Muyuan Foods "Winter": Q4 profit drops sharply quarter-over-quarter, cash flow declines nearly 20%, short-term debt exceeds 40 billion yuan

Wen | New Consumption Financial Research Society

In 2025, pig prices fluctuate downward, and the overall pig breeding industry enters a critical period of capacity reduction, cost lowering, and quality improvement and efficiency enhancement. Leading enterprises are also facing survival tests.

Recently, Muyuan Foods officially disclosed its 2025 annual report. The company’s total revenue for the year was 144.1 billion yuan, a year-on-year increase of 4.49%, but net profit attributable to the parent company dropped from 6.04B yuan in the second quarter to 708 million yuan in the fourth quarter, shrinking by nearly 90%.

This sharp decline is not accidental but caused by multiple factors resonating together: pig prices accelerating to bottom out, costs falling behind pig price declines, insufficient hedging effects from slaughtering operations, proactive capacity contraction, and cash flow pressure, making the “Pig King” struggle at the cycle bottom.

More noteworthy is that in 2025, Muyuan’s operating cash flow decreased by nearly 20% year-on-year. Despite the continued tightening of cash flow resilience, the company still implemented high dividends, with over 4 billion yuan in cash dividends going into the pockets of actual controllers Qin Yinglin and Qian Ying’s couple; meanwhile, senior management’s total compensation surged nearly 70%, showing a clear inward tilt in resource allocation at the industry cycle bottom.

Pig prices break below cost line

Muyuan’s Q4 profit plunges by nearly 90%

In 2025, Muyuan’s annual revenue grew by single digits, but profit quality significantly deteriorated.

In 2025, Muyuan’s operating income was 144.15B yuan, up 4.49% year-on-year; net profit attributable to the parent was 15.49B yuan, down 13.39% year-on-year; net profit after deducting non-recurring gains and losses was 15.99B yuan, down 14.71%, with net profit and revenue growth moving in opposite directions.

More concerning is that the company’s quarterly performance fluctuated sharply within the year. Q1 net profit attributable to the parent was 4.49B yuan, rising to 6.04B yuan in Q2, then falling back to 4.25B yuan in Q3, and plunging to 708 million yuan in Q4. Q4 net profit shrank over 80% compared to Q3 and nearly 90% compared to Q2, indicating significantly weakened profit resilience.

Image source: Muyuan’s 2025 financial report

The “cliff-like” drop in Q4 net profit was not accidental but the result of multiple factors including pig price trends, cost pressures, capacity rhythm, etc.

Among them, the acceleration of pig price bottoming out is the most direct trigger. According to monitoring by the Ministry of Agriculture and Rural Affairs, the national average price of live pigs in 2025 was 14.44 yuan/kg, down 9.2% year-on-year, hitting a new low since 2019. The rapid decline in pig prices directly squeezed profit margins per pig, becoming the core driver of the performance plunge in Q4.

Cost declines failing to cover pig price drops is the main reason for the significant erosion of Muyuan’s profits.

In 2025, the company’s total cost of pig breeding dropped to about 12 yuan/kg, down about 2 yuan/kg year-on-year. Cost reduction was partly due to the decrease in feed raw material prices, and partly due to continuous improvements in internal production efficiency.

It is estimated that the average profit per pig sold throughout the year was 31 yuan, down 183 yuan from 2024. The pig price fell by about 5 yuan/kg for the year, while costs only decreased by 2 yuan/kg, meaning the price decline was 2.5 times the cost reduction. Even with ongoing cost-cutting efforts, the speed of price decline far exceeded cost improvements, and the “buffer cushion” created by cost advantages was clearly insufficient.

In Q4 last year, pig prices fell below 11.35 yuan/kg, lower than the full cost line of 12 yuan/kg, and Muyuan was in a long-term loss during this period. The cost decline could not keep pace with the price drop, directly amplifying profit contraction.

From gross margin perspective, the company’s breeding business gross profit margin decreased by 3.64 percentage points to 17.29%, also vividly reflecting the dilemma of “faster pig price decline and shrinking profit margins.”

Furthermore, the single business structure further magnifies the impact of cycle fluctuations on the company’s finances.

The annual report shows that in 2025, Muyuan’s breeding business revenue accounted for as high as 97.27%, indicating a highly concentrated business structure. Although the slaughter and meat sector achieved a historic breakthrough, with annual revenue of 45.23B yuan, a year-on-year increase of 86.32%, and first-time annual profit, capacity utilization rate soared from 43.2% in 2024 to 98.8%, this sector’s low gross profit margin of only 2.67% makes its overall profit hedging effect very limited.

More critically, Muyuan’s slaughtering business heavily depends on internal breeding capacity supply, with insufficient independent market expansion ability and lack of strong synergy with breeding operations, making it difficult to effectively smooth out performance impacts caused by pig price cycles. Meanwhile, revenue from trading and other businesses only accounts for 2.32% and 0.80%, respectively, providing minimal supplementary support to the main business. The structural risk of a single business model remains unresolved.

In addition to industry-wide pig price and cost pressures, Muyuan’s 2025 actively shrank core capacity, directly abandoning the “volume to compensate for price” cycle buffer mechanism, becoming another key factor exacerbating profit decline.

This strategic adjustment is clearly reflected in data: the book value of the company’s core productive biological assets (breeding pigs) fell from 9.36B yuan at the beginning of the year to 6.8B yuan, and the company plans to reduce the breeding sow inventory to 3.3 million, confirming substantial capacity reduction.

This move directly leads to 2026 pig slaughter targets being roughly the same as 2025, meaning the growth model relying on “scale expansion to offset per-head profit decline” has failed. When the “volume” growth engine stalls, the company’s overall profits are fully exposed to pig price fluctuations, significantly weakening cycle resistance.

It is worth noting that during industry lows, the company’s R&D investment and high-education personnel also declined. In 2025, R&D expenditure was 1.65B yuan, down 5.67%; the number of master’s degree holders among R&D staff decreased from 1,144 to 921, a 19.5% drop. This is a short-term cost-cutting measure but may weaken long-term technological accumulation and innovation in breeding, disease control, and smart technology, posing future industry competitive risks.

Cash flow tightening and short-term debt pressure

Dividends of 4 billion flow to actual controllers, senior management compensation up 70%

In 2025, Muyuan’s net cash flow from operating activities was 30.06B yuan, down 19.94% year-on-year. This was mainly due to a 17.89% increase in cash paid for purchasing goods and services, while cash received from sales of goods and services grew only 6.64%, weakening cash flow’s support for profit.

Despite significant financial structure optimization—total liabilities decreased from 110.1B yuan at the start of the year to 93B yuan at year-end, with the debt-to-asset ratio dropping 4.53 percentage points to 54.15%, achieving the annual debt reduction target—the company still faces substantial short-term repayment pressure. As of the end of 2025, short-term borrowings reached 41.16B yuan, with interest expenses of 2.56B yuan; current ratio was 0.78, quick ratio 0.25, indicating weak short-term debt repayment capacity and insufficient cash flow safety margin.

Meanwhile, the company’s monetary funds decreased by 18.22% to 13.86B yuan, and inventories fell 11.42% to 37.18B yuan, reflecting reduced capital turnover efficiency and possibly active destocking due to low market prices, further weakening short-term cash flow resilience.

The main reason is that Muyuan reduced long-term loans and accounts payable, which are less rigid debts, while the proportion of short-term borrowings increased passively. Coupled with an 86.84% quarter-on-quarter drop in operating cash flow in Q4 2025, the collection ability weakened significantly. The combination of high short-term debt and tightened cash flow has not substantially alleviated short-term repayment pressure.

It is noteworthy that even amid declining net profit, high short-term debt, and a 19.94% drop in operating cash flow, the company still implemented high dividend payouts. In 2025, the total dividends for half-year and full-year reached about 7.44B yuan, accounting for as high as 48.03% of net profit attributable to the parent, greatly consuming internal retained earnings and further weakening the financial buffer against long-term industry cycle fluctuations.

And over half of this 7.44B yuan dividend went directly into the pockets of the actual controllers.

According to the annual report, the actual controllers Qin Yinglin and Qian Ying hold a combined 54.91% stake. Based on this, approximately 4.08B yuan in dividends flowed into their accounts, with about 2.93B yuan from direct holdings and about 1.16B yuan from indirect holdings via Muyuan Industrial. Given that their pledged shares have been fully released, this high dividend policy greatly enhances the family’s financial security and liquidity, effectively “locking in” the huge cash inflow.

Meanwhile, Muyuan’s senior management compensation also surged sharply in 2025. The annual report shows that the total compensation for senior executives reached 42.0393 million yuan, an increase of 17.2742 million yuan or 69.75% compared to 2024. This rapid growth not only far exceeds industry averages but also starkly contrasts with the company’s modest 4.49% revenue increase and 13.39% net profit decline.

Muyuan senior management compensation (2025)

Among them, core management saw substantial salary increases—except for Qin Yinglin, Li Yanpeng, and a few others whose increases ranged from 10% to 20%, most core personnel saw salary jumps of over 50%. For example, Director and Vice President Yang Ruihua’s compensation increased by 161.35%, Chief Legal Officer Yuan Heben’s by 132.33%, Chief Human Resources Officer Wang Chunyuan’s by 90.05%, and Secretary of the Board and Chief Strategy Officer Qin Jun’s by over 90%. These key positions became the main drivers of the total salary increase.

Chart: New Consumption Financial Research Society / Data from company financial reports

It is evident that during the deep industry adjustment and performance pressure cycle bottom, Muyuan’s resource allocation strategy shows a strong inward tilt. The huge dividends safeguard the family’s wealth and liquidity, while the significant salary hikes stabilize and motivate the core management team.

Overall, although Muyuan demonstrated some cycle resilience amid industry deep adjustment in 2025, the company faces multiple risks: short-term debt pressure, single business structure, phased weakening of R&D investment and talent reserves, compounded by high dividend payouts and salary increases squeezing internal accumulation. These challenges are critical tests for the company’s future development.