Major hog producers raising capital and continuing expansion plans

Even though hog prices have fallen over the past three months, hog breeders are still profitable and looking to expand. Several of the largest hog breeders have announced to raise more capital and continue to expand.

New Hope is looking to raise capital and recently told investors that the company’s issuance committee had approved a plan for a non-public stock issuance. 

New hope said that its current cost for hog breeding is around 16.5 yuan per KG. 

Tangrenshen, another large hog breeder, said it was providing loans to subsidiary companies. It said that it had raised additional capital through a non-public share offering and was in the process of lending out 818 million yuan to subsidiary companies. 

Muyuan, the largest hog breeder, is currently in the process of trying to raise money through the issuance of global depository receipts on the Swiss stock exchange and said the company is planning for capital expenditure of 10-15 billion yuan over the next year. 

The company said the money will go construction of new breeding farmers and slaughtering facilities as well as renovations and maintenance of existing facilities. 

Muyuan also said that it expects to reach a capacity of 75 million head next year and plans to have 2.8 million breeding sows at the end of next year. 

Notably, the company also said it had resumed construction on some breeding facilities because the price of the hogs had rebounded and the company’s cash flow had turned positive. 

Continuing to add capacity now that prices are above breakeven is likely to again lead to an eventual downturn and oversupply, but companies are continuing to fight more market share and now that they are again profitable, they are looking to deploy that capital into new projects.