DEKON AGR (02419) will release a new signal: the total cost continues to decrease, and the chairman's intensive increase in holdings indicate confidence.

The price of live pigs has dropped to near a 10-year low, production capacity is accelerating, and a large number of small and medium-sized pig farmers are exiting the industry, with some unlisted large-scale pig farming enterprises facing extreme financial difficulties. During a recent internal discussion, DEKON AGR (02419) Chairman Wang Degen mentioned that although the industry's winter is far from over, he is optimistic about tomorrow: "No matter how tragic the current situation is, how deep the wounds are, tomorrow will be bright. Of course, the premise is that you need to survive." Wang Degen's firm attitude is not only limited to words, as during a period of pessimism in the market, he chose to continuously increase his holdings in the company using real money. Data from the Hong Kong Stock Exchange shows that from May 27 to June 9, he increased his holdings by a total of 1.3283 million shares, involving an amount exceeding HK$68.46 million. According to GMTEight, this kind of behavior where the personal interests of management are tied to the collective interests of the company not only shows the confidence of Decon's senior management in the company's long-term development prospects but also emphasizes their focus on shareholder returns and capital efficiency. Wang Degen's willingness to increase his holdings against the trend probably stems from DEKON AGR's readiness to survive through industry cycles of fluctuations. President of the company, Yao Hailong, disclosed the latest cost data during a conference call: the complete cost of breeding in May is around 11.8 yuan/kg, continuing to lead the industry, with the cost in excellent regions dropping to below 11.29 yuan/kg. In the cost structure, feed accounts for approximately 60% while piglets account for 19%. Yao Hailong stated that, as about 80% of the company's production capacity is concentrated in the southwest, raw material costs are around 200 yuan per ton higher compared to competitors. "At the same raw material prices, we still have a cost reduction potential of 0.5 to 0.6 yuan, reflecting Decon's management advantage." Yao Hailong also mentioned that there is still room for a 0.1 to 0.2 reduction in the feed-meat ratio, the cost of breeding sows can be controlled through measures like accurate feeding; the mid-term target is around 33, with the cost of excellent weaning dropping to within 210 yuan, with some pig farms reaching 35 to 36; there is also a potential improvement in efficiency of 50 to 80 heads; DEKON will continue to increase local raw material development in the southwest to reduce transport costs. The mid-term target Yao Hailong set is to reduce the complete cost to 11-11.3 yuan/kg per month. Despite being under pressure in the industry, DEKON AGR's original barrier-breaking second family farm model continues to prove successful. The company disclosed that about one-third of farmers in the entire second farm have a PSY exceeding 30, placing them at the forefront of the industry. "We have spent more than ten years constantly improving it." Even in the current low pig price environment, Decon's foster fees for farmers are still maintained at over 300 yuan. Wang Degen gave an example: last week, the average foster fee per head for a batch of second family farms settled at 374 yuan, with the total cost per farmer at only 11.2 yuan/kg. "If we were to settle at 300 yuan, they would still be satisfied, but we gave 374 yuan. The local leaders even called to say they didn't expect farmers to earn this much in the current market." This highlights the resilience of Decon's farmer cooperative model, even at the bottom of an industry cycle with pressures on the enterprise itself, through technology and management empowerment, allowing cooperative farmers to obtain stable returns far beyond the industry, creating a positive cycle of "enterprise efficiency, farmer income, and stable cooperation". As for the financial aspect, DEKON has prepared enough reserves for the winter ahead. CFO Jiang Yongjun mentioned that at the beginning of the year, the budget for capital expenditures was 600-800 million yuan, but it has been further reduced in response to industry changes, with all new production capacity expansions under control. Wang Degen also stated that the company currently has sufficient cash flow and good fund operation. "Strategically optimistic, tactically pessimistic," Wang Degen said, "What we need to do is think of the winter as lasting longer and prepare fully for difficult times. When the best opportunity comes, we will still be healthy and have room for development." Apart from its main pig farming business, Decon's yellow-feather chicken business continues to focus on a differentiated path, with Wang Degen stating that Decon will not engage in "homogenized competition" with competitors; at the same time, the company's food processing sector is steadily advancing, aiming to bridge the "final mile" of the complete industry chain.