13 December 2023

1 minute read

By: Global Ag Media

Asia

Chinese animal feed and pig producer Beijing Dabeinong Technology is seeking a no less than 51% stake in the controlling shareholder of Fujian Aonong Biological, both companies said on Tuesday, as the sector consolidates, according to Reuters. 

China's pig breeders and the companies that serve them have been hit by falling hog prices, shrinking demand, mounting losses and rising debts after years of rapid modernisation and aggressive expansion of herds.

Aonong has been selling off stakes in itself or in subsidiaries to raise cash, and its debt-to-equity ratio reached a hefty 8.26 in the third quarter, LSEG data showed.

In filings to Chinese bourses, the companies said negotiations will determine the exact size of any stake purchase in Xiamen Aonong investment.

Separately, Dabeinong signed a letter of intent to buy or invest in Fujian Aonong Biological assets worth up to 600 million yuan ($83.69 million).

"At present, the pig breeding industry as a whole is at a low point and the situation has continued for a long time," Dabeinong said in a filing to Shenzhen Stock Exchange.

Although the hog sector has weighed on Aonong, it said other parts of the company had "better investment value".

($1 = 7.1697 Chinese yuan renminbi)