This Chinese Pig Breeder Is Gaining From Swine Fever for Now
Wens Foodstuffs benefits from rising hog prices in south, east
Consensus earnings forecast revised up by 5.4% in past month
November 28, 2018
China’s top hog and chicken breeder may benefit rather than be hurt by the outbreak of African swine fever in China.
The highly contagious disease, which has led to the culling of more than half a million pigs in the world’s largest pork market, has hardly touched the Pearl River delta in southern China, where most of Wens Foodstuffs Group Co.’s farms are located. The cut in supply from major producing areas located mainly in northern and central China has pushed up chicken and pork prices in the country’s south and east, where Wens sells most of its products.
China’s hog prices rebounded to the highest in nearly two years in October after a government ban on the transport of live hogs triggered a shortage of the meat, particularly in consuming areas in the south. More Chinese are also shifting to poultry as the spread of African swine fever worries consumers, sending prices of chicken meat to the highest level since the end of 2015.
“Wens will benefit from rising hog prices because these consuming areas can not produce enough to meet local pork demand after the transport ban,” said Yang Hao, an analyst with China Post Securities.
About half of Wens’ revenues came from Guangdong and Guangxi, according to the company’s latest interim report. The two provinces have not reported any outbreak of African swine fever yet, The disease has been detected in 20 provinces and 47 cities in the country, resulting in some 600,000 hogs being culled, according to the Ministry of Agriculture and Rural Affairs.
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