[中报]新 希 望(000876):2022年半年度报告（英文版）
原标题:新 希 望:2022年半年度报告（英文版） [August 31, 2022] Section 1 Important Note, Table of Contents and Definitions The board of directors, board of supervisors, directors, supervisors and senior executives of the Company warrant that the contents of this semiannual report are true, accurate and complete and free of any false recordings, misleading statements or significant omissions, and that they will be jointly and severally liable for the legal consequences. The Company’s Chair of the board Liu Chang, chief accountant Chen Xingyao and the person in charge of accounting organization (accountant in charge) Su Xiaodan state that the financial report in this semiannual report is true, accurate and complete. All directors of the Company attended the board meeting deliberating this report. The Company is required to comply with disclosure requirements set forth in the “Self-regulatory Guideline No.3 of Shenzhen Stock Exchange for Listed Companies—Industry Information Disclosure” with respect to livestock, poultry and aquaculture related businesses. I. Epidemic and natural disaster risks The animal epidemic disease is the main risk faced in the development of livestock industry. There are three kinds of risks arising out of the occurrence of epidemic disease. First, the occurrence of epidemic disease is likely to result in death of livestock, directly leading to reduction in yield, rising costs and drop in prices. Second, the occurrence and prevalence of epidemic disease on a large scale easily influence the consumer psychology, lead to shrinking downstream market demands, and affect the feed production and operation. Third, after the outbreak of some infectious epidemic diseases endangering the public health and safety, the government will take lock-down and other measures to contain the spread of epidemic disease. These epidemic containment measures will seriously hinder the transportation of feed, animal healthcare products and live livestock, and the workers returning to work, and have a great impact on the production and operation of breeding industry. In addition, the outbreak of infectious epidemic diseases will force most catering enterprises to close business, some agricultural product markets to shut down, and consumers to reduce outdoors activities, resulting in reduced meat demand and consumption. For example, the African Swine Fever (ASF) has an enormous impact on the entire industry broke out in 2018. As the ASF is characterized by long latency and high mortality after onset of the disease, and the effective and reliable vaccine has not yet been developed successfully, coupled with the fact that it was also the concentrated outbreak on a large scale in China for the first time, both the large-scale breeding enterprises and small farmers lacked effective containment measures at the onset of epidemic, thereby suffering losses to various degrees. ASF has gradually become normal, especially in northern regions including Hebei, Shandong and Henan, causing widespread impact on aquaculture enterprises and farmers in the region. The COVID-19 outbreak at the beginning of 2020 also posed daunting challenges to the livestock and poultry breeding industry in China. The anti-epidemic measures such as lockdown, delay in return to work, suspension of live poultry trading, and shutdown of slaughter houses led to unavailability of feed to farms and livestock farmers, newborn livestock nowhere to sell, inability to slaughter livestock and poultry, and difficulties to conduct breeding production activities normally. Since 2022, the outbreak of COVID-19, mainly caused by the variant Omicron strain, has broken out in many provinces and cities in China. In addition to obstacles to the flow of personnel and materials related to production and operation, it is also significantly affecting daily consumption in cities. In terms of the natural disaster risk, the feed and slaughter are closely related to planting and livestock breeding industry, so the natural disasters such as temperature anomalies, drought, flood, earthquake, hail, and snow disaster will all adversely affect the industry operation and development. The natural disasters occurring on the production bases of the Company and surrounding areas may cause substantial damages to production facilities or equipment, and the natural disasters and extreme climate may also drive the prices of some feed ingredients and meats up. For example, in the summer of 2021 and 2022, multiple rounds of heavy rainfall occurred in many regions in China, resulting in flood disasters in many places. They adversely affected the planting, breeding, farm produce logistics, project implementation and meat prices along the industry chain to varying degrees. Risk countermeasures: in the face of animal epidemics, the livestock farms planned and constructed by the Company’s breeding base are normalized and standardized farms staffed with professional breeding technologists and equipped with strict anti-epidemic measures to effectively prevent and control the occurrence of epidemic diseases. The Company has also summarized some experience and measures responding to major epidemic diseases through years of exploration and accumulation, which allow the Company to eliminate the impact of various epidemics by adjusting the product mix when appropriate, improving the product quality, conducting deep market development actively and reducing the costs. Since 2014, the Company has been guiding technicians to better serve farmers and staffs of self-run farms by establishing animal healthcare laboratories in various areas, creating the cloud-based animal healthcare system, and conducting the monitoring and warning of epidemics and diseases in real time. In view of ASF outbreak in 2018, the Company formulated all-round and system-wide prevention and control measures, covering existing self-run pig farms, fattening farms in cooperation with farmer households, pig feed production plant and internal animal healthcare laboratories, with a view to ensuring proper prevention and control at the source of animal nutrition. Meanwhile, actively participating in industry exchanges and exploring more effective containment methods with peers allowed the Company’s bio-safety epidemic prevention system, pig survival rate and marketing rate to achieve industry-leading levels. From the end of the 2020 to the first quarter of 2021, a new round of attenuated ASF outbreak in many northern provinces is characterized by extensive outside contamination, numerous channels of spread, long latency periods and a long phase of effect, thus posing new challenges to the containment measures formed by the industry based on the ASF containment at the initial stage of the outbreak. However, the Company continued summing up its experiences and upgrading containment and decontamination methods in the containment process, including whole-population serum double-antibody and double-screening, application of thermal imagers, and static attenuation and disinfection of materials; and the Company added up its containment processes then subtracted so as to avoid slackness resulting from prolonged and excessively trivial containment processes, which helped restore normal production faster while ensure containment, as well as reduce bio-safety containment costs at the same time. In response to the COVID-19, the Company lost no time to react, formulated and carried out various containment policies and conducted emergency disposition in a coordinated manner. Secondly, the Company actively communicated with the government at all levels, coordinated the transportation of goods such as livestock products, and raw and auxiliary materials of feed and products, secured vehicle passes, and implemented the green channel policy enacted by the government at all levels. Thirdly, the Company ensured sufficient procurement for feed plants and production supply through region-wide coordination, strengthened internal support for poultry industry integration, arranged its employees to return to work rapidly and orderly, contributes to the adequate supply of daily necessities across the country, adjusts its food industry strategy in real time and expanded sales through supermarket channel and online channel. Fourthly, in light of its business practices, the Company compiled the epidemic containment manual, published documents such as technical guidance on employee prevention and control and quarantine and guidance on engineering control amid epidemics, organized the epidemic prevention arrangements in a targeted manner and strengthened employee safety protection. In response to natural disasters, the Company’s extensive business portfolio and presence both at home and abroad help ensure that the Company’s business will not be materially affected when natural disasters occur in particular regions. Especially for the rainstorms and floods in south China, which have occurred frequently in these years, the Company has accumulated a large wealth of experience, establishes proven contingency plans and maintains sufficient flood prevention supplies in stock at all times, which allow the Company to flexibly guide farmers through production plan adjustments when the flood season begins in preparation for disaster relief together. At the same time, the Company can also take the advantage of its nationwide presence to allocate funds, raw materials, equipment, and staff timely and effectively to resume production as soon as possible and reduce the losses caused by natural disasters. II. Risk of price fluctuations of feed ingredients The cost of main feed ingredients for feed production accounts for more than 90% of total cost of feed production. In the past, the proportion of feed business in the Company’s revenue was large, but as the feed industry generally adopts the cost-plus pricing method, the fluctuations in prices of feed ingredients can be partly transmitted to the downstream breeding operations, to relieve the pressure from the rising prices of feed ingredients. However, with a growing percentage of livestock breeding business in the Company’s revenue, the rising prices of feed ingredients will have a growing impact on the Company. Since 2020, due to various factors such as the COVID-19, changed purchase and storage policies and crop yield in main grain-producing areas of various countries, the prices of main feed ingredients such as corn and soybean meal continuously rose. Coupled with the impact of the international geopolitical conflict that broke out in early 2022 on the prices of agricultural commodities, and the continuous tension between China and the U.S., which brings great uncertainties to the agriculture commodities trade between the two countries and international trade of feed ingredients in the future, the risk of price fluctuations will remain for a long time. Moreover, considering the background of longtime existence of ASF in China, the feed enterprises will reduce some high-risk feed ingredients for the safety of animal nutrition, such as usage of corn, pig blood, and pig bone meal, so as to make the demand for raw materials concentrate on other types of raw materials, which will also lead to rise in prices of such alternative raw materials. Risk countermeasures: the Company is the largest domestic feed enterprise with the scale advantages and a considerable bargaining power in the raw material procurement. At present, the Company has established strategic partnerships with many domestic and overseas best-run raw material suppliers, conducted the supply chain financing of various forms actively, and optimized its purchasing cost and related financial expenses. Since 2019, the Company promoted reform in terms of central procurement of raw materials and acquisition of corn produced in northeast China Since 2020, in the context of the phase-specific impact of COVID-19 on the prices of feed ingredients and feed additives, the Company applied hedging tools more to control the ingredient price fluctuation risk. In the first half of 2022, when prices of main feed ingredients such as corn and soybean meal continuously fluctuated at high levels, the Company actively purchased imported low-price ingredients and alternative ingredients such as wheat, sorghum and brown rice while properly anticipating the market condition, in an effort to continually optimize ingredient costs. III. Risk of price fluctuations of livestock and poultry The finished products of livestock and poultry breeding business of the Company mainly include baby chick, baby duck, white feather broiler, white feather duck, breeding pig, piglet, and hog. In recent years, the pig farming business of the Company has been growing rapidly, with 9.98 million hogs and more than 400 million self-raised and outsourced commercial generation chicken and ducks sold in 2021, which allowed the livestock and poultry breeding to contribute greater to the entire revenue and profits of the Company. Along with the further growth of breeding volume of the Company in the future, the prices of livestock and poultry will affect the levels of revenue and profits of the Company even more remarkably. In the first half of 2022, the domestic livestock and poultry market as a whole was in a gradual recovery after hovering at the bottom for a long time. In terms of pig business, the price of domestic hogs was below 16 Yuan/kg in the first 5 months of the first half of the year, and it was at a very low position of about 12 Yuan/kg for 2 months. After June, with the continuous reduction of pig production capacity, the price began to rebound significantly. In terms of poultry business, it also experienced a period of downturn in the first half of 2022. The price of white feather broiler fell to about 7 Yuan/kg in the first quarter, and the price of white feather duck also fell to about 6 Yuan/kg in the first quarter, a relatively low level in the recent 5 years. However, compared with hog price, the price of chicken and duck has gradually turned upward since the second quarter. Risk countermeasures: apart from the impact of sporadic epidemics, the fluctuations in prices of livestock and poultry mainly depend on the periodic increase and decrease in breeding and supply quantities. As a result, the process of livestock and poultry prices going down itself is a process of the survival of the fittest in the industry. Against this backdrop, the Company still can generate more revenue or suffer fewer losses than its rivals in the process of price decline as long as it increases its breeding efficiency and makes its breeding costs lower than its rivals. When some participants withdraw, the total supply declines and the prices rise again, the Company might gain a greater market share and a higher return on investment than before. In recent years, the Company has been committed to continuously increasing its breeding efficiency. Although the Company’s rapid scale expansion on its pig business in the past year caused some of its competitiveness to be diluted temporarily, and some best practices failed to be replicated in time at newly constructed pig farms, along with the Company’s full transition to a stage of robust operation, the Company is gradually improving its business operation efficiency, reducing farming costs and restoring its original competitiveness by enhancing its internal management capabilities in many ways. On the other hand, unlike most of agricultural and livestock companies, the Company has slaughtering and food processing business at the downstream part of farming and feed business at the upstream part of farming, which happens to hedge against the farming process. The price decline of livestock and poultry means that the cost of raw meat in the slaughtering and processing businesses falls too and its profit margin will be increased; the declining prices of livestock and poultry also mean the farming volume of livestock and poultry is at high levels, which also helps increase the profitability of feed business. Such an industry chain presence can moderately mitigate the effects of declining prices of livestock and poultry on the Company. IV. Impact of environmental protection policies In 2014, China started implementing the Regulations on Pollution Prevention for Large-scale Breeding of Livestock and Poultry, as the government was strongly determined to keep livestock farms in line and new regulations were enacted across the country to demolish livestock farms, ban or restrict livestock farming activities. At the level of central government, the new Environmental Protection Law was enacted in 2015; in 2016, the State Council issued the 13th Five-Year Plan for Ecological and Environmental Protection. Since 2018, the central environmental protection inspectors have conducted several “follow-up reexaminations”, as the efforts to investigate pollution caused by livestock farms were strengthened across the country, ordering some breeding households to shut down for environmental remediation or close once for all due to their livestock farming facilities failing to meet the environmental standards or discharging wastewater beyond the set standards. In 2020, in the context of the sharp shortage of domestic hog supply caused by ASF, local governments have gradually relaxed the environmental protection requirements for farm construction in order to promote the resumption of hog production to ensure supply. However, after 2021, as the hog production capacity gradually recovered to the normal range, the environmental protection policies related to breeding returned to a more stringent situation. These pressures from the environmental protection policies will force some livestock and poultry farms failing to meet the environmental standards out of the market, and lead to reduced breeding quantities, which will have a certain impact on the Company’s feed business growth and its acquisition of hogs and poultry for slaughtering business, and will increase the cost of the Company’s investment in the construction of breeding capacity. In the long run, however, the withdrawal of backward production capacity that does not meet the environmental standards will allow the best-run producers that remain in the industry to acquire higher profitability, which is still of a positive significance to the entire industry. Risk countermeasures: in light of the changes in breeding market, the Company makes every effort to maintain existing customers, and strengthens its cooperation with medium and large-sized farms and farmers that meet the environmental standards by changing its feed marketing model and utilizing its industrialized supporting and integrated services. While exploring a new way of breeding, the Company regards ecology, environmental protection, efficiency and safety as primary considerations in its project design, helps farmers remodel and build sheds and stalls that meet the higher environmental standards, increase the profitability of breeding business and actively drive the domestic livestock and poultry farming industry to grow healthily. On the other hand, the Company actively grows its inventories by cultivating new livestock and poultry farming bases in areas with environmental condition through construction, acquisition, joint venture and cooperation using its existing business portfolio across the country, thus ensuring the stability of its breeding resources. V. Risk of food safety Food safety concerns the physical health and life safety of the general public, and is even a matter of life and death for food companies. Occurrence of food safety problems or accidents would cause food companies to face claims, litigation or related penalties in a way that even affects their brands and reputations, thereby materially adversely affecting their business, financial condition, stock prices or business performance. The implementation of the revised Food Safety Law in 2015 also means that China has brought its focus on food safety to an unprecedented level. The outbreak of ASF in 2018 raised even more demanding requirements for food safety control. Although the ASF itself is not a zoonotic disease and the pork with ASF virus is not harmful at all to humans after conventional heating and cooking, as there is not yet fully effective containment measure against ASF at present, and the pork and its products are one of the main vectors of the virus, more costs are required to prevent and control ASF during the process of hog recovery and slaughter, pork transportation and vending. In 2019, the State Council issued the Opinions on Deepening Reforms and Strengthening Food Safety Efforts, making clear the need to further beef up food safety efforts and to ensure the “safety on the dining table” of the general public with the most rigorous standards, the most stringent oversight, the most severe penalties and the most serious accountability. Risk countermeasures: the Company has always been highly concerned about food safety by seriously ensuring food safety in each link of its business practices. In 2015, the Company established its Safety and Environmental Protection Department to ensure safety, health and environmental protection of its products, and upgraded the equipment in its “three-level” testing system, expanded the laboratories of its branches and subsidiaries in terms of human and material resources, guaranteed the allocation and input of funds, resources and personnel across the food industry chain, which upgraded the food safety organization management, equipment and facilities, process management and key process control. In 2022, the Company further separated the Food Safety and Quality Management Department from the Safety and Environmental Protection Department, making the latter focus more on food safety-related work. So far, the Company has created a food safety control chain from feed, livestock and poultry breeding all the way to dining table. In 2014, the “Beiyouzi” branded duck meat produced by the Company was the first in China to achieve end-to-end traceability; in 2015, Chengdu Xiwang Food Co., Ltd, a subsidiary of the Company, became one of the second group of pilot companies for implementation of the national standard of “food cold chain logistics traceability management requirements”. In 2016, the Company passed the food technical standard certification issued by the British Retail Council (BRC), and was elected the Vice President of the China Council at the first plenary session of the Global Food Safety Initiative (GFSI) in China, becoming the first Chinese private enterprise to be selected as a member of the global board of directors of GFSI. In 2019, the 8th GFSI Focus Day China organized by the Company was held, marking the first time a private enterprise organized this event since GFSI began holding the Focus Day China in 2012. At present, all food businesses of the Company have passed China-HACCP certification, and more than 60 food companies are finishing the BRC and Global-GAP certifications in succession. In addition, the Company systematically explores the antibiotic-reducing and antibiotic-free possibilities in cooperation with multiple parties using the GFSI platform resources, and actively drives the popularization of antibiotic-reducing and antibiotic-free successful cases. VI. Risk of exchange rate fluctuations Currently, the globalization of raw material procurement for feed production is improved sharply, and the feed enterprises have been increasingly affected by the exchange rate in terms of feed ingredients purchasing centered on foreign supply such as corn, soybean, whey powder, fish meal and DDGS. At the same time, the Company has larger foreign operations than its Chinese peers, and in the foreign investment and overseas operations, the cross-border capital transaction and settlement amounts involved are growing, thus making the Company more vulnerable to exchange rate fluctuations. In recent years, due to the impact of factors such as the COVID-19, geopolitics and foreign exchange policy adjustments, the currencies of many overseas countries where the Company operates experienced extraordinary fluctuations, and the exchange rate of these currencies against the US dollar has dropped sharply, posing a great challenge to foreign exchange management and operational difficulties of the Company. Risk countermeasures: in response to the growing needs for overseas raw material procurement and investment and operation, the Company has been building its Singaporean branch into an overseas commercial and trading center and investment and financing center, actively conducted international centralized procurement of raw materials, foreign direct financing, supply chain finance, foreign exchange risk management, funds management and raw materials purchasing risk management to reduce the impact of exchange rate fluctuations on its cash flow in overseas operations. According to the forecast of the price trend of raw materials in the second half of the year, the Company set the raw material procurement strategy and trade strategy in advance. Meanwhile, the Company further strengthened its close connection and communication with overseas financial institutions, overseas agencies of the Chinese government and host governments to analyze the trends of local currency exchange rates in host countries in time and ease the adverse impact of exchange rate fluctuations by means of direct investment in local currency abroad, etc. VII. Risk of human resources The risk of human resources to the Company is mainly manifested in the following four aspects. First, the pig farming scale of the Company is now at a phase of leapfrog development. In the past year, the total number of the Company's pig breeding team has been maintained at more than 30,000 people, and management radius of the Company also increased, therefore, there are tremendous pressures and challenges in terms of rapidly training and retaining a large number of qualified pig farming workers. If the personnel recruitment, training and retention prove inadequate, potential risks will arise for the subsequent pig farm management and operation. Second, as the Company transforms from a traditional agricultural and animal husbandry enterprise to an agricultural, animal husbandry and food integrated enterprise, the Company will face the risk of insufficient reserve of high-caliber operation and management personnel in new business domains and of personnel in food retail, engineering technology, IT and other emerging fields. Third, along with the rising labor cost, employee compensation has become an important factor in cost increase of the Company. Fourth, as a leading enterprise in China’s agricultural and animal husbandry industry, the Company has trained a large number of outstanding employees in many years, but the competition for human resources has been intensifying due to the increasing competition in the industry and entry of new players from different backgrounds in recent years, the Company will suffer from losing of talents which will subsequently affect the sustainable development of the Company. Risk countermeasures: the Company treats employee training and employee motivation as a long-term strategic task of the Company. In terms of recruiting talented pig farmers, the Company expanded its recruitment targets beyond college graduates majored in agriculture and animal husbandry. The Company started to recruit non-specialized college graduates and veterans. For pig farmer training, the Company not only standardized and digitalized daily production processes, but also offers specialized courses of different levels for general manager, farm managers all the way down to the newly recruited frontline workers through in-house pig farming universities and pig industry research institutes that offer high-frequency learning and training，and through the modern mentorship system inside pig farms and one-to-one mentoring by experienced employees, the training time for new employees has been shortened. The Company further optimized its pig industry talent incentive system, employees at all levels in pig industry will receive industry-leading compensation based on their performance and output. In addition, in order to reduce the pressure on labor cost, the Company became more aggressive in carrying out projects such as pig farming in multistory buildings, intelligent pig farms and IoT, which will significantly increase its efficiency of personnel utilization. The Company also intensified its efforts to recruit talented people in new strategic businesses, while actively conducting cross-industry training and learning to enhance employees’ knowledge and improve their capability. The Company realized a continuous increase in per capita efficiency by efficiency improvement, lean management, optimization of industry chain design and organization flattening; created the professional manager promotion system with survival of the fittest by constructing the competition, selection and elimination mechanisms; and creates the growth community of employees and the Company by constructing fair evaluation mechanisms ,incentive mechanisms and value sharing mechanisms. In 2019, the Company implemented its restricted stock and stock option incentive plan for the first time to motivate its key technologists and key members of pig farming teams. In the first half of 2022, the Company launched the restricted stock incentive plan and employee stock ownership plan again. These two incentive plans covered more than 2,000 people, which was unprecedented in the Company's history. The scope of the incentive objects not only covers the frontline farm managers in the pig breeding team, but also extends to the frontline key cadres in other industries of the Company. The new round of equity incentives has further improved team cohesion and the Company's competitiveness, fully mobilized the enthusiasm of the Company's senior managers to key frontline cadres, and provided a solid guarantee for the Company's steady and sustainable development in the next few years. The Company plans not to distribute cash dividends or allot bonus shares or transfer its provident fund to share capital. Table of Contents Section 1 Important Note, Table of Contents and Definitions .................................................................... 2 Section 2 Company Profile and Key Financial Indicators ....................................................................... 25 Section 3 Management Discussion and Analysis ..................................................................................... 28 Section 4 Corporate Governance ........................................................................................................... 63 Section 5 Environmental and Social Responsibilities .............................................................................. 66 Section 6 Important Matters ............................................................................................................... 150 Section 7 Changes in Shares and Information about Shareholders ........................................................ 186 Section 8 Details Related to Preferred Shares ....................................................................................... 195 Section 9 Details Related to Bonds ....................................................................................................... 196 Section 10 Financial Report ................................................................................................................ 202 List of Reference Documents (1) Financial statements bearing the signatures and seals of the CEO, chief accountant and the person in charge of accounting organization (accountant in charge) of the Company. (II) Originals of all corporate documents and manuscripts of announcements publicly disclosed on China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and cninfo.com during the reporting period. Definitions
Section 2 Company Profile and Key Financial Indicators I. Company Information
1. Contact information of the Company Whether the Company’s registered address, office address, post code, website and email address have been changed during the reporting period □applicable ?not applicable There is no change in the Company’s registered address, office address, post code, website or email address during the reporting period, refer to 2021 annual report for details. 2. Information disclosure and filing place Whether the information disclosure and filing place have been changed during the reporting period □applicable ?not applicable There is no change in the name of the information disclosure newspaper selected by the Company, the website designated by CSRC for publication of semiannual report or the filing place of the Company’s semiannual report during the reporting period, refer to 2021 annual report for details. 3. Other relevant information Whether other relevant information have been changed during the reporting period □applicable ?not applicable IV. Key accounting data and financial indicators Whether the Company needs to retroactively adjust or restate the accounting data of previous years □Yes ?No
standards and Chinese accounting standards in the financial report □applicable ?not applicable The Company had no difference in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards during the reporting period. 2. Differences between the net profit and net assets disclosed in accordance with overseas accounting standards and Chinese accounting standards in the financial report □applicable ?not applicable The Company had no difference in net profit and net assets in financial reports disclosed in accordance with overseas accounting standards and Chinese accounting standards during the reporting period VI. Items and amounts of non-recurring profit or loss ?applicable □not applicable Unit: Yuan
□applicable ?not applicable The Company has no other profit or loss items that conform to the definition of non-recurring profit or loss. Description of non-recurring profit or loss items enumerated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public– Non-recurring Profit or Loss classified as recurring profit or loss items □applicable ?not applicable The Company has no non-recurring profit or loss items enumerated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public– Non-recurring Profit or Loss classified as recurring profit or loss items. Section 3 Management Discussion and Analysis I. Main businesses of the Company during the reporting period The four main businesses of the Company are feed, white feather poultry, pig farming and food. The four major businesses are run by different business units, but are highly collaborative with each other and jointly constitute a structure featuring diversification of pig and poultry business segments and with synergy between upstream farming and downstream food industry. The ingredient procurement part of feed business can meet the ingredient needs for feed production in white feather poultry business and pig farming business. Some hogs from pig farming operations would be delivered to pig slaughter plants of food business units for slaughtering. White feather poultry business and food business share numerous channels and customer resources downstream and jointly carry the food brand image of the Company. (I) Feed business In the Company’s feed business, there are premix feed, concentrated feed as well as compound feed according to classification of nutrients, of which premix feed and concentrated feed are both sold to external markets directly and sold to in- house compound feed factories. Classification of feed types according to animals, it includes almost all types of feed products such as poultry feed, pig feed, acquatic feed and ruminant feed. As the Company also has white feather poultry business and pig farming business downstream, poultry feed and pig feed produced by the Company are supplied to downstream contract farmer households and in-house breeding farms for their use in addition to sales to external markets. Aquatic feed and ruminant feed produced by the Company are all sold to external markets. The Company’s feed business has been the largest for many years in the domestic feed industry. In the first half of 2022, the Company’s internal and external feed sales totaled 13.34 million tons, accounting for about 10% of the national total, of which poultry feed amounted to 7.51 million tons, accounting for about 13% of the national total, the largest manufacturer in China; pig feed sales totaled 4.79 million tons, accounting for about 8% of the national total, and aquatic feed sales totaled 0.73 million tons, accounting for about 7% of the national total, both ranked among the top three in China; ruminant feed sales total 0.23 million tons, accounting for about 3% of the national total, also ranked among the top in China. The Company strengthens its product power, purchasing power, productivity and service ability continuously, by launching biological environment-friendly feed and antibiotic-free feed, eliminating the outdated capacities, and building high-output benchmark plants. The Company also actively pursues extension of industry chain and explores transformation and upgrading of its business model. On one hand, the Company makes full use of downstream industry chain foundation deployed in the past, actively develops integrated projects of feed–breeding-slaughtering, actively invests in and acquires projects related to food business, and steadily promotes its transformation from a sole feed manufacturer to a breeder and food producer; on the other hand, the Company was the first in the industry to launch the project of “everything flourishing” (poultry flourishing, pig flourishing, fish flourishing, cattle flourishing, sheep flourishing) to provide technical and financial services to farmer households. It established breeding training management companies or breeding service companies to facilitate the direct engagement with large farms or farmers. It also developed guarantee business to promote the development of feed business. (II) White feather poultry business The Company’s breeder bird propagation business extends to upstream operations differently for breeding duck and breeding （未完）  |