[年报]牧原股份(002714):2022年年度报告摘要（英文版）
I ．Important Notes This summary is abstracted from the 2022 Annual Report of Muyuan Foods Co., Ltd.. Investors may refer to the full text of the report through the media designated by the China Securities Regulatory Commission (CSRC) for further details of the business performance, financial situation and future development plans of Muyuan Foods Co., Ltd. (hereinafter referred to as “the Company"). This summary has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. All directors attended the board meeting on which this report was reviewed. Notes of non-standard audit opinions □ Applicable ?Not Applicable Preliminary plan for profit distribution or capitalization of reserves in the reporting period as reviewed by the board ?Applicable □ Not Applicable Capitalization of reserves or not □ Yes ?No The preliminary plan for profit distribution, as approved by the Company’s board of directors, decides to distribute a cash dividend of CNY 7.36 (tax included) for every 10 shares to all shareholders, on the basis of the total share capital on the record date for the distribution, with 0 bonus shares (tax included) and no capitalization of reserves. Profit distribution plan of preferred shares during the reporting period as approved through the resolution of the board of directors ?Applicable □ Not Applicable
1. Company Profile
In 2022, the Company sold 61.201 million heads of pigs, including 55.296 million heads of finished pigs (of which, 7.368 million heads were sold to the wholly-owned subsidiary Muyuan Meat Co., Ltd. and its subsidiaries), 5.558 million heads of piglets, and 346 thousand heads of breeding pigs. In 2022, 7.362 million heads of pigs were slaughtered and 757 thousand tons of fresh and frozen pork products were sold. As a result, the Company achieved an operating revenue of CNY 124.826 billion in 2022, a YOY increase of 58.23%. Of which, the revenue attributable to slaughter and meat processing is CNY 14.718 billion, a YOY increase of 171.66%. The net profit is CNY 14.933 billion, a YOY increase of 95.50%. In 2022, the Company continued to increase investment in the on-site management of farms, technology R&D and innovation, and achieved significant results in pig health management and disease elimination. The Company's production indicators improved significantly compared to 2021 and the annual pig farming costs showed a continuous downward trend. In 2022, the the fourth quarter was reduced to less than CNY 15.5/kg. Without considering the impact of raised raw grain prices on costs, the Company had basically realized its annual goal of lowering costs. The year 2022 witnessed the Company’s further transformation from high-speed development to high-quality and stable development. It continuously promoted the construction of supporting facilities for pig farms, improved the infrastructures for biosecurity, and strengthened the cost-control ability of pig farming. It also expanded to the upstream and downstream of the industrial chain. Subsidiaries of grain trading companies were established to serve the purpose of lowering purchase costs. And slaughter business was distributed to match the established pig production capacity for providing more high-quality pork foods to the public. As of the end of 2022, the Company has 288 wholly-owned and holding subsidiaries, which are distributed in 24 provincial-level administrative regions across China. Besides, to enhance the industrial chain linkage and reduce purchase costs, during the reporting period, the Company co-founded the CAHIC-Muyuan (Henan) Biopharmaceutical Co., Ltd (“中牧牧原（河南）生物药业有限公司”) with the China Animal Husbandry Industry Co., Ltd. (CAHIC) (“中牧实业股份有限公司”) and CAHIC Nanjing Animal Pharmaceutical Co., Ltd. (“中牧南京动物药业有限公司”) and co-founded the Henan Lianmu Veterinary Medicine Co., Ltd (“河南联牧兽药有限公司”) with the United Laboratories (Inner Mongolia) Animal Healthcare Co., Ltd. (“内蒙古联邦动保药品有限公司”). 2022 is the second year for China to fully promote the Dual-carbon Strategy. To promote green development in the industry by further energy conservation, emission reduction, low-carbon production, and improvement in utilization efficiency of raw materials, the Company established companies based on its businesses of pig farming, slaughter, and meat processing, namely Henan Muyuan Ecological Environment Technology Co., Ltd.(“河南牧原生态环境科技有限公司”), Henan Muyuan Synthetic Biotechnology Co., Ltd. (“河南牧原合成生物技术有限公司”), and Henan Muyuan New Energy Industry Development Co., Ltd. (“河南牧原新能源产业发展有限公司”). In 2022, to build a talent team that is younger, internationalized, and more professional, the HR Department of the Company carried out various activities to attract talent from colleges domestically and actively managed several overseas special recruitment activities for international students. It established well an assessment mechanism to select and use talents, a talent pool and qualities continuously, and a performance-based pay mechanism and personnel administration mechanism to make employees clear about their promotion channels. By doing so, it aims to give the right people full play in the right positions and meet the talent needs during the Company's high-quality development. (II) Main businesses, products and their uses The Company’s main businesses are the farming, sales, and slaughter of pigs. Its main products include finished pigs, piglets, and breeding pigs, as well as pork products such as pork carcasses and finely cut pork. As of the end of 2022, the Company has a pig farming capacity of about 75 million heads per year and has put 10 slaughter plants into operation, with a designed slaughter capacity of 29 million heads of pigs per year. (III) Business model The Company adopts a vertically integrated business model and has formed a pork industrial chain, integrating feed processing, pig breeding, pig finishing, pig slaughtering, and meat processing, that covers the whole pig industrial value chain. The vertically integrated business model is helpful for the Company to carry out more strict control of costs and quality and ensure business results in an all-round way. The Company builds its own feed mills to independently develop nutrition formulas and produce feeds to meet the feeding needs of all-stage pigs. To control the feeding costs effectively, feed formulas would change timely in accordance with the changes in the raw grain market and low-protein diet technology has been applied to reduce the usage of soybean meals. The Company adopts the two-breed rotational crossbreeding system to select continuously and independently and build its own nucleus herds. It, therefore, depends on no breeding pigs purchased from external sources and makes the production costs and disease risks reduced. At the same time, the Company’s breeding pigs can satisfy both breeding use and finishing use in terms of reproductive performance, growth rate, lean meat percentage, and carcass quality, which lays a foundation for the rapid development of the Company. The Company adheres to R&D innovations and the application of smart equipment. It has independently developed the fresh air filtration system, independent ventilation system, intelligent environment control system, intelligent feeding system, etc. A series of intelligent equipment operate in a collaborative manner. It aims to improve pig farming efficiency, lower pig farming costs, and promote the transformation and upgrading of the industry through technology-led and innovation-driven development. In 2022, the Company continued to build supporting slaughter capacity in the regions where the Company carries out large-scale pig farming. Based on the business model of independent pig farming and slaughter, the Company made the whole production process transparent, controllable and traceable, so as to ensure food quality and safety and provide consumers with more high-quality pork products. As of the end of 2022, the Company had set up 25 slaughter subsidiaries across China, with all slaughtered pigs from its own farms. The Company further expanded its pork sales network in China. It had set up more than 60 service stations for slaughter and meat business in 20 province-level regions across China as of the end of 2022, providing services to over 13,000 clients from agricultural product wholesale and distribution, supermarket chains, chain catering, food processing and new retail. (IV) Industry development 1. Overview of China’s pig industry Data from the National Bureau of Statistics of China (NBSC) show that 699.95 million heads of pigs were marketed in China in 2022, an increase of 4.27% over the previous year. As of the end of 2022, the inventory of reproductive sows and live pigs is 43.90 million and 452.56 million, an increase of 1.41% and 0.74% over the previous year, respectively.
Department of Agriculture (USDA), China's pork production in 2022 accounted for 48.36% of global production, an obvious increase over the previous two years.
China is also the largest pork consumption country in the world. According to data released by USDA, China's pork consumption accounts for about 51% of the world's in 2022, and China's per capita pork consumption is about twice the world's. So, Pork is the most important component of meat consumption among Chinese residents. According to NBSC, China's pork production in 2022 was 55.41 million tons, accounting for 60.05% of the meat production of main livestock and poultry.
2. Pig price trend China’s pig market is characterized by significant cyclicity. In the cycle from 2019 to 2022, live pigs for market dropped in 2019, and the pig price turned to high from a low position at the beginning. The annual average price increased significantly year-on-year. In 2020, the industry's production capacity showed a gradual recovery trend, but due to the large reduction in the early stage, live pigs were still in short supply, and the price of live pigs was generally maintained at a high level. In 2021, the industry's production capacity basically recovered, the market supply rebounded significantly, and the price of live pigs showed a downward trend. In 2022, the production capacity of the industry fully recovered. The pig price turned to high from a low position at the beginning of the year, with a large fluctuation.
3. Continuously improved pig farming scale China’s pig farming industry has long been dominated by scatter feeding production, with a low industry concentration. There are a large number of backyard households and small- and medium-sized farms. According to the statistics of the China Animal Husbandry and Veterinary Yearbook, there were 554 farms/households with an annual production of more than 50,000 live pigs for market in 2020, accounting for only 0.0027% of the total number of farms/households, which increased a little bit but is still a very low proportion. In recent years, affected by factors such as the tightening of environmental protection policies, scarcity of pig farming land, frequent outbreaks of African Swine Fever and other epidemics, drastic fluctuations in pig prices, and accelerated improvement of food safety, the backyard households have withdrawn significantly, further accelerating the process of China’s top 10 pig farming companies sold 141.92 million heads of pigs in total in 2022, accounting for 20.28% of the total output in China, an increase over 2021. The concentration of China's pig farming industry has shown a continuous upward trend in recent years, but the overall level of large-scale production in the industry remains relatively low compared with other countries with more mature industrial development. 3. Main accounting data and financial indicators (1) Main accounting data and financial indicators in the past three years Whether the Company needs to make retroactive adjustments or restate the accounting data of previous years or not □ Yes ?No Unit : CNY
Unit : CNY
4. Share Capital and Shareholders (1) The number of common shareholders and preferred shareholders with resumed voting rights and the shareholding of the top 10 shareholders Unit: share
(1) Basic information of bonds
During the reporting period, China Chengxin International Credit Rating Co., Ltd. (CCXI) issued the 2022 Tracking and Rating Report on the Public Issuance of Convertible Bonds by Muyuan Foods Co., Ltd. on June 28, 2022. It decided to maintain the Company's AA+ main credit rating, adjust the rating outlook to negative, and maintain the AA+ credit rating of "Muyuan Convertible Bond". Please refer to the relevant announcements on the website of CNINFO on June 29, 2022, for details. (3) Main accounting data and financial indicators in the past two years as of the end of the reporting period Unit: CNY 10,000
(1) During the 32nd Meeting of the Third Board of Directors held on December 8, 2020, the Company deliberated and approved the Proposal on the Establishment of a Jointly Funded Financial Company by Muyuan Foods Co., Ltd. and Muyuan Industrial Group Co., Ltd. and on Related-Party Transactions. The Company and Muyuan Group plan to jointly fund a financial company. The registered capital of the financial company is CNY 1 billion, which shall be funded in cash by Muyuan Group and the Company as sponsors, with CNY 450 million from the Company. As of the report release date, the matter is still under preparation and application. (2) The Company held the 15th Meeting of the Fourth Board of Directors on December 12, 2022 and the 3rd Extraordinary General Meeting of 2022 on December 28, 2022, during which the Proposal on the Issuance of GDRs and Listing on the SIX Swiss Exchange and Transforming into an Overseas-Offering Limited Company and other related proposals were approved. It was agreed the Company issue GDRs on the SIX Swiss Exchange; the new underlying A shares represented by the GDRs issued shall not exceed 250 million shares, including the securities issued upon the exercise of any over-allotment option (if any), and shall not exceed 4.37% of the total ordinary share capital of the Company upon completion of the issuance. As of the date of this report, the Company has been granted conditional approval from the SIX Exchange Regulation AG for issuing GDRs and listing on the SIX Swiss Exchange. The SIX Swiss Exchange Regulation AG has agreed to list the GDRs issued by the Company, subject to the satisfaction of customary conditions, on the SIX Swiss Exchange. For the issuance and listing, the approval of the China Securities Regulatory Commission (CSRC) is required. And several prerequisites, including but not limited to the approval of the Prospectus Office of the SIX Swiss Exchange Regulation AG on the Company’s prospectus and the final confirmation of the listing timing by the SIX Swiss Exchange, still need to be satisfied. These matters are subject to certain uncertainties. In addition to the above matters, the Company is not required to disclose other significant matters. Muyuan Foods Co., Ltd. Chairman: Qin Yinglin April 26, 2023 中财网
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