest China, DBN’s feed production capacity has grown significantly to exceed 20 million tons.
The business will form leading advantages in wider regions. A multi-dimensional synergy of feed types, channels, customers, and team is expected, significantly expanding the business scale.
The pig business continued to suffer losses
DBN marketed about 640,000 hogs in2022Q1, with an average selling price of CNY 12.7($1.87)/kg (down 56.2% YOY). The average loss was about CNY 510 ($75.02) per head, affected by high feed costs and the sluggish market. Deep losses in the pig business dragged down the company’s overall performance.
With the rebound of pig prices, its pig business expects to bottom out in 2022Q2. At that time, it would reduce the adverse impact on overall performance for the year.
Accelerate the layout of the traditional seed industry; promote bio-breeding business smoothly
Its seed business reported revenue of CNY 130 million ($19.12 million), up 8.3% YoY, with a net profit of CNY 25 million ($3.68) in 2022Q1. The company accelerated the layout of the traditional seed industry through outward M&A. Currently, the M&A project of Yunnan Daitian Seeds, a leading seed company in the southwest region, is going smoothly.
DBN plans to strengthen and expand the traditional seed business, which is conducive to fully exerting its leading advantages in the bio-breeding field. Meanwhile, it will also facilitate DBN to hold an excellent position in the market, such as in the competition of bio-breeding industrialization and the distribution of the industry chain benefits.
Under the relevant national deployment and guidance, DBN’s bio-breeding business continues to advance, steadily moving towards the performance realization period.
According to the person in charge, the seed industry and bio-breeding business have become the company’s top priority business. It will continue to receive strategic resources tilt.
Some investment institutions believe that the seed industry and biological breeding business are expected to become the company’s most growing business.
