[年报]梅花生物(600873):梅花生物2023年年度报告（英文版）
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时间：2024年04月19日 18:32:55 中财网 |
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原标题:梅花生物:梅花生物2023年年度报告（英文版）
Company Code: 600873 Short name: Meihua Bio
Meihua Holdings Group Co., Ltd.
Annual Report 2023
This is an English translation from the Annual Report 2023, in case of any inconsistency, the Chinese Version shall prevail.
Important Information
I. The Company’s board of directors, board of supervisors, directors, supervisors, and officers guarantee that the contents of this annual report are true, accurate, and complete without any false
records, misleading statements, or material omissions and bear joint and several legal liability. II. All of the Company’s directors have attended the board meeting. III. Da Hua CPAs LLP (special general partnership) has issued an unqualified audit report for the Company.
IV. Wang Aijun, the principal of the Company, Wang Lihong, the accounting principal, and Wang Ailing, the principal of the accounting body (the accounting officer), hereby declare that they guarantee the truthfulness, accuracy, and completeness of the financial report in the annual report.
V. Profit distribution plan or capital reserve conversion plan for the Reporting Period as approved
by the Board
th th
Upon deliberation and approval of the 9 meeting of the 10 session of the board of directors, the profit
distribution plan (proposal) for 2023 is as follows: with the total share capital registered on the registration
date of equity distribution as the basis (before deducting the number of shares in the share repurchase
account, the Company has a total of 2,943,426,102 shares in share capital; there are 69,634,252 shares in
the share repurchase account, and after deducting those shares, the number of shares is 2,873,791,850), a
dividend of 4.17 yuan (inclusive of tax) for every 10 shares is to be distributed to all shareholders, and a
total of approximately 1.2 billion yuan (inclusive of tax) in cash dividend is estimated to be distributed. The
plan is yet to be submitted to the general meeting for deliberation. The amount that is actually distributed
will be subject to the notification on equity distribution published by the Company. If there is any change
in the Company’s total share capital before the registration date of equity distribution, the total amount to
be distributed will remain unchanged, and the distribution proportion per share will be adjusted accordingly.
VI. Risk Disclosure on Forward-Looking Statements
√ Applicable ?Not applicable
This annual report involves forward-looking descriptions such as future plans, and such statements do not
constitute material commitments for investors. Investors are reminded to pay attention to the risk of
investment.
VII. Any occupation of funds by the controlling shareholder or other affiliates for non-operating purposes
No
VIII. Any external guarantee that violates the decision-making procedures No
IX. Is it the case that more than half of the directors cannot guarantee the truthfulness, accuracy,
and completeness of the annual report disclosed by the Company? No
X. Warning of Key Risks
For the details of the risks facing the Company, refer to the “Potential Risks” part in “Section 3 Discussion
and Analysis by the Management” and the “Risks Related to Financial Instruments” part in “Section 10
Financial Report”.
XI. Miscellaneous
? Applicable √Not applicable
Contents
Section 1 Definitions................................................................................................................................... 4
Section 2 Company Overview and Key Financial Indicators .................................................................... 7
Section 3 Discussion and Analysis by the Management .......................................................................... 12
Section 4 Corporate Governance ............................................................................................................. 47
Section 5 Environmental and Social Responsibility ................................................................................ 66
Section 6 Significant Matters ................................................................................................................... 80
Section 7 Share Changes and Shareholders ............................................................................................. 96
Section 8 Information on Preferred Shares ............................................................................................ 103
Section 9 Information on Securities ....................................................................................................... 103
Section 10 Financial Report .................................................................................................................... 104
| List of documents for
reference | Financial statements signed and sealed by the Company’s principal, the accounting principal, and
the principal of the accounting body (the accounting officer) | | | The original of the audit report sealed by the CPAs firm and signed and sealed by the certified
public accountants | | | The originals of the Company’s documents and announcements disclosed on the website of the
Shanghai Stock Exchange during the Reporting Period |
Section 1 Definitions
I. Definitions
| Definitions of common terms | | | | Company, the Company, the
listed company, Meihua
Bio, Meihua Group, or
Meihua Company | means | Meihua Holdings Group Co., Ltd., whose stock name is “Meihua Bio” and
stock code is 600873. | | Xinjiang Meihua | means | Xinjiang Meihua Amino Acid Co., Ltd., a wholly-owned subsidiary of the
Company. | | Xinjiang Base or Xinjiang
Company | means | the production base in the Wujiaqu Industry Park located in the Xinjiang Uygur
autonomous region where Xinjiang Meihua is located. | | Tongliao Meihua | means | Tongliao Meihua Biotech Co., Ltd., a wholly-owned subsidiary of the
Company. | | Tongliao Jianlong | means | Tongliao Jianlong Acid Production Co., Ltd., a wholly-owned subsidiary of
Tongliao Meihua. | | Tongliao Base or Tongliao
Company | means | the production base located in Tongliao of the Inner Mongolia autonomous
region as formed by Tongliao Meihua and Tongliao Jianlong. | | Jilin Meihua | means | Jilin Meihua Amino Acid Co., Ltd., a wholly-owned subsidiary of the
Company. | | Jilin Base, Baicheng Base,
or Jilin Company | means | the production base located in Baicheng of Jilin where Jilin Meihua Amino
Acid Co., Ltd. is located. | | Three production bases or
all production bases | means | the Company’s production bases in Tongliao of Inner Mongolia, Wujiaqu of
Xinjiang, and Baicheng of Jilin. | | Hong Kong Meihua | means | Meihua Group International Trade (Hong Kong) Co., Ltd., a wholly-owned
subsidiary of the Company. | | Hengqin Meihua | means | Zhuhai Hengqin Meihua Biotech Co., Ltd., a wholly-owned subsidiary of the
Company. | | Hong Kong Holdings | means | Hong Kong Plum Holding Limited, a wholly-owned subsidiary of Hengqin
Meihua. | | Cayman Company | means | Cayman Plum Holding Limited, a wholly-owned subsidiary of Hong Kong
Holdings. | | Singapore Company | means | Plum Biotechnology Group Pte. Ltd., a wholly-owned subsidiary of Cayman
Company. | | Lhasa Meihua | means | Lhasa Meihua Bio-investment Holdings Co., Ltd., a wholly-owned subsidiary
of the Company. | | Da Hua or Da Hua CPAs | means | Da Hua CPAs LLP (special general partnership) | | CSRC | means | the China Securities Regulatory Commission. | | SSE or the Stock Exchange | means | the Shanghai Stock Exchange. | | CSDC Shanghai | means | China Securities Depository and Clearing Co., Ltd. Shanghai Branch. | | Environmental authorities | means | the Ministry of Ecology and Environment of the People’s Republic of China
and the environmental authorities authorized by it. | | Amino acids for animal
nutrition | means | the amino acids used as feed supplement for animal nutrition, which can
enhance the effects of feed, improve the utilization of feed, and supplement and | | | | balance nutrition. The amino acids for animal nutrition produced by the
Company include lysine, threonine, methionine, and valine. | | Lysine | means | 2,6-Diaminohexanoic acid, the only amino acid with side-chain primary amine
in proteins. It is an amino acid and ketogenic amino acid essential for
mammals. The common L-lysine is one of the 20 amino acids that make up
proteins. Depending on content, lysine is classified into L-lysine hydrochloride
(commonly known as the 98% lysine) and L-lysine sulfate (commonly known
as the 70% lysine). The addition of lysine to feed improves meat quality,
increases the ratio of lean, and refines meat texture. It increases the utilization
of feed proteins and reduce the dosage of crude protein. It also reduces piglet
diarrhea, cuts feeding costs, and increases economic returns. | | Threonine | means | 2-Amino-3-hydroxybutanoic acid, an aliphatic α-amino acid that contains an
alcoholic hydroxyl. It is an amino acid and ketogenic amino acid essential for
mammals. The common L-threonine is one of the 20 amino acids that make up
proteins. Threonine is an essential amino acid. Threonine is often added to the
feed for piglets and poultry. It is the first limiting amino acid in pig feed and
the third limiting amino acid in poultry feed. | | Valine | means | 2-amino-3-methylbutanoic acid, a branched-chain non-polar α-amino acid that
contains five carbon atoms. It is an amino acid and glycogenic amino acid
essential for mammals. The common L-valine is one of the 20 amino acids that
make up proteins. The addition of valine to sow feed can help increase lactation
yield. It also helps improve animals’ immunity and affects endocrine. | | Starch byproduct protein
powder, feed fiber, germ,
mycoprotein, etc. | means | Corn gluten meal is a byproduct of the manufacture of starch from maize grain
in the food industry or its purification in the brewing industry. It is rich in
protein nutrients, has a special taste and color, and can be used as feed. Corn
husk powder (feed fiber) is a byproduct of the manufacturing process of
manufacturers engaged in the deep processing of corn. It is produced from
maize grains being soaked, put into starch production, washed, squeezed, and
dried. Its main components include fiber, starch, and proteins. | | Food taste and trait
improving products | means | The food additives (flavor enhancers) produced by the Company. It refers to
artificial or natural substances that are added to food for the purpose of
improving food quality, color, smell, and taste, as well as for preservation and
processing. | | MSG | means | 99% MSG refers to monosodium glutamate. The key composition of MSG is
glutamic acid monosodium salt, which is produced from the microbial
fermentation, purification, and refinement of saccharic or starch raw materials.
The finished product is white columnar crystal or crystalline powder. As a basic
flavoring agent, MSG not only enhances the taste of dishes and stimulates
appetite but also stimulates the secretion of digestive juice, thereby helping
food digestion and absorption in human bodies. | | Disodium 5’-ribonucleotide | means | a substance composed of disodium 5’-inosine (IMP) and disodium 5’-
guanosine (GMP) in a 1:1 proportion. It is mostly used in condiments or
condiment blends with MSG to enhance taste. | | Disodium inosinate | means | is a flavor enhancer produced from glucose as the key raw material through
microbial fermentation, extraction, and refinement. | | Trehalose | means | a safe and reliable natural sugar with the superb ability to maintain cell viability
and biomacromolecular activity. It is known as the “sugar of life” in the science
community. With a moderately sweet taste, it serves as a unique food ingredient
that prevents food deterioration, inhibits nutrient deterioration, preserves food
flavors, and improves food quality. It is also an important ingredient for
cosmetics that maintain cell viability and preserve moisture. It is generally
recognized as safe (GRAS) by the FDA. | | Amino acids for human
medical purposes | means | are also known as pharmaceutical amino acids. The Company’s pharmaceutical
amino acids are mainly divided into two parts. One is amino acid products,
including L-glutamine, branched-chain amino acids (L-isoleucine, L-valine,
and L-leucine), and L-proline, etc., which are mainly used as upstream raw
materials for sports nutrition food, food for special medical purposes, and
drugs. The other part is pharmaceutical intermediate raw materials, including
L-proline and nucleoside (inosine, guanosine, and adenosine), which are
mainly used as upstream raw materials for drugs that treat chronic diseases
(such as hypertension, diabetes, hepatitis B, etc.). | | Proline | means | L-proline (known as proline for short) is one of the 18 amino acids for the
human body to synthesize proteins. It is an important raw material for amino
acid transfusions as well as a key intermediate for synthesizing first-line
antihypertensive drugs, such as captopril and enalapril. It is widely applied in
food and pharmaceutical industries. The Company produces L-proline through
corn fermentation, which is free of all the chemical reagents added in synthesis
and is thus safer. | | Glutamine | means | with the scientific name of 2-amino-4-formamide butyric acid, is the amide of
glutamic acid. L-glutamine is the coding amino acid in protein synthesis and
an amino acid essential for mammals. In vivo, it can be converted from glucose.
Glutamine prevents muscle breakdown and promotes muscle growth. It is an
important nutrition supplement for bodybuilders and bodybuilding enthusiasts.
It also improves human immunity and antioxidant capacity. It has superb
healthcare and even medical effects for the gastrointestinal and digestive
systems. | | Isoleucine | means | L-isoleucine is one of the 20 common amino acids that make up proteins. It
contains two asymmetric carbon atoms and is an amino acid and ketogenic
amino acid essential for mammals. | | Leucine | means | L-leucine is one of the 20 common amino acids that make up proteins. It is an
amino acid and a ketogenic and glycogenic amino acid essential for mammals.
Leucine, isoleucine, and valine are all branched-chain amino acids, which help
promote muscle recovery after training. In particular, leucine is a very effective
branched-chain amino acid that effectively prevents muscle loss as it is able to
break down faster into glucose. | | Pullulan | means | a water-soluble polysaccharide produced from the fermentation of
Aureobasidium pullulans. Pullulan can be processed into a variety of products.
With superb film-forming properties, it forms highly stable pullulan film. It
also has excellent oxygen isolation performance. In pharmaceutical and food
industries, it is widely used in capsule molding agents, thickeners, adhesives, | | | | and food packaging. Pullulan has been used as food accessories for more than
20 years in Japan and is generally recognized as safe (GRAS) by the FDA. | | Xanthan gum | means | a monospore polysaccharide from the fermentation of pseudoxanthomonas. It
offers many functions due to its special macromolecular structure and colloidal
characteristics. It is widely used in different fields as emulsifiers, stabilizers,
gel thickeners, impregnating compounds, and film molding agents. Xanthan
gum is a microbial polysaccharide in mass production with broad applications
around the world. | | Bio-organic fertilizers | means | the fertilizers containing organic substances that provide multiple inorganic
and organic nutrients for crops and fertilize and improve soil. | | Fermentation | means | a reaction process in which massive metabolites are produced and accumulated
through the growth and chemical changes of microorganisms (or animal/plant
cells). | | Traditional fermentation | means | mainly involves matrix conversion (the converted matrix is the product itself).
Traditional fermentation gives unique tastes and nutrients to the product and
changes the texture of the product, such as the fermentation process involved
in the production of wine, bread, yogurt, fermented beancurd, and pickled
vegetables. Traditional fermentation is generally natural fermentation. In this
case, there are many kinds of fermentation microorganisms, and it is usually
impossible to conduct pure culture. The specific microorganism types and
proportions are not even known. There is also traditional fermentation
involving pure microorganisms. | | Precision fermentation | means | a process that uses microorganisms as cell factories to produce specific
functional components. In general terms, precision fermentation is a process of
genetic reprogramming. It is synthetic biology. Scientists change the genes of
selected microorganisms based on specific designs, and their genes are
programmed to produce specific fermentation products. |
Section 2 Company Overview and Key Financial Indicators
I. Company Information
| Chinese name | 梅花生物科技集团股份有限公司 | | Short Chinese name | 梅花生物、梅花集团 | | English name | MeiHua Holdings Group Co., Ltd | | Abbreviation | MEIHUA BIO, MeiHua Group | | Legal representative | Wang Aijun |
II. Contact Person and Contact Information
| | Board Secretary | | Name | Liu Xianfang | | Address | 66 Huaxiang Road, Langfang Economic and Technological
Development Zone, Hebei Province | | Tel | 0316-2359652 | | Fax | 0316-2359670 | | Email | [email protected] |
III. Basic Profile
| Registered Address | Unit 5, Building 11, Yangguang Xincheng, 158 Jinzhu West Road,
Lhasa, Xizang Autonomous Region | | Changes in the registered address | 189 Jinzhu West Road, Lhasa (announcement published on January
23, 2018; change approved at the fourth extraordinary general
meeting of 2017) | | Office address | 66 Huaxiang Road, Langfang Economic and Technological
Development Zone, Hebei Province | | Postal code of the office address | 065001 | | Website | http://www.meihuagrp.com | | Email | [email protected] |
IV. Places of Information Disclosure and Report Placement
| Names and websites of media where the Company
discloses annual reports | Shanghai Securities News, Securities Times, the website of Shanghai
Stock Exchange | | The stock exchange website where the Company
discloses annual reports | www.sse.com.cn | | Place where the Company prepares and keeps annual
reports | The Company’s securities department and Shanghai Stock Exchange |
V. Company’s Stock Information
| Company’s Stock Information | | | | | | Stock type | Stock Exchange for the
listing of the
Company’s stock | Stock name | Stock code | Stock name before
change | | A-share | Shanghai Stock
Exchange | Meihua Bio | 600873 | Meihua Group |
VI. Other Relevant Information
| CPA firm appointed by the Company
(domestic) | Name | Da Hua CPAs LLP (special general partnership) | | | Office address | Floor 12, Building 7, Courtyard 16, Xisihuan Middle
Road, Haidian District, Beijing | | | Names of signing
accountants | Gong Chenyan, Li Qianqian |
VII. Key Accounting Data and Financial Indicators for the Last Three Years (I) Key Accounting Data
| Key accounting
data | 2023 | 2022 | | + (%) | 2021 | | | | | After adjustment Before adjustment | | | | | | | | | | | After adjustment | Before adjustment | | | | | | | | | | Revenue | 27,760,612,259.07 | 27,937,152,798.85 | 27,937,152,798.85 | -0.63 | 23,060,956,394.50 | 23,060,956,394.50 | | Net profit
attributable to the
shareholders of
the listed
company | 3,180,949,695.48 | 4,406,241,981.92 | 4,406,312,397.53 | -27.81 | 2,402,174,994.05 | 2,402,247,556.46 | | Net profit
attributable to the
shareholders of
the listed
company after
deducting non-
recurring profit or
loss | 3,083,801,516.17 | 4,220,155,225.29 | 4,220,225,640.90 | -26.93 | 2,092,383,169.07 | 2,092,455,731.48 | | Net cash flows
from operating
activities | 5,228,937,084.88 | 5,654,954,446.36 | 5,654,954,446.36 | -7.53 | 3,734,331,862.05 | 3,734,331,862.05 | | | At the end of 2023 | At the end of 2022 | | + (%) | At the end of 2021 | | | | | After adjustment Before adjustment | | | | | | | | | | | After adjustment | Before adjustment | | | | | | | | | | Net assets
attributable to the
shareholders of
the listed
company | 14,163,014,813.67 | 13,515,990,374.75 | 13,516,133,352.77 | 4.79 | 10,672,616,672.10 | 10,672,689,234.51 | | Total assets | 23,157,179,855.25 | 24,491,133,112.07 | 24,490,222,471.46 | -5.45 | 20,979,912,384.01 | 20,979,450,562.75 |
(II) Key Financial Indicators
| Key financial indicators | 2023 | 2022 | | + (%) | 2021 | | | | | After Before
adjustment adjustment | | | | | | | | | | | After
adjustment | Before
adjustment | | | | | | | | | | Basic earnings per share (yuan/share) | 1.06 | 1.44 | 1.44 | -26.39 | 0.78 | 0.78 | | Diluted earnings per share (yuan/share) | 1.06 | 1.43 | 1.43 | -25.87 | 0.78 | 0.78 | | Basic earnings per share after
deducting non-recurring profit or loss
(yuan/share) | 1.03 | 1.38 | 1.38 | -25.36 | 0.68 | 0.68 | | Weighted average return on equity (%) | 23.48 | 35.95 | 35.95 | Decrease by
12.47
percentage
points | 26.77 | 26.77 | | Weighted average return on equity
after deducting non-recurring profit or
loss (%) | 22.76 | 34.43 | 34.43 | Decrease by
11.67
percentage
points | 23.61 | 23.61 |
Notes to the Company’s key accounting data and financial indicators for the last three years as at the end
of the Reporting Period
? Applicable √Not applicable
VIII. Differences in Accounting Data under Domestic and Foreign Accounting Standards (I) Differences in the net profit and the net profit attributable to the shareholders of the listed
company in the financial report disclosed in accordance with both the international accounting standards and the Chinese accounting standards
? Applicable √Not applicable
(II) Differences in the net profit and the net profit attributable to the shareholders of the listed
company in the financial report disclosed in accordance with both the foreign accounting standards and the Chinese accounting standards
? Applicable √Not applicable
(III) Explanation of differences between domestic and foreign accounting standards ? Applicable √Not applicable
IX. Key Financial Indicators for 2023 by Quarter
| | Q1
(January-March) | Q2
(April-June) | Q3
(July-September) | Q4
(October-
December) | | Revenue | 6,950,072,385.57 | 6,638,198,131.66 | 6,937,900,936.52 | 7,234,440,805.32 | | Net profit attributable to the
shareholders of the listed
company | 800,793,127.47 | 570,050,837.41 | 789,669,986.19 | 1,020,435,744.41 | | Net profit attributable to the
shareholders of the listed
company after deducting non-
recurring profit or loss | 786,151,871.17 | 620,341,263.47 | 691,979,710.43 | 985,328,671.10 | | Net cash flows from operating
activities | 333,494,806.92 | 1,936,997,486.40 | 2,613,793,889.22 | 344,650,902.34 |
Explanation of differences between the quarter-based data and the data in the disclosed periodic reports
? Applicable √Not applicable
X. Non-recurring Items and Amounts
√ Applicable ?Not applicable
| Non-recurring item | Amount for
2023 | Notes (if
applicable) | Amount for
2022 | Amount for
2021 | | Gains or losses from the disposal of non-current assets,
including the write-offs of the accrued provisions for asset
impairment | -38,915,902.24 | | -14,259,233.56 | 274,464,740.54 | | Government grants recognized in the profit or loss,
excluding government grants that are closely related to the
Company’s normal operations, conform with national
policies, are enjoyed in accordance with established
standards, and have continuous impact on the Company’s
profit or loss | 240,560,349.82 | | 176,066,538.92 | 89,462,801.04 | | Gains or losses from fair value changes arising from the
financial assets and financial liabilities held by non-financial
enterprises and gains or losses from the disposal of financial
assets and financial liabilities, except for the effective
hedging associated with the Company’s normal operations, | -35,150,749.48 | | 46,017,976.33 | 17,149,045.52 | | Fund possession fees collected from non-financial
enterprises that are recognized in the profit or loss | | | | | | Gains or losses from the entrusted investment or
management of assets | | | | | | Gains or losses from external entrusted loans | | | | | | Losses on assets arising from force majeure factors, such as
natural disasters | | | | | | Reversal of provisions for the impairment of accounts
receivable for which the impairment test is conducted
separately | 1,861,963.30 | | | | | Gains from the investment costs of the Company for the
acquisition of subsidiaries, associates, and joint ventures
being less than the fair value of the investees’ identifiable
net assets due to the Company at the acquisition of
investment | | | | | | Net profit or loss of subsidiaries formed through business
combinations under common control for the period from the
beginning of the Reporting Period to the combination date | | | | | | Gains or losses from the exchange of non-monetary assets | | | | | | Gains or losses from debt restructuring | | | | | | Non-recurring expenses of the Company arising from the
discontinuation of relevant operating activities, such as
expenses for staff resettlement | | | | | | Once-off effect of adjustments to tax and accounting laws
and regulations on the profit or loss | | | | | | Share payment expenses recognized once off due to the
cancellation or change of the share incentive plan | | | | | | For share payment in cash, gains or losses from changes in
the fair value of staff remuneration payable after the vesting
date | | | | | | Gains or losses from changes in the fair value of investment
property that is subsequently measured in the fair value
model | | | | | | Gains from transactions with obviously unfair transaction
prices | | | | | | Gains or losses from contingencies irrelevant to the
Company’s normal operations | -45,888,616.17 | | | | | Trusteeship income from trusteeship business | | | | | | Other non-operating income and expenditure than the above | -1,380,228.88 | | 11,936,886.89 | -14,002,962.34 | | Other profit or loss items that fall within the definition of
the non-recurring profit or loss | | | - | | | Less: effect of income tax | 23,938,637.04 | | 33,675,411.95 | 56,455,088.73 | | effect of minority interest (after tax) | | | - | 826,711.05 | | Total | 97,148,179.31 | | 186,086,756.63 | 309,791,824.98 |
If the Company defines any items not listed in the Explanatory Announcement on Information Disclosure
for Companies Offering Their Securities to the Public No.1 – Non-recurring Gains or Losses as non-recurring items which involve significant amounts or defines any non-recurring items listed in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 – Non-recurring Gains or Losses as recurring items, the Company should provide the reasons.
? Applicable √Not applicable
XI. Items Measured at Fair Value
√ Applicable ?Not applicable
| Item | Opening balance | Closing balance | Change | Amount of impact
on the profit | | Financial assets held for trading | 175,624,337.11 | 172,376,801.33 | -3,247,535.78 | 14,201,175.30 | | Derivative financial assets | 15,431,100.00 | 200,000.00 | -15,231,100.00 | -55,005,897.14 | | Derivative financial liabilities | - | 250,000.00 | 250,000.00 | | | Other equity instrument investments | 1,255,463,900.59 | 512,691,350.00 | -742,772,550.59 | 6,934,595.00 | | Accounts receivable financing | 118,425,206.87 | 60,013,169.98 | -58,412,036.89 | 5,621,428.73 | | Total | 1,564,944,544.57 | 745,531,321.31 | -819,413,223.26 | -28,248,698.11 |
XII. Miscellaneous
? Applicable √Not applicable
Section 3 Discussion and Analysis by the Management
I. Discussion and Analysis of Business Performance
In the face of complicated domestic and foreign environments during the Reporting Period, the Company continued to focus on its main business under the leadership of the Board, centered around the
strategic goal of building a leading enterprise in synthetic biology. The Company made efforts to improve
both technology and management and develop high-end manufacturing through standard, automatic, and fine management and operations, thereby achieving high-quality development. During the Reporting Period, the Company increased R&D spending and beefed up technological upgrades. New strains for the production of glutamic acid, anaerobic valine, and glutamine were put into
production at the production bases, and new techniques for the production of lysine and threonine achieved
technological improvements, reducing production costs substantially. During the Reporting Period, the
Company’s new projects concerning xanthan gum, threonine, and raw material ammonia reached the planned capacity and efficiency, contributing to the continuous expansion of the Company’s business and
further improving its competitiveness. In 2023, the Company used the Manufacturing Execution System
(MES) to create opportunities, refined the production management policies and processes, built the whole-
process monitoring of production order, and continuously implemented the concept of “operations, creation, and sharing by all,” thus achieving growth shared by the Company and its employees. During the Reporting Period, the Company registered a revenue of 27.761 billion yuan, basically equal the previous year. The net profit attributable to the shareholders of the listed company reached 3.181
billion yuan, down 27.81% year-on-year. The decrease in revenue and in net profit was mainly caused by
declining product prices. By product, during the Reporting Period, the sales volumes of the knockout
products, which are lysine hydrochloride (98% lysine), lysine sulfate (70% lysine), and threonine, increased by 6.91%, 3.93%, and 24.33%, respectively, but their selling prices decreased by 16.75%, 10.41%, and 5.25% year-on-year, respectively. The falling prices caused a reduction in main business
revenue and profit. While experiencing industrial adjustments and price falls for its knockout products,
the Company continued to strengthen the sales of star products, including xanthan gum and minor amino
acids. In 2023, both the sales volume and price of xanthan gum increased, with its sales volume up 26.86%
year-on-year and its average selling price up 5.85% year-on-year. The sales volumes of medical amino
acids such as glutamine and proline grew by 12.74% and 13.40% year-on-year, respectively, while the
sales volume of valine rose by 31.69%. During the Reporting Period, the Company maintained relative
stability in revenue based on its matrix of multiple products. (I) Significant breakthroughs in new projects, new products, and new technologies through the hiring of research professionals and the increase of R&D spending In 2023, the Company successfully hired nearly 40 professionals from prestigious domestic and foreign universities, including the Chinese Academy of Sciences (Tianjin Institute and the Institute of （未完）
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