[年报]牧原股份(002714):2023年年度报告摘要（英文版）
Stock Code: 002714 Stock Abbreviation: Muyuan Foods Announcement No.: 2024-024 Bond Code: 127045 Bond Abbreviation: Muyuan Convertible Bond Summary of 2023 Annual Report of Muyuan Foods Co., Ltd. I．Important Notes This summary is abstracted from the 2023 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"). All directors attended the board meeting on which this report was reviewed. Notes on non-standard audit opinion ?Applicable ?Not Applicable Preliminary plan for profit distribution or capitalization of reserves in the reporting period as deliberated by the board ?Applicable ?Not Applicable The Company plans no cash dividend distribution, bonus issue, or converting capital reserve into share capital. II. Basic Information of the Company 1. Company Profile
2. Main Business or Products Introduction during the Reporting Period (I) Summary of the Company’s Operation In 2023, the Company sold 63.816 million pigs, including 62.267 million commercial pigs (of which, 13.266 million were sold to the wholly-owned subsidiary Muyuan Meat Co., Ltd. and its subsidiaries), 1.367 million piglets, and 181 thousand breeding pigs. And totally, 13.260 million pigs were slaughtered and 1.405 million tons of fresh and frozen pork products were sold in 2023. As a result, the Company achieved an operating revenue of RMB 110.86 billion yuan in 2023, showing a YOY decrease of 11.19%. Among the total revenue, the revenue attributable to slaughter and meat processing is RMB 21.86 billion yuan, representing a YOY increase of 48.54%. The net profit was RMB -4.17 billion yuan, representing a YOY decrease of 127.91%. In 2023, the Company made continuous efforts in refined management to enhance pig health and production management and improved pig farming results. In 2023, the Company improved its major production indicators, and the annual average full cost of raising a commercial pig was around 15 yuan per kilogram. In the coming years, the Company will continue to make smooth the technical path and optimize production management. With better herd health level, various production indicators are expected to be further improved. In 2023, the Company made continuous efforts in improving the efficiency of slaughterhouses that are in operation, expanding meat sales markets and channels, optimizing client structure and improving operating results. As a results, the capacity utilization rate of the slaughtering and meat processing division increased to 46% in 2023 from the 25% in 2022 and the loss per pig reduced significantly. In 2024, the slaughtering and meat processing division will strive to make more progress in the development of markets, channels, and customer demands, and make better internal production management to enhance its comprehensive operational capability and profitability, so as to supply high-quality pork products to customers across the country. The year 2023 witnessed the Company’s further transformation from a high-speed development to a high-quality and stable development. The Company continuously promoted the construction of supporting facilities for planned pig farms, improved the biosecurity infrastructures, and strengthened the cost-control ability of pig farming. It also expanded to the upstream and downstream of the industrial chain. A subsidiary of grain trading was established to lower purchase costs. And slaughter business was distributed to match the existing pig production capacity to provide more high-quality pork foods to the public. As of the end of 2023, the Company had 308 wholly-owned and holding subsidiaries in 25 provincial-level administrative regions across China. In 2023, the Company explored the potential of nutrition technology and developed and applied low-soybean diets to continuously reduce the proportion of soybean usage. In 2022, the proportion of soybean meal in the Company’s feed consumption was only 7.3%, which is about half of the industry average level 14.5%. In 2023, the proportion was further decreased to 5.7%. In recent years, the Ministry of Agriculture and Rural Affairs (MARA) of the People’s Republic of China vigorously promoted the reduction and substitution of soybean consumption in animal feeds. These actions were aimed to improve feed efficiency while reducing soybean consumption and broaden sources of alternative ingredients for soybean, where efforts had been made in the demand end to reduce soybean usage and in the supply end to supply more alternative resources. In response, the Company actively shared its core technology with the industry to promote low-soybean diets. As a result, soybean meal usage in feed formulas in China reduced to 13% in 2023, a YOY reduction of 1.5 percentage points. In 2023, the Company worked with the Westlake University in the field of synthetic biology and carried out R&D in related cutting-edge science and technology. It also cooperated with Mint BioTech (Hangzhou) Co., Ltd (元素驱动（杭州）生物科技有限公司) to establish the Henan Muyuan Anliang Synthetic Biology Technology Co., Ltd （河南牧元安粮合成生物技术有限公司）for the consumption reduction and substitution of soybean meal and the development of other bio-based products. The Company will continue to use advanced synthetic biology technologies to explore the low-soybean diet technology. Changzhou Qianhong Biopharma Co., Ltd (常州千红生化制药股份有限公司) boasts its professional manufacture technologies of and quality management experiences in crude products, bulk drugs, and preparations of heparin sodium. In 2023, the Company co-established the Henan Qianmu Biopharma Co., Ltd (河南千牧生物制药有限公司) with Changzhou Qianhong to build a world-class biopharmaceutical base with leading traceability for producing heparin sodium crude products, heparin sodium, low molecular heparin sodium and other related products from pig by-products such as small intestines, leveraging the Company’s resource advantages in pig farming and slaughtering. Joint venture projects related to this are expected to further expand the Company’s industrial chain and enhance its comprehensive profitability. These projects are currently under construction and are expected to begin trial production by the end of 2024. In 2023, the Company took active actions such as reducing fossil energy consumption and developing new energies like solar photovoltaic (PV) power to promote energy structure transformation and achieve peak carbon and neutrality goals. In the reporting period, the Company established unified management for affairs related to new energy. New energy companies were established as project construction and operation entities in counties where PV projects were proposed to be launched. On the premise of not affecting the main business and not causing biosafety management risks, internal teams planned and designed to utilize the roofs of farms and slaughterhouses to construct distributed PV facilities. Where the power demand of each farm or slaughterhouse was satisfied, the extra power was supplied to the grid. Through the development and utilization of green energy, the production cost was reduced. In 2023, the Company’s PV facilities generated 36.88 million kW·h. Later, the Company will determine the feasibility of modes such as roof renting and cooperation with electric power companies, further optimize its energy structure, increase the usage of green power, and achieve low-carbon production and sustainable development. In 2023, the Company optimized its organizational management structure. Three business divisions (feed, pig production, and pig slaughtering) and eight functional platforms were set up to improve operation and management efficiency and reduce management costs. To build a talent team that is younger, more international, and more professional, the HR Department of the Company carried out various activities to attract college graduates and launched several overseas special recruitment activities to engage international students. It established well an assessment mechanism to select and position talents and a cultivation mechanism for talents in the pool to empower them precisely and improve their professional competence and qualities continuously. Through enhanced performance management, the salary and remuneration mechanism was optimized to give outstanding employees higher rewards and motivate employees to be more proactive. Through the personnel administration mechanism, employees were made clear about their promotion channels. By doing so, talents were matched with suitable positions and have given full play on their role while the talent needs of the Company’s high-quality development were met. (II) Main business, products, and their uses The Company’s main business is the farming, sales, and slaughter of pigs. Its main products include commercial pigs, piglets, and breeding pigs, as well as pork products such as pork carcasses and finely cut pork. As of the end of 2023, the Company's annual pig farming capacity was about 80 million heads, and 10 slaughterhouses were put into operation, with an annual pig slaughter capacity of 29 million heads. (III) Business model The Company adopts a vertically integrated business model and has formed an pork industrial chain, integrating feed processing, pig breeding, pig raising, pig slaughtering, and meat processing, that covers the whole pig industrial value chain. The vertically integrated business model has enabled the Company to carry out stricter control of costs and quality and ensure business results in an all- round way. The Company has its own feed mills to independently develop nutrition formulas and produce feeds to meet the needs of pigs of all stages, where feed formulas can be adjusted timely in accordance with the changes in the raw grain market. Low-soybean diet technology has been applied to reduce the usage of soybean meals to control the feeding costs. The Company adopts the two-breed rotational crossbreeding system to select continuously and independently and build its own nucleus herds, which is helpful to reduce the production costs and disease risks. At the same time, the Company’s breeding pigs can satisfy both breeding needs and production needs, in terms of reproductive performance, growth rate, lean meat percentage, and carcass quality, laying a foundation for the rapid development of the Company. The Company attaches great importance to R&D innovations and the application of smart equipment. It has independently developed a 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 2023, the Company stuck to the business model of independent pig farming and slaughter. The whole production process was made transparent, controllable and traceable, food quality and safety was ensured, and more high-quality pork products were provided to customers. By the end of 2023, the Company had set up 26 slaughtering subsidiaries across China, with all slaughtered pigs supplied from its own farms. The Company has been expanding its pork sales network in China. By the end of 2023, more than 60 service stations in 20 provincial-level administrative regions across China had been set up for the Company’s slaughtering and meat business. (IV) Industry development 1. China as the world's largest pork production and consumption country Data from the National Bureau of Statistics of China (NBSC) shows that 726.62 million pigs were marketed in China in 2023, an increase of 3.8% over the previous year. As of the end of 2023, the national inventory of reproductive sows and live pigs were 41.42 million and 434.22 million, an decrease of 5.7% and 4.1% over the previous year, respectively. (Data source: NBSC) China currently is the largest pork producer in the world. According to data released by the U.S. Department of Agriculture (USDA), China's pork production in 2023 accounted for 49.39% of global production, ranking first in the world. (Data source: USDA) China is also the largest pork consumption country in the world. Pork is the most important source of animal protein for Chinese people, and has long been dominant in meat consumption in China. According to NBSC, China's pork production in 2023 was 57.94 million tons, accounting for 60.10% of the meat production of main livestock and poultry. (Data source: NBSC) 2. Pig price trend China’s pig market is characterized by significant cyclicity. The fluctuation of pig supply is the main factor affecting pig price. Data from the NBSC shows that 726.62 million pigs were marketed in China in 2023, an increase of 3.8% over the previous year. Pork output saw a YOY increase of 4.6%, standing at its highest-recorded volume since 2015, at 57.94 million tons. Large pig output and obviously increased pork output are the main reasons behind the low pig price in 2023. Live pig prices started to decrease in December 2022. In 2023, pig prices generally remained low, with only a temporary rebound in Q3. (Data source: MARA) 3. Continuously improved pig farming scale In China, small-scale pig farming has long been the main pattern in the pig industry, leading to a low industry concentration. There is a large number of backyard farming households and small- to medium-sized farms. In recent years, intensive pig farming and the industry concentration ratio in China have been in the rise. The industry is moving towards high-quality development to better satisfy people’s increasing demands for high-quality pork. According to statistics from the Ministry of Agriculture and Rural Affairs (MARA) of the People’s Republic of China, the proportion of intensive pig farming by the end of 2023 was estimated to reach about 68%, an increase of around 3 percentage points over 2022. According to public data, China’s top 10 listed pig farming companies sold about 149.15 million heads of pigs in total in 2023, accounting for 20.53% of the total national output, showing an increase over 2022. 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: yuan
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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
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(1) Basic information of bonds
During the reporting period, China Chengxin International Credit Rating Co., Ltd. (CCXI) issued the 2023 Tracking and Rating Report on Muyuan Foods Co., Ltd. on June 27, 2023. It maintained the Company's main credit rating as AA+, adjusted the rating outlook to Stable from Negative, and maintained the credit rating of "Muyuan Convertible Bond" as AA+. For more details, please see www.cninfo.com.cn. (3) Main accounting data and financial indicators in the past two years as of the end of the reporting period Unit: 10,000 yuan
None Qin Yinglin, Chairman Muyuan Foods Co., Ltd April 25, 2024 中财网
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