COFCO Joycome, COFCO Group’s publicly traded meat platform, has acquired COFCO Feed to strengthen its full-chain meat and feed strategy. The acquisition, valued at CNY 1.569 billion (about USD 216.52 million), brings COFCO Feed’s extensive feed production capacity, technical expertise, and diversified product range under Joycome’s control. This integration is projected to enhance COFCO Joycome’s operational efficiency, revenue, and profitability metrics, especially in pig, poultry, and aquatic feed sectors. Additionally, COFCO Feed’s solid financial track record is expected to stabilize Joycome’s revenue by diversifying its income streams and reducing reliance on the pork sector, particularly amid challenging market cycles.
COFCO Joycome, the Hong Kong-listed meat platform of COFCO Group, has announced its acquisition of a 100% stake in COFCO Feed. This move is intended to enhance its industry chain strategy, streamline operational costs, and bolster its market resilience. The acquisition, valued at CNY 1.569 billion (about USD 216.52 million), will be completed through a wholly owned subsidiary of COFCO Joycome.

Expansion into Feed Production and Services
COFCO Feed specializes in the R&D, production, and sale of various feed products, including pig, ruminant, poultry, and aquatic feeds, alongside technical services. By the end of 2023, it is projected to operate 21 feed facilities across China, with a production volume exceeding 2 million tons annually.
Financial Strength
In 2022, COFCO Feed reported revenues of CNY 7.7 billion (about USD 1.06 billion), increasing to CNY 8.5 billion (about USD 1.17 billion) in 2023, alongside a net profit growth from CNY 96 million (about USD 13.15 million) to CNY 155 million (about USD 21.23 million). The acquisition is expected to improve COFCO Joycome’s financial indicators, with projected revenue increases to CNY 7.483 billion (about USD 1.03 billion) and a net profit rise to CNY 323 million (about USD 44.1 million) if the transaction closed by mid-2024.

Strategic Motives
The primary driver behind this acquisition is Joycome’s ambition to build a robust, cost-efficient, full-chain meat enterprise. The company anticipates that self-sufficiency in feed production will lead to reduced procurement costs and operational efficiencies. Additionally, it aims to leverage COFCO Feed’s technical expertise to optimize feed formulas, enhancing production quality and efficiency across its operations.
Strengthening Business Diversity
Historically focused on pork, Joycome’s revenue has been vulnerable to fluctuations in pig farming cycles. COFCO Feed’s diverse portfolio allows entry into other animal feed segments, such as ruminant and aquatic, enhancing revenue stability and mitigating risks tied to pig farming’s cyclical nature.
Enhancing Financial Metrics and Market Integration
With consistent profits and a steady cash flow, COFCO Feed has demonstrated financial stability. By integrating these assets, Joycome anticipates improved cash flow and profitability metrics across its business. The company’s alignment with COFCO Group’s resources positions it advantageously for further growth and market integration.

The Challenges
Despite this acquisition, Joycome faces challenges. For instance, pig slaughter numbers in early 2024 were down by 32% year-on-year, and market fluctuations in pig pricing continue to affect profitability. Additionally, challenges in beef imports and deciding to limit these imports for risk management are noteworthy.
COFCO Joycome did not disclose the total cost of pig farming in its financial report in the first half of 2024. In recent years, the cost has remained between CNY 16 and CNY 17 per kg (about USD 2.19 – 2.33 per kg). Compared with the domestic pig farming industry, which is entering the CNY 14 per kg cost era, COFCO Joycome has fallen behind.

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