In 2024, Zhengbang Technology achieved substantial progress in expanding its breeding sow inventory and returning to profitability after restructuring. By the end of Q3, breeding sow stock reached 257,000, with projections to exceed 280,000 by year-end. Financial gains CNY 100 million (about USD 14 million) in Q3 net profits and reductions in fattening costs, although elevated idle depreciation remains a cost factor. A strategic joint venture with Shuanghui Group supports future growth, while the company aims to produce over 7 million market-ready hogs in 2025.
In a significant push toward recovery and expansion, Zhengbang Technology has increased its breeding sow inventory by approximately 70,000 head in 2024, bringing the total to around 257,000 by the end of Q3. This growth comes as the company restructures its livestock operations, with expectations to reach over 280,000 breeding sows by year-end. Additionally, the company has a reserve of 58,500 gilts aimed at further boosting production capabilities.
The inventory expansion reflects Zhengbang’s comprehensive revival strategy, with improvements reported in operational scale and profitability. As part of this restructuring, Zhengbang has reopened 11 breeding farms, reinvigorating partnerships with contract farmers and expanding production capacity to approximately 1.2 million stalls.
Financial and Production Metrics
Financially, Zhengbang has seen a notable upturn. Total assets reached CNY 18.66 billion (about USD 2.54 billion) in Q3 2024, representing a 6.67% increase since the start of the year. Inventories and biological assets surged by 68.42%, reaching CNY 2.91 billion (about USD 396 million). The company also reduced its debt ratio by nearly seven percentage points, at 47.05% by Q3.
In terms of production, Zhengbang’s efficiency metrics have shown steady improvement. The company’s Piglets per Sow per Year (PSY) now averages between 25 and 26, while its fattening rate has exceeded 91%. Additionally, the cost of weaning piglets dropped significantly from nearly CNY 600 (about USD 81.65) per head last year to under CNY 400 (about USD 54.43) in recent months. By September, Zhengbang had cut fattening costs to about CNY 15 (about USD 2.04) per kilogram, down from roughly CNY 20 (about USD 2.72) at the end of the previous year.
Challenges in Cost Management and Utilization
While Zhengbang’s pig production returned to profitability in Q3 with over CNY 100 million (about USD 14 million) in net profits, cost management remains challenging. High idle depreciation and amortization expenses from the restructuring process, and constrained cash flow have impacted piglet-rearing investments. Currently, capacity utilization is below 50%, and idle costs continue to add around CNY 1 (about USD 0.14) per kilogram to fattening expenses.
Partnerships and Outlook for 2025
Aligned with its expansion goals, Zhengbang continues to leverage a “company + contract farmer” model for pig fattening, with over 80% of production handled through contracted farms. For 2025, the company projects total output to exceed 7 million head, prioritizing internal production for piglet supply while reserving excess stock for market sales. Zhengbang anticipates further growth in breeding sow inventory to support consistent piglet sales.
Despite a 40.14% year-on-year decline in hog sales volume to 2.48 million head over the first three quarters of 2024, piglet sales outpaced those of finishing hogs in multiple months, with September seeing 206,000 piglets sold out a total of 380,800 head.
Revenue Growth and Strategic Joint Venture
Revenue reached CNY 5.84 billion (about USD 793 million) in the first three quarters, a modest 0.89% increase year-over-year. Net profit attributable to shareholders rose by 110.67%, reaching CNY 301 million (about USD 41 million). In a key move to accelerate expansion, Zhengbang has entered a joint venture with Shuanghui Group, holding a 60% stake. The partnership is expected to optimize resource allocation, focusing on technology and financial support for rapid growth and operational recovery.
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