| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 60.18 | 110 |
| Intrinsic value (DCF) | 12.50 | -56 |
| Graham-Dodd Method | 15.07 | -47 |
| Graham Formula | 65.28 | 128 |
Yunnan Shennong Agricultural Industry Group Co., Ltd. is a vertically integrated agricultural enterprise headquartered in Kunming, China, specializing in the complete pork production value chain. Founded in 1999, the company operates across three core business segments: feed production, pig farming, and food processing. Yunnan Shennong's integrated model encompasses feed processing, pig breeding, slaughtering operations, and fresh pork sales, creating a closed-loop system that enhances quality control and supply chain efficiency. Operating in China's massive agricultural sector, the company plays a vital role in the Consumer Defensive space by providing essential protein products to the domestic market. With its strategic location in Yunnan province, Yunnan Shennong leverages regional agricultural resources while serving broader Chinese consumer markets. The company's vertically integrated approach positions it to capture value across multiple stages of pork production, from animal nutrition to final consumer products. As food security remains a national priority in China, Yunnan Shennong contributes to stabilizing pork supply chains in one of the world's largest pork-consuming markets.
Yunnan Shennong presents a mixed investment profile with several notable strengths and risks. The company demonstrates solid financial performance with CNY 686.8 million in net income on CNY 5.58 billion revenue, reflecting healthy profitability margins. Strong operating cash flow of CNY 1.53 billion supports business operations, while a conservative debt profile with total debt of CNY 562 million against cash holdings of CNY 1.04 billion indicates financial stability. However, the absence of dividend payments may deter income-focused investors. The company's beta of 0.962 suggests moderate volatility relative to the market. Key risks include exposure to commodity price fluctuations in feed ingredients and pork markets, vulnerability to disease outbreaks in pig populations, and regulatory changes in China's agricultural sector. The vertically integrated model provides cost control advantages but requires significant capital expenditures, as evidenced by the CNY 980.8 million in capital spending.
Yunnan Shennong's competitive positioning is defined by its vertical integration strategy within China's fragmented pork industry. The company controls the entire production chain from feed manufacturing to fresh pork sales, which provides several advantages including quality control, supply chain stability, and margin capture across multiple value stages. This integrated approach differentiates Yunnan Shennong from smaller, specialized operators who focus on individual segments of the pork value chain. The company's regional focus in Yunnan province offers localized market knowledge and potentially lower transportation costs, though it may limit national scale compared to industry giants. Competitive advantages include operational efficiencies from controlling upstream feed production and downstream processing, reducing dependency on external suppliers. However, Yunnan Shennong faces significant scale disadvantages compared to national leaders like Muyuan Foods and Wens Foodstuff, which operate with substantially larger production volumes and broader geographic reach. The company's moderate market capitalization of CNY 17.9 billion positions it as a mid-tier player in an industry where scale increasingly drives competitiveness through purchasing power, distribution networks, and brand recognition. Success will depend on balancing regional strengths with potential expansion opportunities while managing the capital intensity of maintaining full vertical integration.