Resilient feed business supports long-term growth, while farming drags on earnings and leads to a target price cut

Overview

This report is UBS's review of Guangdong Haid Group's FY25 and 1Q26 earnings call. The core conclusion is that the feed business maintained solid growth in both 2025 and 1Q26, while the overseas business sustained strong growth momentum and is viewed by the company as a core long-term expansion driver; however, the hog farming segment continued to weigh on overall earnings due to hog price weakness and cost pressure.

Core views

UBS maintains its Buy rating mainly because long-term visibility for feed sales volume growth remains high, the domestic business still targets 10%-15% compound growth, overseas growth is faster, and management continues to emphasize shareholder returns and potential buybacks. However, the report also lowers earnings forecasts and the target price to reflect lower-than-expected hog farming profitability.

Analysis framework

The report analyzes segment operating performance, management guidance, earnings forecast revisions, and valuation changes. At the segment level, it focuses on feed sales volume, average selling prices, gross profit per tonne, expense savings, and farming losses; on valuation, it primarily uses DCF with SOTP as a cross-check.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  UBS derives Guangdong Haid Group's target price using the DCF method and cross-checks it with SOTP valuation; this time, the DCF target price was lowered from Rmb78.30 to Rmb68.70.

• Valuation cross-checkSOTP

  Sum-of-the-parts valuation

  The report mentions SOTP as a cross-check for the DCF target price, which is suitable for a company with multiple business segments such as feed, farming, and overseas operations.

• Rating frameworkForecast Stock Return

  Forecast stock return

  UBS defines forecast stock return as expected share price appreciation over the next 12 months plus dividend yield; this report forecasts 39.9% share price appreciation, 2.6% dividend yield, and 42.5% forecast stock return.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Guangdong Haid Group / 002311.SZ

  Research target; a leading Chinese feed company with operations spanning feed, fry and fingerlings, animal health products, farming services, and hog farming.

  Strengths

  Strong feed sales volume growth, up 22.3% YoY in 2025; management maintains the long-term target of 52mn tonnes by 2030; strong overseas growth momentum; relatively clear commitment to shareholder returns and buybacks.

  Weaknesses

  Profitability in the hog farming segment remains under pressure, with an estimated loss of about Rmb100mn in 1Q26; EPS forecasts were lowered; weak near-term hog prices affect overall earnings quality.

  Comparison

  The target price was cut from Rmb78.30 to Rmb68.70, but versus the current price of Rmb49.12 it still implies 39.9% forecast share price upside and 42.5% forecast total return.

  Risks

  Extreme weather, epidemics, weaker feed demand, intensified industry competition, rising grain prices, slower-than-expected hog capacity reduction, etc.

Key data

• 2025 feed sales volume29.9mn tonnes，YoY +22.3%Average selling price declined 6.0% YoY to about Rmb3,500/tonne, mainly due to lower raw material costs.
• 2025 feed gross profit per tonneabout Rmb340/tonne，YoY -about Rmb23/tonneExpenses per tonne declined by about Rmb20 YoY, basically offsetting the impact of lower gross profit per tonne on net profit per tonne.
• 1Q26 feed sales volume6.8mn tonnes，YoY +13%Hog feed sales volume rose more than 20% YoY, aquatic feed rose 40% YoY, and poultry feed was broadly flat.
• 2025 hog shipmentsmore than 6.0mn heads，roughly flat YoYAverage selling price was about Rmb13.6/kg and cost was about Rmb13.0/kg, affected by the higher price of externally purchased piglets.
• 1Q26 hog farmingabout 1.6mn heads，segment loss of about Rmb100mnThe loss includes hedging impact.
• 2026 feed sales volume growth guidance3.7-3.8mn tonnesAbout 1.5mn tonnes of poultry feed, 1.0mn tonnes of hog feed, and 1.0mn tonnes of aquatic feed.
• 2030 long-term target52mn tonnesThe company targets aquatic feed to account for about 50%, with overall feed market share of about 12%.
• EPS revisions2026-28E EPS cut by 6%-17%2026E lowered from Rmb3.12 to Rmb2.59; 2027E lowered from Rmb4.00 to Rmb3.75; 2028E lowered from Rmb4.51 to Rmb4.13.
• Target price and valuationRmb68.70，implying 26x 2026E PEPrevious target price was Rmb78.30.
• Market capitalizationRmb80.8b / US$11.8bThe report discloses trading data and key metrics.

Impact & implications

The report's investment implication is positive but more cautious: the core feed business and overseas operations provide long-term growth support, sufficient to sustain the Buy rating; however, earnings volatility in hog farming depresses short-term earnings forecasts and the target price. If hog prices recover, farming losses narrow, or feed sales exceed expectations, earnings elasticity could improve; conversely, a downcycle in hog prices or intensified feed competition would limit valuation recovery.

Risks

• Extreme weather or epidemics could reduce downstream livestock, poultry, and aquatic inventories, thereby depressing feed demand.
• Competition in the feed manufacturing industry may intensify, causing sales volume growth to come in below expectations.
• Extreme weather or international tensions could push up feed grain prices and compress net profit per tonne of feed.
• Slower-than-expected reduction in sow capacity may prolong the downcycle in hog prices, further dragging on the company's earnings.
• Weaker-than-expected profitability in the hog farming segment may continue to pressure EPS and valuation.

What to watch

• Whether 2026 feed sales volume can achieve the guided increase of 3.7-3.8mn tonnes.
• Whether aquatic feed sales growth in April and thereafter normalizes to about 20% after front-loaded demand.
• Changes in hog prices, externally purchased piglet costs, and losses in the farming segment.
• The domestic business's 10%-15% CAGR target and the growth rate of the overseas business.
• Whether 2026 capex remains at about Rmb3.3bn, as well as changes in potential buybacks and payout ratio.
• The direction of subsequent revisions to 2026E EPS relative to consensus expectations and UBS forecasts.