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Sen Yu International Holdings, Inc. (CSWG) Anticipates Gains from Increased Hog Prices

May 26, 2011 5:56 PM ET1 Comment
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Sen Yu international Holdings, Inc., a leader in breeding, raising, and distributing commercial hogs and piglets to the slaughter facilities and distributors in the People’s Republic of China, announced that it expects increasing hog prices to help increase breeders’ profits and expects long-term demand for its commercial breeding hogs based upon increased consumption by Chinese consumers.

Dow Jones Newswires reported a week prior that higher hog prices are supporting U.S. pork exports to China and a swift expansion of the domestic herds for this year, with Chinese piglet prices increasing by 50% thus far to three-year highs, in accordance with a note that was released by the U.S. Department of Agriculture on May 19, 2011. Weaker domestic prices for the first half of 2010 and diseases reduced Chinese herds sharply, which caused a pork shortage in the country that is potentially more severe than was initially expected, according to the USDA’s Beijing-based Foreign Agriculture Services.

The increases in pork prices nationwide took off last month when certain farms in one of the country’s major pig breeding areas were reported to have given the pigs an illegal drug in their food to produce more lean meat. China’s biggest meat processor learned that certain pigs in Henan and other farms have been affected by the lean-meat producing drugs and the facilities were shut down as a result. This added to the supply shortage and helped push prices higher. In accordance to a recent report in the Want China Times, increased feed and labor costs, along with supplies that fall short of the demands in the market, are more likely to keep pig and pork prices at higher levels during the second quarter for this year, and even reach a new high later.

“Though higher prices for pork will likely encourage more hog farmers to enter the industry, Sen Yu has a well-established brand and is the leading commercial hog breeder and supplier in Heilongjiang Province,” commented Mr. Zhenyu (Jack) Shang, Founder, Chairman and CEO of Sen Yu International Holdings, Inc. “In our most recent fiscal third quarter, we experienced higher revenue and gross profit and very significant increases in gross margins due to strong increases in average market prices for commercial hogs. As a result, gross margin in the fiscal third quarter increased 27.2% versus 17.9% for the same period last year, and net margin rose to 19.3% versus 9.7% a year ago. While prices may fluctuate over time, we believe that strong demand from Chinese consumers for high quality pork coupled with rising domestic incomes and economic expansion will stimulate even greater demand for our superior breeding and commercial hogs.”

For more information on the Company and its products, visit their company website: www.hljsenyu.com

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