Chicken production firms ring up strong growth in the first six months

Chicken farming enterprises in China have reported sterling results in the first half of the year, as growing demand and tight supply have bolstered prices.

With the approach of traditionally busy seasons such as the new semester for schools, Mid-Autumn Festival, and the National Day holiday, continued robust market demand is expected, and chicken prices also are expected to climb over the rest of the year.

In the first six months, the total number of slaughtered broiler chickens hit 4.2 billion nationwide, up 15.8 percent year-on-year. Total chicken production reached 6.64 million metric tons, 13.5 percent higher year-on-year, the Ministry of Agriculture and Rural Affairs said.

Chicken has stepped in to fill the gap in consumption caused by short supplies and higher prices of pork caused in part by African swine fever.

From July last year to May, prices of young broiler chickens edged up from 3 yuan (4 cents) each to about 10 yuan each. Prices of chicken products and young birds are seen picking up and industry experts are bullish on the growth of the whole-year earnings of chicken farming companies.

"Yantai, Shandong province saw ex-farm prices of chicken reach their highest point in years. Chicken farming enterprises, especially breeders, are likely to hit their best earnings in decades. In the first half, the gross profit of chicken raising enterprises grew about 30 percent," a research report of Everbright Securities said.

From January to June, A-share market listed industrial players, such as Shandong Minhe Animal Husbandry Co Ltd, Shandong Yisheng Livestock& Poultry Breeding Co Ltd, Fujian Sunner Development Co Ltd, and Liaoning Wellhope Agri-Tech Joint Stock Co Ltd posted net profit of 869 million yuan, 904 million yuan, 1.65 billion yuan and 359 million yuan respectively.

All enterprises more than doubled their net profit over the same period a year ago.

Share prices of many of the companies have shot up as a result.

Shandong Minhe stock has more than tripled since the start of the year, closing on Wednesday in Shenzhen at 35.87 yuan per share. Since the start of the year, the stock has soared more than 208 percent in value.

Shares of Wellhope Agri-Tech climbed 68 percent so far this year and ended on Wednesday at 13.88 yuan, nearly doubling in price from the beginning of the year.

"With the surge of prices of young chickens, most listed chicken raising enterprises achieved their highest profits since they debuted. Backed by a growing industry, profits hopefully will climb continuously," said a research report of Haitong Securities.

Industry reports noted that avian influenza, price increases of young chickens and changes in consumption habits may have an impact on the sector, and this in turn could cause fluctuations in both revenue and profit.