Longda drops the Wucang Nongmu acquisition due to hog-cycle uncertainty, funding limits, and Wucang’s 98.73% leverage. ~896,300-head Sichuan capacity will be sold to an unrelated third party by Dec 31, 2025; Longda stays focused on food core, with Shandong farm projects delayed to Aug 2026.
Shandong Longda Meishi Co., Ltd has decided not to acquire equity in Wucang Nongmu Group Co., Ltd. from its controlling shareholder, Lanrun Development Holding Group. The company cited industry-cycle uncertainty, its own funding position, and Wucang Nongmu’s high leverage for the decision.
When Lanrun took control of Longda in 2019, it pledged to inject Wucang Nongmu into the listed vehicle by December 31, 2025, to avoid competition in the same line of business. With Longda now formally waiving the right to acquire, Lanrun must transfer Wucang Nongmu to an unrelated third party by the same deadline.
Wucang Nongmu focuses on hog production, with projects in Bazhong, Dazhou, and Nanchong in Sichuan. Current annual marketings are about 896,300 head (piglets/finishers).
Before Lanrun took control, Longda’s operations were mainly concentrated in East and Central China. To help Longda seize the post–African swine fever capacity cleanup, rising industry consolidation, and the 2019 “hog cycle” opportunity—and to expand into Sichuan and the wider Southwest to complete its national footprint—Lanrun began investing in integrated hog projects in Bazhong, Dazhou, and Nanchong from 2019, with the intent to inject these assets into the listed company when conditions allowed.
Why Longda walked away
1) Refocus on food, own capacity covers traceability needs.
Since 2021, Longda has pushed a strategy with food as the core business and farming and slaughter as two supporting pillars to smooth the hog cycle’s swings. The company said self-operated, under-construction, and planned farms now fully meet major customers’ traceability requirements.
In the same notice, Longda extended the “ready for use” dates to end-August 2026 for 2 Shandong farming projects—Anqiu Shibuzhen 500,000-head and Shandong 660,000-head. Planned capex from raised funds remains unchanged at CNY 665.00 million (USD 92.62 million) and CNY 425.00 million (USD 59.19 million), respectively. Funds were received in July 2020 and July 2021; as of August 2025, progress stood at 44.73% and 82.75%.
Longda explained the extensions by weaker results since 2021, tight operating cash flow, and an industry-wide capacity shakeout. The company prioritised cash safety and efficiency gains at commissioned farms over further expansion. Even so, it still sees the two projects as necessary: Longda has 15.0 million head/year slaughter capacity, while internal marketings in 2024 were only 382,400 head—leaving room to absorb new in-house pigs once completed.
2) Wucang Nongmu’s leverage is too high.
Longda disclosed Wucang Nongmu’s liability ratio at 98.73%. Short- and long-term borrowings plus current-portion non-current liabilities total CNY 1.95 billion (USD 271.59 million), against CNY 3.89 million (USD 542,298) in cash—posing material debt-servicing risk after acquisition.
Key indicators:
• End-2024: total assets CNY 7.03 billion (USD 978.80 million); net assets CNY 246.00 million (USD 34.26 million); revenue CNY 1.012 billion (USD 140.95 million); net profit CNY 12.65 million (USD 1.76 million).
• End-June 2025: total assets CNY 7.47 billion (USD 1.04 billion); net assets CNY 109.00 million (USD 15.19 million); 1H revenue CNY 459.00 million (USD 63.94 million); 1H net profit CNY 3.97 million (USD 552,927).
Some farms need upgrades, and further spend on productive biological assets would be substantial. Given sector conditions and Longda’s funding reality, the company expects it cannot shoulder that capex. It also noted limited room for cost-down synergies from vertical integration under uncertainty, plus complex management integration—together risking returns shortfall.
3) The hog cycle still bites.
China’s hog sector remains cyclical. Capacity recovered and even exceeded pre-ASF levels since 2020, pushing prices low for a prolonged spell, with only partial repair in 2024 as the industry cut capacity.
Listed producers’ earnings—including Longda’s—have swung with hog prices; Longda booked losses of CNY 659.00 million (USD 91.78 million) in 2021 and CNY 1.538 billion in 2023. Wucang Nongmu also lost 240.00 million (USD 33.43 million) in 2023. Longda warns that a renewed price drop post-acquisition could amplify losses.
4) Cash first, acquisitions later.
As of June 2025, Longda held CNY 973.00 million (USD 135.57 million) in cash against CNY 3.219 billion (USD 448.46 million) in interest-bearing debt, 57.72% of which is short-term. With sizeable near-term maturities, the company says it does not meet the conditions for a cash acquisition.
What happens to the Sichuan assets
Longda says its Southwest business is already on a mature footing through supply-chain partnerships and procurement optimisation. Dropping the deal avoids heavy outlays and integration risk, supporting stable cash flow and a healthier balance sheet.
The company will urge Lanrun and the actual controller to transfer Wucang Nongmu’s equity to an unrelated third party within the promised timeframe. Until transfer, Longda will continue to manage Wucang Nongmu under the existing “equity custody agreement”, to mitigate adverse effects from same-industry competition.
Policy footnote: strengthening Sichuan’s chain
Lanrun’s chairman and Longda’s actual controller, Dai Xuebin, is also a deputy to the National People’s Congress. In response to his Proposal No. 1625 to the 3rd Session of the 14th NPC—on strengthening Sichuan’s hog chain—the Ministry of Agriculture and Rural Affairs issued public replies in August.
Highlights included: advancing hog genetics R&D; promoting non-grain feed crops in Southwest China under the 2024 Opinion on High-Quality Forage Development; supporting circular farming with manure-to-field utilisation and building a livestock carbon-footprint management framework; and, on financing, noting that existing re-lending tools already cover “agriculture and small” fields, so a hog-chain-specific re-lending facility is not advised.
Longda’s takeaway: focus on the food core, let capital discipline and the cycle’s reality guide farming exposure, and keep Southwest supply secure via partnerships—not by absorbing a highly leveraged producer.
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