May 28, 2024

 

Yisheng and Minhe: Comparing performance between two Chinese white-feather broiler producers from Yantai, Shangdong

 

Most of Chinese province Shandong's white feather broiler industry is based in Yantai City.

 

There are five white-feather broiler chicken companies listed on the two major stock exchanges in Shanghai and Shenzhen — with four of them from Yantai, namely Minhe Husbandry, Shandong Yisheng Livestock & Poultry Breeding, Shandong Xiantan and Springsnow Food.

 

Comparing Minhe and Yisheng

 

Following the COVID pandemic, Yisheng was expected to make a profit of up to ¥600 million in 2023, whereas Minhe projected a huge loss as high as ¥400 million.

 

Yisheng's business is mainly in the production of grandparent stock (GPS) and parent stock (PS) breeder broilers (the company has an annual inventory of about 400,000 sets of GPS broilers). After its listing, Yisheng expanded its PS broiler production to 560 million birds in 2022. By 2023, its production volume increased to approximately 580 million.

 

Minhe produces only PS and commercial broilers.

 

As GPS broiler imports were restricted in 2022, the number of GPS broilers in China dropped significantly, leading to the falling production of PS and commercial broilers in mid-2023. Soaring prices of PS and commercial chicks boosted Yisheng's profits but dealt a heavy blow to Minhe.

 

Yisheng's monthly sales report revealed that it sold about 503 million broiler chicks in the first three quarters of 2023. Among them, about 11 million sets were PS chicks, which fetched an average profit of about ¥30 per set. The company sold around 490 million commercial-grade chicks, with a profit of about ¥0.7 per chick.

 

In the third quarter, Yisheng's sales of commercial chick totalled 170 million.

 

However, as prices of domestic white feather broiler chicks tumbled since April 2023, the profits of Yisheng's commercial chick production fell to low levels; as prices dipped to ¥1 per chick by the end of last year, it was incurring losses.

 

Minhe's performance forecast released on January 31, 2024, showed that its net profit loss attributable to shareholders was estimated at ¥370-400 million (US$51-55 million), translating to a loss of ¥1.06-1.15 (US$0.15-0.16) per share.

 

The main reason for Minhe's performance downturn was the significant rising cost of PS broiler chicks, which led to higher production costs of commercial chicken chicks, Minhe's key product (the company then expedited the establishment and promotion of its cooked food sales channels, which drove up its sales significantly).

- David Lin, eFeedLink