In just half a year, the company’s shareholders’ meeting had only just used 15.48 billion yuan in capital reserves to wipe out the parent company’s accumulated losses, and the recently released third-quarter report has now disclosed a net loss of 13.05 billion yuan. As the only state-owned listed company under the Hunan Provincial State-owned Assets Supervision and Administration Commission whose principal business is hog farming, New Wellful is facing the most severe cyclical test since its listing. Against a backdrop of continued losses caused by low hog prices, the company issued a 4 billion yuan perpetual medium-term note to optimize its financial structure, improving the smoothness of its short-term funding rollover.
Third-quarter report: Revenue and net profit both fell; debt-to-asset ratio reached 89.98%
10 month 30, New Wellful released its third-quarter report for 2026. Revenue for the first three quarters was 43.16 billion yuan, down 19.92% year on year; net loss attributable to the parent company was 13.05 billion yuan, and the loss excluding non-recurring items was 13.13 billion yuan. The company stated in its announcement that the main reason for the pressure on performance was the persistently low selling price of live hogs.
Liability-side pressures also became apparent. At the end of the third quarter, the company’s total liabilities were 88.79亿元, and its asset-liability ratio reached 89.98%. Lease liabilities were 41.53亿元, accounting for 46.8% of total liabilities, mainly representing payment obligations arising from large-scale leased pig farms established earlier. Long-term borrowings increased from 8.78亿元 to 16.69亿元, nearly doubling in size. In terms of cash flow, net cash flow from operating activities for the first three quarters was -6.07亿元, indicating that the core business’s ability to generate cash remained relatively weak.
A little over five months ago, the company’s shareholders’ meeting approved a proposal to use 15.48亿元 from its capital reserve to cover the parent company’s accumulated losses, turning its retained earnings from negative to positive. This financial arrangement cleared balance-sheet obstacles for subsequent financing and capital operations and constituted financial preparation for navigating the business cycle. However, using capital reserves to cover losses only adjusts retained earnings on the financial statements and cannot change operating results for the current period. As of the end of 9月, equity attributable to the company’s shareholders was only 8.36亿元, down 61.37% from the end of the previous year. The balance-sheet repair completed earlier was continually eroded by current-period losses.
Breaking through on financing: 20 days to complete a 4亿元 perpetual medium-term note issuance
Supplementing equity does not add liabilities
On the eve of the release of its third-quarter report, New Hope Liuhe completed a low-cost equity financing. On 10 month 29, the company successfully issued its first perpetual medium-term note for 2026, with an issue size of 4 hundred million yuan, a term of 3+N years, and a coupon rate of 2.35%. This set a new low in interest rates nationwide for instruments with the same term, rating and type. From registration approval to issuance, the process took 20 days.
For accounting purposes, perpetual medium-term notes are recognized as equity rather than liabilities. The proceeds will be used to repay borrowings from financial institutions and supplement day-to-day working capital. While providing additional liquidity, this financing will not further increase the company’s asset-liability ratio, which is already high, and is suited to its current financial position.
The successful completion of this financing was supported by the credit standing of the controlling shareholder. New Hope Liuhe’s controlling shareholder, Hunan Agricultural Group, has an AAA issuer credit rating, providing support for this bond issuance. At a time when the industry as a whole is still at the bottom of the cycle, multiple banks and investment institutions participated in the subscription, reflecting interbank market investors’ recognition of the company’s credit quality, risk management capabilities and long-term value. CITIC Bank served as lead underwriter, with Industrial Bank as joint lead underwriter, and all stages of the issuance proceeded in an orderly manner.
Earning market trust: reducing costs + optimizing capacity to strengthen the operational foundation
Market confidence in New Wufeng’s creditworthiness is built on its ongoing internal operational adjustments, which mainly focus on cost control and optimizing production capacity structure.
Costs have continued to decline. The company’s fully loaded cost per hog shipped has fallen by approximately 35% cumulatively since 2021, at an average annual compound rate of approximately 8%. In the first half of 2026, the company saved approximately 4000 ten thousand yuan in procurement costs by locking in prices for bulk raw materials for future delivery and using alternative raw materials; overall procurement costs for vaccines and medicines fell by more than 5%; and the management structure was streamlined from four tiers to three, with management expenses down 21.60% year over year. Against a backdrop in which hog prices are difficult for the company to control independently because of industry cycles, cost control has become a controllable lever for stabilizing operations.
The company has proactively adjusted capacity rather than blindly expanding. The breeding sow inventory was reduced from 24.93 ten thousand head at the end of 2025 to 22.09 ten thousand head at the end of month 6 in 2026, mainly by culling older, less productive sows; the company also terminated inefficient capacity expansion projects and liquidated inefficient subsidiaries to control capital outlays. By proactively exiting inefficient assets during the downturn, the company is reducing capital expenditure and preparing for a cyclical reversal.
In terms of debt structure, short-term debt accounts for 28.2%, and working capital loans with maturities of 2-3 years account for 55%. Bank credit facilities total approximately 60 hundred million yuan, so the pressure from concentrated short-term maturities is relatively manageable. However, the asset-liability ratio of 89.98% and rigid lease liabilities of 41.53 hundred million yuan remain risks that require ongoing attention. If the recovery in hog prices falls short of expectations, sustained negative cash flow will continue to deplete the company’s liquidity.
Cycle outlook: awaiting a supply reversal in 2027
Cash flow is the management bottom line
The industry’s fundamentals have shown marginal changes. The national inventory of breeding sows has fallen below the regulatory red line, and capacity reduction is continuing, creating conditions for a subsequent recovery in the central level of hog prices. In the short term, peak demand for preserved meat in the fourth quarter provides some support for hog prices, but is unlikely to reverse the weak trend. Frozen pork inventory utilization is currently high, the average weight of hogs shipped remains around 125 kilograms, and large-scale farms are shipping at a relatively fast pace. Market supply pressures have not yet eased significantly. Most institutions believe that the window for a reversal in this cycle is unlikely to open before the first half of 2027.
For New Wufeng, using capital reserves to cover losses has secured time and flexibility for financial operations; the issuance of perpetual medium-term notes has added liquidity. Whether the company can navigate this cycle steadily depends primarily on two operating metrics: maintaining cash flow security and continuing to control debt levels; and pursuing cost reduction and efficiency improvements to consolidate its cost advantage.
The company’s future business direction is clear: closely follow industry policy guidance, make cost leadership the core and cash flow security the baseline, continuously optimize the debt structure and strengthen equity capital, and leverage a stable financial foundation and operating efficiency to seize opportunities arising from an industry recovery. Xinwufeng said it will continue to advance its three-year cost reduction and efficiency improvement initiative, use operational reforms to offset cyclical fluctuations, fulfill the responsibilities of a provincial state-owned enterprise in serving rural revitalization, and pursue high-quality, sustainable development.