[年报]新 希 望(000876):2022年年度报告（英文版）
原标题:新 希 望:2022年年度报告（英文版） 2022 Annual Report 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 annual 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 board chairman 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 the annual report is true, accurate and complete. All directors of the company attended the board meeting deliberating this report. I. Animal disease and natural disaster risks Animal 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, increased costs and drop in prices. Second, the occurrence and prevalence of animal disease on a large scale easily influence the consumer psychology, lead to shrinking downstream market demands and affect the feed production and operation. For example, the first outbreak of African Swine Fever (ASF) in China in middle 2018 caused a significant shock to the whole industry. Although the industry initially explored the prevention, control and treatment methods of comprehensive bio-safety prevention and control combined with precise elimination in 2019 and 2020, ASF experienced a weakened mutation at the transition from winter and spring between the end of 2020 and beginning of 2021, making it more spread channels, longer incubation periods, and more difficult to detect and eliminate. In recent years, ASF has gradually become prevalent, especially in winter and early spring when the temperature is low, the impact is particularly severe in the north of China. In terms of the risk posed by natural disasters, the feed and slaughter are closely related to planting and livestock breeding industry. Therefore natural disasters such as temperature anomalies, droughts, floods, earthquakes, hailstorms, and snow disasters can all have adverse effects on industry operations and development. Natural disasters occurring in the production bases of the company and surrounding areas may cause substantial damages to production facilities or equipment. Additionally, these natural disasters and extreme climate conditions can also drive up the prices of certain feed ingredients and meats. For example, the continuous high temperature and low rainfall in many provinces in Southwest China in middle 2022 led to the continuous development of drought in some regions, which led to the "power shortage" in many provinces in South China, and had various degrees of impact on planting, breeding and other links in the industrial chain. Regarding planting, the drought in certain regions reduced the production of feeds crops, which can impact the price of feed ingredients and decrease the quality. Regarding breeding, for example, aquaculture exposed to hypoxia caused by high temperature, which affected the feeding and growth of fish, shrimp and crabs, and led to production decrease. Additionally, due to the drought, water shortages and power limitions, the utilization of breeding facilities and equipment was limited to a certain extent, resulting losses for breeding enterprises and farmers. These factors also impacted the feed sales of the company. Risk countermeasures: to address the risk of animal disease, the livestock farms planned and constructed by the company’s breeding base are standardized and regulated farms. They are staffed with professional breeding technologists and equipped with strict anti-epidemic measures to effectively prevent and control the occurrence of epidemic diseases. Over the years, the company has accumlated valuable experience and developed measures to respond to major animal diseases. These include adjusting the product structure when necessary, improveing product quility, actively engaging in extensive market development and reudcing costs to eliminate the impact of animal disease. Since 2014, the company has been guiding technicians to better serve farmers by establishing animal healthcare laboratories in various areas, creating the cloud-based animal healthcare system, and conducting the monitoring and warning of animal diseases in real time. In view of ASF outbreak in 2018, the company formulated comprehensive and systematic prevention and control measures, covering existing company-owned pig farms, fattening farms in cooperation with farmers, 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 prevention system, pig survival rate and marketing rate to achieve industry-leading levels. From the end of 2020 to the beginning of 2021, the outbreak of a new round of attenuated ASF in multiple provinces in northern China prosed new challenges to the prevention and control methods formed based on the past type ASF 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,. This include implementing whole-herd serum double-antibody and double-screening, utilizing thermal imagers, and conducting static attenuation and disinfection of materials. Additionally, the company adopted an approach of adding and subtracting steps in the conrainment process to avoid prolonged and excessively intricate procedures, which could lead to fatigue and laxity. Thhis approach helped faxilated faster restoration of normal production faster while ensuring effective containment, and also contributed to reducing bio-safety containment costs. In response to natural disasters, the company’s extensive business presence both domestically and internationally ensures that the company’s business will not be significantly affected when specific regions experience natural disasters. In particular, for frequent occurrences of heavy rain and flooding in southern China, the company has accumulated ample experience and established reliable contingency plans. It maintaines sufficient flood prevention supplies in stock at all times, which allows the company to flexibly guide farmers through production plan adjustments when the flood season approaches, effectively working together to mitigate and alleviate the impact of disasters. Additionally, leveragings its advantage of its nationwide presence, the company can promptly and effectively allocate funds, raw materials, equipment, and staff across regions to expedite production resumption and minimize losses caused by natural disasters. In response to natural disasters such as heavy rains and floods that occurred frequently in southern China in recent years, as well as the sudden drought in southwestern China in 2022, the company has actively established emergency plans, pre-stored disaster response materials, and provided flexible guidance to farmers in adjusting their production plans, these measures are aimed at jointly mitigating and alleviating the impact of disasters. II. Risk of price fluctuations of feed ingredients The cost of main feed ingredients for feed production accounts for more than 90% of the 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 macroeconomic situation at home and abroad, international trade relations 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. The outbreak of international geopolitical conflict in early 2022 further pushed up global agriculture commodity price. The annual average price of soybean meal in 2022 increased by about 27% year-on-year. 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 scale advantages and considerable bargaining power in raw material procurement. Since 2020, the company applied hedging tools more to control the ingredient price fluctuation risk. In 2021, the company further reinforced centralized management of raw material procurement across the industry and reduced feed use costs through processing in bonded zones and other methods. In 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. At present, the company has established strategic partnerships with many domestic and overseas best-run raw material suppliers, while actively exploring domestic and foreign high-quality and safe local raw materials and opening up the raw material supply network at home and abroad, conducted the supply chain financing of various forms actively, and optimized its purchasing cost and related financial expenses. III. Risk of price fluctuations of livestock and poultry The finished products of the livestock and poultry breeding business of the company mainly include breeding pigs, piglets, hogs, chicks, ducklings, white feather broilers and white feather ducks. In recent years, the pig farming business of the company has been growing rapidly, with 14.61 million hogs sold and more than 390 million self-raised and outsourced commercial chicken and ducks in 2022, 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 the 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 the 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 capacity, the price began to rebound significantly. In terms of the 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 prices, the price of chicken and duck has gradually turned upward since the second quarter. In the second half of 2022, the price of chicken and duck showed a high and volatile trend as a whole, with the average price at 9.2 yuan /kg, which was a high price in recent years. Affected by external macro factors, the price of chicken and duck fell rapidly in December, as low as 7.27 yuan /kg, which adversely affected the company's performance in December. Risk countermeasures: apart from the impact of sporadic animal diseases, 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 background, 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 of its pig business in the previous stage 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 a 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 and ban or restrict livestock farming activities. At the level of the 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 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 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 positive significance to the entire industry. Risk countermeasures: considering 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 conditions 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 ASF itself is not a zoonotic disease and 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 enhance food safety efforts and 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. 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. The company has established its food safety management system and safety traceability system for the whole industrial chain from feed, breeding, farming to food, and conducted the whole process of safety supervision from the front end of the supply chain to the end, forming the three-level safety and quality management system and the three-level safety and quality audit system including Food Safety and Quality Management Department of the headquarters, Food Safety Management Line of BUs and Safety and Quality Department of branch companies and subsidiaries. The company has improved its level of food safety related work by participating in international cooperation and passing the relevant industry standards certification. 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. 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. In recent years, the company's achievements in the field of food safety and quality management have been fully recognized by the industry. It has been awarded the title of "2021-2022 Food Safety Integrity Unit" by China Food Safety Conference, "2022 Annual Quality Golden Shield Case" by China Quality Press, "Model Unit in China Meat Food Safety Integrity System Construction" by China Meat Association, and "2022 Food Safety Science and Technology Innovation Award” by China Animal Health and Food Safety Alliance. 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 supplies such as corn, soybean, whey powder, fish meal and DDGS. At the same time, as the company expands its presence abroad, in 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 geopolitics and foreign exchange policy adjustments, the currencies of some host countries where the company operates experienced extraordinary fluctuations, and the exchange rate of these currencies against the US dollar has dropped sharply, combined with the trend of US dollar interest rate increase, which poses 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 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. In the context of the increasing uncertainty in the macro environment and sharp exchange rate fluctuations in recent years, the company has reinforced efforts to improve the ability of exchange rate forecasting and fund management and guaranteed the value of funds through hedging and other means and tools. 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 from time to time, make financial arrangements and ease the adverse impact of exchange rate fluctuations by means of direct investment in local currency abroad, etc. 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 ................................................................................. 20 Section 3 Management Discussion and Analysis ................................................................................................. 25 Section 4 Corporate Governance ......................................................................................................................... 94 Section 5 Environmental and Social Responsibilities ........................................................................................... 1 Section 6 Important Matters ............................................................................................................................... 191 Section 7 Changes in Shares and Information about Shareholders ................................................................ 241 Section 8 Details Related to Preferred Shares ................................................................................................... 252 Section 9 Details Related to Bonds ..................................................................................................................... 253 Section 10 Financial Report ................................................................................................................................ 261 List of Reference Documents (1) Financial statements bearing the signatures and seals of the CEO, person in charge of accounting and the person in charge of accounting organization (chief accountant) of the company. (2) Original auditor’s report bearing the seal of the accounting firm and signatures and seals of CPAs. (II) Originals of all corporate documents and manuscripts of announcements publicly disclosed on China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and www.cninfo.com.cn during the reporting period. Definitions
Section 2 Company Profile and Key Financial Indicators I. Company information
Accounting firm engaged by the company
?applicable □not applicable
□applicable ?not applicable VI. Key accounting data and financial indicators Whether the company needs to retroactively adjust or restate the accounting data of previous years □yes ?no
years were negative, and the most recent year’s auditor’s report shows that the company’s ability as a going concern is uncertain. □yes ?no The lower of net profits of the company before and after deduction of non-recurring profit and loss was negative ?yes □no
standards and Chinese accounting standards □applicable ?not applicable The company had no difference in net profits and net assets in financial reports disclosed under either international accounting standards and Chinese accounting standards during the reporting period. 2. Difference in net profits and net assets in financial reports disclosed under both overseas accounting standards and Chinese accounting standards □applicable ?not applicable The company had no difference in net profits and net assets in financial reports disclosed under either overseas accounting standards and Chinese accounting standards during the reporting period. VIII. Quarterly key financial data Unit: yuan
and semiannual reports disclosed by the company □yes ?no IX. Items and amounts of non-recurring profit and loss ?applicable □not applicable Unit: yuan
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