Longer Road to Recovery

Research evidence excerpt

Longer Road to Recovery

87 (4,156) 21,212 26,585

Structural advantages remain intact: Although lower hog prices and elevated feed

(Rmb mn)

costs will continue to weigh on near-term earnings, Muyuan remains best positioned P/E 17.8 NM 10.7 8.5

P/BV 3.6 2.6 2.3 2.1

given its industry-leading cost structure and biological performance (MSY of 25 RNOA (%) 11.4 (1.6) 14.1 19.6

versus the industry average of 20). We forecast complete hog raising costs of ROE (%) 21.5 (5.3) 24.6 27.1

EV/EBITDA 9.8 33.7 10.3 8.5

Rmb11.5/kg in 2026. We therefore lower our hog production gross profit forecasts FCF yld ratio (%)** 7.1 (0.0) 16.2 16.4

to Rmb1.4bn in 2026 and Rmb27.9bn in 2027 (from Rmb21.8bn and Rmb34.4bn Leverage (EOP) (%) 60.1 39.5 6.8 (13.7)

previously), mainly reflecting weaker hog price assumptions. This implies unit gross Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

profit estimates for hog production at Rmb0.1/kg in 2026 and Rmb2.9/kg in 2027. ** = Based on consensus methodology

e = Morgan Stanley Research estimates

Changes to earnings estimates and price targets: We lower our 2026 earnings

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estimate to a loss of Rmb0.72/share and cut 2027e EPS 22%, reflecting lower hog

Muyuan Foodstuff Co. Ltd: 1Q26 Results: Loss

price assumptions and a slower industry recovery. Accordingly, we reduce our A-

Making As Industry Accelerates Destocking (21

share and H-share price targets to Rmb48 and HK$49 (from Rmb57 and HK$58),

Apr 2026)

respectively. We now value Muyuan at 13x 2027e P/E, versus 18x 2026e P/E

previously, to reflect a more prolonged destocking cycle. The revised multiple is Morgan Stanley does and seeks to do business with

companies covered in Morgan Stanley Research. As a result,