润丰股份(301035):2023年度经营概要 （英文版）
原标题:润丰股份:2023年度经营概要 （英文版） SHANDONG WEIFANG RAINBOW CHEMICAL CO., LTD Operating Summary of 2023 Section I. Company Information and Key Financial Indicators I. Company Information
II. Contact Person and Contact Information
III. Information Disclosure and Place of Report
IV. Other Relevant Information Accounting firm engaged by the Company
? Applicable □ Not applicable
V. Key Accounting Data and Financial Indicators Whether the Company needs to retroactively adjust or restate the accounting data of previous years ?Yes □No Reasons for retrospective adjustments or restatements Changes in accounting policies
and Accounting Estimates" in "Section X. Financial Report". The lower of the Company's net profit before and after deduction of non-recurring gains and losses for the last three fiscal years is negative, and the audit report for the latest year shows that there is uncertainty about the Company's ability to continue operating □ Yes ?No The lower of the Company's net profit before and after deduction of non-recurring gains and losses is negative □ Yes ?No VI. Key Quarterly Financial Indicators Unit: RMB
Company in the quarterly report and semi-annual report □ Yes ?No VII. Items and Amounts of Non-recurring Gains and Losses ? Applicable □ Not applicable Unit: RMB
Other gains and losses items that meet the definition of non-recurring gains and losses in this reporting period are personal tax commission refunds. Reasons for the non-recurring profit and loss items listed in Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 - Non-recurring Gains and Losses recognized as recurring gains and losses items □ Applicable ?Not applicable There is no circumstance where the non-recurring profit and loss items listed in Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 - Non-recurring Gains and Losses are recognized as recurring gains and losses items. Section II. Discussion and Analysis of Management of the Company I. The situation of the industry during the reporting period The Company shall comply with the disclosure requirements of "related business of the chemical industry" in the Guidelines of SZSE for Self- Discipline Regulation of Listed Companies No.3 – Industrial Information Disclosure The Company is categorized into the industry of chemical pesticide manufacturing (C2631) in chemical raw materials and chemical manufacturing (C26). Pesticides are also commonly known as crop protection products in the industry, which refer to products with a broader scope, including non-chemical pesticides (such as bio-pesticides, and bio-stimulants). Pesticides are known as preparations for the prevention and control of crop diseases and insect pests. Pesticide products actually used are pesticide preparations made from pesticide active compound and pesticide auxiliaries. The active compound takes effect, and it is also called active ingredients or active constitute. In addition, depending on the targets, the pesticides can also be categorized into herbicide, insecticide, fungicide, plant growth regulator, etc. (I) The development and trend of crop protection industry: 1. Structural growth opportunities still exist in the global crop protection market with rigid demands From the global perspective, the crop protection industry is an existing market that has rigid demands and is steadily growing in market shares. The demand for crop protection is closely related to the demands of humans for food and other crops. In recent years, with the increase in the population of the world, and the continuous occurrence of pests and diseases, the scale of global crop protection market is constantly expanding. According to the S&P Global Commodity Insights crop science team, the global crop protection market size grew from USD 35.575 billion to USD 87.7 billion from 2006 to 2022, at a CAGR of around 5.80%. It is not an industry featuring rapid growth in terms of the total growth rate, and it is also an industry that lacks change or strong growth dynamic due to the limitation of the non-linear expansion of the market shares of non-patented crop protection products. Second, with the continuous expansion of non-patented crop protection market share, excellent multinational generic companies grow rapidly (such as UPL in India). Third, with the promotion of different transgenic seeds and the resistance of different varieties, the prohibition policy from the government has brought about the change of usage amount of different varieties (such as glufosinate-ammonium, diquat, prothioconazole and chlorantraniliprole gained rapid growth in the global market in the past few years). 2. Non-patented crop protection market shares and excellent multinational non-patented crop protection companies grow fast With the continuous expansion of the non-patented crop protection market shares, excellent multinational non-patented crop protection companies have grown rapidly. The most eye-catching case in the industry in past few years is how Indian company UPL rapidly strengthened itself and expanded its market share internationally by purchasing Arysta and other companies with strong channel brands and constantly investing in the self-production of important non-patented active ingredients. Excellent multinational non-patented crop protection companies with high growth rate must have the following five features: (1) Fast response and decision-making mechanism (quick response to the rapid changes in the supply-end, cost-end and market-end globally is needed); (2) Simple structure and low-cost rate (fierce homogeneous competition in non-patented crop protection markets will make gross profit margin of the market channels constantly decline); (3) Diversified and complete product portfolio for providing an integrated crop solution (not relying too much on a single product); (4) The broad global market coverage and channel, and the construction of the brand (not relying too much on a single market, and having a good brand channel); (5) Be able to exert the impact on a number of important active ingredients (advanced manufacturing of important active components to form the complete industrial chain from the factory to the farm, thus stabilizing the supply and cost advantage, and supporting further expansion of the global market). 3. The global usage amount of different varieties changes rapidly With the promotion of different transgenic seeds, the prohibition/ restriction policies of government, and the resistance of different varieties, the usage amount is changing rapidly among different varieties. (1) With the promotion of transgenic seeds, the growth rate of global use of glufosinate-ammonium and 2,4D was significantly higher than that of other varieties in the past three years. (2) The prohibition or restriction policies of the government have a great impact on the use of different varieties: For example, the prohibition of paraquat in China, Brazil, Vietnam, Thailand and other markets has prompted significant increase of its alternatives varieties such as glufosinate-ammonium and diquat; To give another example, the prohibition of chlorpyrifos in Argentina, Vietnam, the EU, Myanmar, the United States and other markets directly has led to a significant decline in the global use of chlorpyrifos, and promoted the rapid growth of other alternative varieties; Another example is the prohibition of chlorothalonil in the EU directly has led to the serious excess of chlorothalonil production. (3) The resistance changes of different varieties require the mixed use of several alternatives for the same target diseases, insects and weeds: For example, countries such as Vietnam and Pakistan in South Asia have habitually used a single insecticide frequently and intensively, resulting in the rapid rise of its insecticide resistance and the frequent changes of different varieties; For another example, the fungicide resistance of Brazil to prevent soybean Asian rust changes rapidly, and it needs to be used alternately or mixed among different varieties. The rapid change in such different varieties enables manufacturers who are relying too much on a single active ingredient to face significant opportunities or major crises. 4. The development of crop protection products market in different regions of the world is imbalanced, the growth rate is different, and emerging markets are growing rapidly. In the past five years, the growth rate of the crop protection products market in different regions of the world has been different, and the growth rate in emerging markets is faster, which is represented as follows: (1) The Latin American region continues to grow rapidly: Latin America has become an increasingly important source of agricultural production and supply in the world. In the past five years, Latin America has sustained rapid growth, especially in Brazil. (2) The growth rate in the Northern American market slows down: The market size of the United States and Canada is relatively stable, and with the increase in the market share of non-patented crop protection products, competition has intensified; (3) Steady and slow growth of the Asia-Pacific market: India, Indonesia, Bangladesh, Vietnam and other markets in the region are growing relatively fast; (4) The growth rate in Africa is accelerating: With the development of economy, countries in Africa increase investment in agriculture, and the market scale of crop protection products grows rapidly; (5) The size of the EU market is stable and slightly decreased: The EU's policy of prohibiting and restricting more and more active ingredients, and the high product registration and maintenance costs to meet regulatory requirements have made this market less attractive due to the high risk of registration investment and high amortization cost of intangible assets, despite its high gross profit margin. The market size in this region is stable and continues to decline slightly, but the market for bio-pesticide and bio-stimulant will become a growth point. 5. The management regulations and policies of crop protection products in different countries worldwide are frequently adjusted and increasingly strict To enter the market of any country, crop protection products need to obtain a product registration certificate in that country in accordance with relevant laws and regulations of that country. Obtaining a product registration in country A does not mean that it can be sold in country B. That is, even the same product also needs to be sold in accordance with relevant laws and regulations of each country, to obtain the product registration certificate in the target country. The management regulations and policies for crop protection products in various countries around the world are frequently adjusted and increasingly strict, mainly in the following aspects: (1) Changes in registration policies or approval fees have increased the registration costs of individual products in various countries: For example, the adjustment of the registration policy of the imported API product of India in 2017, has made the registration fee of a single imported technical drug directly rise from USD 20,000 to around USD 400,000 to USD 800,000 now. (2) Registration policies are being adjusted towards high data standardization and complication, making registration more difficult: Even countries with very loose requirements are increasingly changing from accepting public data to requiring GLP experiments reports. The types of reports required are more and more complex, which increases the types of data required for the registration of a single product, improves the standard, and increases the preparation time of data, and some of the data is extremely difficult to prepare professionally. (3) The efficiency of government approval and certification is declining: In countries such as Argentina, Bangladesh, Sri Lanka, Malaysia, and Algeria, government departments have even introduced policies limiting the annual number of product registration applications for each applicant, resulting in slow process with prolonged cycles for new product certification in most countries. (4) The registration process in important crop protection product markets generally takes a long time: The process takes long in the world's important crop protection product markets such as Brazil, Argentina, Mexico, Russia, India, China, the EU and etc. In Brazil, it generally takes 5-8 years; in Russia, India, and the EU, it generally takes 4-6 years; in Argentina, Mexico, and China, it generally takes 3-5 years; in the United States, it generally takes 2-3 years. The above-mentioned changes in industry management regulations and policies are very beneficial to those companies that have a registration team that registers KNOW-HOW in various markets around the world, have efficient decision-making and organizational coordination mechanisms, and have a large number of registrations in various markets around the world. (II) 2023 global crop protection market environment 1. Prices of bulk agricultural products remain at a reasonable median value all-time. Farmers are willing to use pesticides, and the planting areas of agricultural products remain unabated, which means that the rigid consumption demand for pesticides by end consumers - growers continues to be stable. According to China Customs statistics for January-December 2023, the export quantity under Customs Code 3808 rose by 10.53% year-on-year in 2023, indicating that the global market for agrochemical products remains rigid, with market demand returning to normal. 2. Prices of the active ingredients of most crop protection products decreased during the reporting period. The Sino-Agri Price Index for APIs was reported at 80.19 points on December 31, 2023, down 37.5% year-on-year; of the hundreds of products tracked, 92% showed a decline, while 8% remained flat, with none of them going up. Prices of large-tonnage active ingredients such as glyphosate (-48%), glufosinate- ammonium (-58.00%), alachlor (-56%), 2,4-D (-45%), chlorantraniliprole (-45%), prothioconazole (-64%), and pyrimethanil (-39%) dropped significantly, hitting or breaking the historical lowest level. 3. With new production capacities of pesticide active compound in China and India since the fourth quarter of 2022, coupled with the high stockpiling inventory in various market channels due to the poor global supply and logistics over the past two years, competition in the market has intensified, with the overall trend of oversupply. Therefore, active ingredients manufacturing will inevitably undergo the de- production capacity and capacity optimization in the future. Manufacturers without competitive technical costs or compliance advantages will gradually exit the market, and the concentration of the active ingredients manufacturing industry will be further increased, enabling advantaged leading companies in active ingredients and those with brand advantages in globalized marketing channels to further expand their market share. (III) Outlook for the global crop protection products market in 2024 1. Prices of most active ingredients of crop protection products will continue to stabilize at the bottom. Prices of most active ingredients have been at or even below the historical lowest level, to such an extent that no further decline is possible. However, due to the expansion and release of pesticide production capacity in China and India over the past three years, most active ingredients will still face excess supply over demand, meaning that their price will continue to stabilize at the bottom. 2. Products with historical low prices may experience major price fluctuations in the short term at any time along with incidental events, so accurate decision-making and quick response in inventory management and market strategy are particularly important. 3. Market demand continues to pick up. Along with the recovery of rigid demand in large markets such as Brazil, Argentina and the United States in the second half of the year, the demand will be significantly stronger than in the first half of the year, with continued rebound in rigid market demand. 4. The adjustment of the competitive pattern of global head enterprises will be accelerated. First, the market share of generic crop protection products continues to expand. Second, along with the continued expansion of the market share of generic crop protection products, multinational big-names of generic protection products will experience accelerated growth. II. Analysis of Core Competitiveness 1. Originating from China and serving the world - Unique business model to achieve "From Made in China to Globalization of Chinese Brands". In the early years after the Company's establishment, relying on the experience accumulated by the founding team in the crop protection product industry, it participated in the global pesticide industry chain as basic manufacturers and suppliers for different active ingredients. It achieved rapid growth and initial accumulation with the help of the rapid development of the global crop protection products market and the wave of industrial transfer to emerging countries such as China. With the changes in the global economic environment, the global crop protection industry is also undergoing changes. Especially after the outbreak of the financial crisis in 2008, affected by the decline in overall market demand, the overcapacity problem of domestic manufacturing industry was more and more prominent due to years of continuous low-level repeated production. Many products were oversupplied and generated vicious price competition, which adversely affected the profitability of enterprises in the industry. In response to the challenges brought about by changes in domestic and foreign economic and market environments, the Company responded quickly. Since the second half of 2008, it began to explore and plan for the optimization and upgrading of the its sales model and development route. The Company has gradually formed a global marketing network with "Team + Platform + Innovation" as the basic elements, combining the traditional export mode of crop protection products with the independent overseas registration mode, and featuring a "Quick Market Access Platform". The core of the "Quick Market Access Platform" is to obtain the registration of a rich and complete product portfolio in each target country and to adhere to the concept of open platform. The rich and complete product portfolio registration can provide growers with integrated crop solutions, and the concept of open platform enables the Company to build its own local team based on the target country platform, to carry out the B-C business model of its own brand. In addition, the Company adopts flexible way to open the platform to other excellent partners to carry out B-B operation. Based on this open platform, the Company can rapidly expand market share through multiple channels including the Company's self-built team and cooperation with industry partners. In each target country, the Company adheres to the combination of the traditional export model of crop protection products and the overseas self-registration model. The Company can flexibly adjust and switch between different market roles such as suppliers, brand owners and service providers according to changes in market scenarios and product differences. Two models promote and complement each other. The traditional export model provides a solid customer base and market awareness for business expansion under the overseas self-registration model. The abundant overseas self-registration not only greatly improves the Company's brand awareness, but also can better meet customer needs with more various products and improve the intimacy with customers, which is more conducive to the development of the Company's traditional export business. At present, the Company's traditional export business model still accounts for a considerable proportion of revenue. In the future, with the continuous increase of the Company's overseas self-registration quantities and the continuous improvement of the construction of the global marketing network characterized by "fast market entry platform", the proportion of revenue of the overseas self-registration model and the proportion of B-C revenue of self-owned brands will be further increased. In addition, the Company's profitability and capabilities to maintain sustainable and stable growth and operation will be significantly improved, so as to achieve stable, sustainable and rapid growth. According to the mid-term strategic plan, the Company is speeding up and increasing the investment in overseas self-registration to enrich the product portfolio in each target country, and starting the construction of a "fast market entry platform" in more target countries. In the meanwhile, the Company also adheres to the characteristics of "simple structure and rapid response" to accelerate the development of its own brand B-C business in each target country. With its own strength and China's strong supply chain, the Company is striving to achieve "From Made in China to Globalization of Chinese Brands". 2. Clear strategic plan that is firmly implemented In 2019, based on the BLM model, with the participation of all core team members, the Company reached a consensus and determined the mid-term strategic plan for 2020-2024 after in-depth and sufficient discussions. The mid-term strategic plan was formulated based on the guidelines of "Persisting in doing the difficult but correct work, moving towards the forefront of industrial value chain, and building a complete industrial chain". After the mid-term strategic plan is completed, the Company organizes an annual review and update in the middle of each year to ensure that the critical tasks formulated around the plan keep pace with the times. Based on the mid-term strategic plan, the Company formulates the annual business plan, annual department work plan and personal PBC. After goal-splitting level by level, it forms a strategic plan implementation map, summarizes, reviews and assesses the implementation every quarter, and proposes the next improvement plan to ensure that all staff focus on strategic planning and annual work plans, and work together to achieve the goals. 3. A professional and dedicated international core team The Company has nurtured a stable operation team. For more than 20 years, the operation team led by founding shareholders, Wicky Wang, Sun Guoqing, Qiu Hongbing, Yuan Liangguo and Liu Yuanqiang, has focused on the sector of crop protection products. They have a profound expertise and rich hands-on experiences with insights into segmented markets and development trends globally. The Company's vision is "To be a Global Leading Crop Protection Company" and its mission is "All about Growing". The core values of the Company are "Customer Oriented; Rapid Response; Constant Effort; Open and Inclusive; Together We Work; Together We Win". With the guidance of the vision, mission and core values, and by practicing them, the Company builds cultural identities and unity of team members. Through continuously improving positions, salaries and benefits, performances and training systems, the Company builds an international team to facilitate global business expansion. To fully implement the core value of "Together We Win", the Company has launched a restricted share incentive plan for excellent core members of the operational team other than the founding shareholders in 2021. This will be an integral part of the Company's efforts in continuously improving the combined system of positions, salaries and benefits, performances and training, with an aim to build a united international team who will give collective efforts towards shared goals. 4. Widely covered global marketing network The Company's business covers the world, with five manufacturing bases in Wei Fang, Qingdao (Shandong Province, China), Pingluo (Ningxia Province, China), Argentina and Spain. The Company has set up over 100 subsidiaries overseas with its businesses in over 100 countries. With strong global registration competence, the Company is expanding its global marketing network at high speed. According to the Company's medium-term strategic plan (updated in 2023), in terms of the construction of "Fast Market Access Platform", the Company will complete the preliminary stage of the project in all major markets except the United States, Canada and Japan by 2024. In addition, the Company will complete the project in all major markets between 2025 and 2029 to complete the construction of the "Fast Market Access Platform". The Company will implement the plan for running self-branded B2C operations in at least 25 new target countries by the end of 2024. 5. Advanced manufacturing supported by R&D innovation The Company started to shift the focus of R&D and innovation to advanced manufacturing of single products with active ingredients in 2019. After years of accumulation, five core capabilities have been shaped in advanced manufacturing supported by R&D and innovation: (1) Product selection capability based on thorough understanding of the whole industry chain Under our unique business model, we have gained thorough understanding of the whole industry chain from factory to farm, and built up the capability of screening active ingredients in line with our characteristics and target market demands in terms of active ingredients, with a rich R&D pipeline to ensure the sustainability of advanced manufacturing. In terms of preparations, we have formed the capability of selecting and planning differentiated preparations oriented to the pain points of the end market, to improve the product portfolio. (2) Resource integration capability based on industry influence and the "Open and Inclusive, Together We Win" culture To practice the core values of "Open and Inclusive, Together We Win", we make full use of the contacts accumulated in the international market, and actively integrate top experts and R&D teams in each specialized field from all over the world, for strong alliance. Currently, we have built up a technical team with world-class capabilities, and cooperated closely with numerous research institutes, colleges and universities, as well as enterprises. (3) Process development capability based on mechanistic studies and engineering conversion capability based on process analysis Focusing on advanced manufacturing supported by R&D and innovation, we have strengthened the research on reaction mechanisms and laws, to upgrade our process development and engineering conversion capabilities, forming a potent team for process development and engineering conversion. Regarding active ingredients, we have set up multiple dangerous process technology platforms, to support the commercialization of multiple active ingredients. As for preparations development, a platform technology for the rapid development of preparations and continuous production has taken shape, with more than 1,300 production formulations, over 900 of which have realized engineering conversion. (4) Flexibility to adopt different implementation standards and methods based on product and market characteristics We classify the active ingredients reasonably from the dimensions of scale, patent, and mechanism of action, and employ different implementation standards accordingly. We ensure the advanced manufacturing of important active ingredients with large-scale effects, the rapid implementation of those with unique mechanisms of action and small-scale effects, and the prioritized deployment of those with large market potential and early patent expiration dates. Different implementation standards match with self-production, customization or combination of the two to enable rapid industrialization. (5) Continuous improvement capability based on core technology advantages and lean manufacturing By fully utilizing the core technology advantages and lean manufacturing experience accumulated over the years, we conduct in-depth research on the mechanism and law of reaction regarding active ingredients, to strengthen process analysis, and continue to explore the potential to reduce API costs. In terms of preparations, we continue to upgrade formulas to improve drug efficacy and reduce acreage costs, thus enhancing the enduring competitiveness of our products. 6. Simple structure and rapid response based on the complete industrial chain and thorough understanding of the whole process, originating from China and serving the world The Company has built a complete industrial chain involving research and development of active ingredients, manufacturing, branding towards the global market, trading channels, sales and services from the factory to the farm. The Company also has a thorough understanding of the whole industrial chain and can make values in each section. By leveraging its own productivity, strong supply chain in China and a global marketing network, the Company responds to changes on the supply side, cost side and global market rapidly, which features as "simple structure, and fast response". It originates from China and serves the world. The global marketing network enables the Company to gain insights in the market dynamics and advert risks of blind investment in R&D and manufacturing side. The global vision, international professional teams and core values of "Open and Inclusive, Together We Win" also help the Company successfully integrate the upstream and downstream of the global industrial chain as well as to grow rapidly in the capital market. III. Analysis on main businesses 1. Overview Rainbow's present medium-term strategic plan (2020-2024) was drawn under the guiding principle of "Persisting in doing the difficult but correct things, moving towards the forefront of industrial value chain, and building a complete industrial chain". Based on this medium-term strategic plan, the Company will continue to focus on further improving its global marketing network and enhancing advanced manufacturing supported by R&D and innovation. Following is the summary of progresses made in these two aspects in 2023. (I) Improving the global marketing network 1. Team building: The marketing and registration team has rapidly expanded through recruitment campaigns at domestic universities and colleges, social recruitment and local recruitment in different countries. Especially after enhancing recruitment of local staff overseas, the set-up and management of international teams has become more systematic and mature. We have specially designed a two-year Rainbow Leadership Program for Chinese team members stationed overseas who need to transform their roles into business managers. With more young staff joining the team, the Company has further enriched and optimized the marketing and registration training scheme and serial training materials. It has successfully organized 4-month training course for new staff recruited at universities and colleges and an annual 1- week intelligence training camp for on-the-job staff, which achieved the goal of improving unity, sharing lessons learned at work and educating methodologies of success. （未完）  |