New stock preview | Can "Qingyuan Chicken King" TianNong Food break through the dilemma of the cycle by going to Hong Kong?

"Eating in Guangdong" is not only a folk proverb, but also a recognition of the profound heritage of Lingnan cuisine culture. In this food paradise, the Qingyuan chicken, known as the "number one chicken in Lingnan", with its unique flavor passed down for thousands of years, has become a taste totem of Cantonese cuisine. Today, this delicacy is brewing a new chapter in the capital market - Guangdong Tiannong Group Co., Ltd. (hereinafter referred to as "Tiannong Food"), the core supplier of Qingyuan chicken, is officially launching an attack on the Hong Kong capital market. According to the disclosure by the Hong Kong Stock Exchange on October 30, Tiannong Food has submitted its listing application to the Main Board of the Hong Kong Stock Exchange, with CMSC International as its exclusive sponsor. According to Frost & Sullivan's report, based on the output of Qingyuan chicken, Tiannong Food has been the largest supplier of Qingyuan chicken in China during the previous years. From the fields to the dining table, and now to the stock exchange, how does this "Qingyuan Chicken King" measure up? Profit fluctuations highlight cyclic nature According to the prospectus, since its establishment in 2003, Tiannong Food has gradually evolved from a regional poultry farming enterprise to one of China's leading providers of high-quality meat and meat products. The company has built a vertically integrated whole industry chain operation system around core products such as Qingyuan chicken, pigs, and related meat products. The company's business model covers the entire value chain, including breeding, quality breeding, ecological farming (through self-operated farm and family farm models), feed production, slaughtering, food processing, and brand marketing. In the core category of Qingyuan chicken, Tiannong Group holds an absolute leading position. According to Frost & Sullivan's report, in 2024, its market share in the Chinese Qingyuan chicken market was approximately 59.3%, surpassing the sum of all other competitors and ranking second among suppliers of Huangyu chicken in Guangdong province. At the same time, the company's pig business also performs well. By the end of 2024, Tiannong Group ranked eighth in revenue among pig breeding enterprises in southwestern China, and its per-head pig margin ranked second among national large-scale breeding enterprises, demonstrating strong cost control and operational capabilities. Despite its leading industry position, the company's performance is not stable. In the years 2022, 2023, 2024, and the first half of 2025, Tiannong Food achieved revenues of approximately 3.952 billion yuan, 3.596 billion yuan, 4.776 billion yuan, and 2.221 billion yuan, respectively. Regarding business segments, Tiannong Food offers a comprehensive product portfolio, mainly including Qingyuan chicken and other native chickens, pig products, and fresh and other products. Despite being known as the "Qingyuan Chicken King", the company's revenue is actually more stable in the "pig-strong, chicken-stable" segment. In the reporting period, the revenue from the company's pig products was 2.587 billion yuan, 2.214 billion yuan, 3.203 billion yuan, and 1.472 billion yuan, showing a fluctuating upward trend, with the related business contribution also increasing, accounting for 65.5%, 61.6%, 67.1%, and 66.3%, respectively. In contrast, revenue from Qingyuan Chicken and other native chicken products showed slight fluctuations, with revenues of 1.01 billion yuan, 0.991 billion yuan, 1.071 billion yuan, and 0.461 billion yuan in the reporting period. The revenue contribution of this business also showed a fluctuating downward trend, dropping from 25.6% in 2022 to 20.7% in the first half of 2025. The fresh and other products business has maintained steady growth, increasing from 0.355 billion yuan in 2022 to 0.502 billion yuan in 2024, and the revenue contribution of this business increased from 8.9% to 10.5%. By the first half of 2025, the revenue increased to 0.288 billion yuan, with the revenue contribution further increasing to 13%. In addition to revenue fluctuations, the company's profitability is also unstable. The gross profit margin was 16.3%, 1.6%, 18.8%, and 15.5% during the reporting period, and the profits were 0.341 billion yuan, -0.669 billion yuan, 0.890 billion yuan, and 0.127 billion yuan, respectively. For the loss in 2023, the company explained that it was mainly due to the overall increase in supply in the Qingyuan chicken and pig industry, leading to a decrease in the average selling price, a reduction in sales revenue, and ultimately affecting overall profitability. Double decline in the chicken and pig cycles Behind the intense fluctuations in performance is the double impact of the "chicken cycle" and "pig cycle". The poultry and pig markets are highly competitive markets, and product market prices are mainly influenced by supply. Furthermore, due to the long production cycle of poultry and pigs, the adjustment of industry total supply often lags behind changes in industry capacity and market prices, such as industry total supply gradually increasing after industry capacity increases, industry total supply continuing to increase to a certain extent, and then product prices start to fall. After a certain point, breeders suffer deep losses and passively exit, excess capacity is cleared, and the industry total supply declines, leading to prices rising again. This cycle repeats and is commonly known as the "chicken cycle" or "pig cycle". In recent years, the chicken industry is currently in a low point of the cycle. Taking the most common white feather chicken as an example, according to Wind data, its average price has dropped from a high of 10.65 yuan/kg in April 2023 to a range of 7-8 yuan/kg in 2024. As of 2025, the situation has not improved, with prices hitting a low of 5.87 yuan/kg in the first quarter and still hovering at low levels, facing challenges in recovery. It is worth noting that even though Qingyuan chicken, as a high-quality native chicken, commands a price premium, it still faces challenges. The company's prospectus shows that the price of Qingyuan chicken and other native chickens ranged from 34.9 yuan to 37.7 yuan per chicken between 2022 and 2024, showing signs of stabilization. However, this trend was disrupted in the first half of 2025, with prices plummeting to 30.7 yuan per chicken, a significant 21% decrease compared to the same period last year, demonstrating the difficulty even for top brands to withstand systemic downward pressure. On the other hand, the "pig cycle" is also going through a difficult period of losses. From March 2022 to the present, the current pig cycle has lasted 44 months, and is currently in the loss trough dominated by "high inventory and high supply". On the supply side, based on the high inventory of sow stocks at the end of 2024, the theoretical output of pigs in 2025 will continue to increase, coupled with the release of second-generation pig sources, the supply pressure in the next two months will increase. Demand recovery lags behind, supporting softness. In the short term, the pattern of "easy to fall and difficult to rise" in pig prices is difficult to change, and the key variable in the future is the activation of demand for Southern cured meats, if the strength is less than expected, pig prices may be under pressure to fall below 12 yuan/kg. This "easy to fall and difficult to rise" industry background is directly reflected in the company's financial data. The average selling price of the company's pig products is a reflection of the cycle mentioned above: it decreased by 26.2% from nearly 2700 yuan per head in 2022 to 1989.8 yuan in 2023, and although it rebounded by 14.7% to 2,281.6 yuan in 2024, the upward trend is weak. As of the first half of 2025, the selling price is 2113.3 yuan per head, a slight increase of 1.5% compared to the same period last year, but still significantly lower than the 2022 level, fully demonstrating that the current pig cycle is still in a low-level oscillating trough. Conclusion Tiannong Group's listing in Hong Kong this time is essentially a strategic move to enhance capital reserves and improve risk resistance under the dual pressure of the "chicken cycle" and "pig cycle". The company's brand position in the field of Qingyuan chicken and its full industry chain layout constitute its core advantages. However, the dramatic fluctuations in performance also expose the inherent fragility of its business model. Against the backdrop of the industry's overall decline, whether Tiannong Group can overcome the cycle and achieve steady development with the help of the capital market will be the core issue of concern for investors. This IPO is not only a financing action, but also a key test of its long-term strategy and market confidence.