[年报]禾丰股份(603609):禾丰股份2023年年度报告（英文版）
原标题:禾丰股份:禾丰股份2023年年度报告（英文版） March 2024 Important Statements I. The Board of Directors, Supervisory Board, directors, supervisors and senior management of the Company hereby warrant that the contents of this annual report do not contain any false or misstatements or material omissions and are individually and collectively responsible for the truthfulness, accuracy and completeness of its contents. II. All Directors were present at the Board Meeting. III. SuyaJincheng CPA LLP has issued an audit report with unmodified opinion. IV. Mr. Jin Weidong, the person in charge of the Company, Mr. Chen Yu, the person in charge of the accounting work and the person in charge of the accounting department( head of accounting), declare that they guarantee the truthfulness, accuracy, and completeness of the financial report in the annual report. V. Dividend payment proposal for the reporting period approved by the Board of Directors In view of the negative net profit attributable to equity shareholders of the Company, which did not meet the conditions for cash dividends set out in the Articles of Association of the Company, and taking into account the long-term development plan and capital requirements, and in order to ensure the sustainable and healthy development of the Company and to provide investors with more stable and long-term returns, the Board of Directors of the Company, after careful deliberation, has decided that no profit distribution and no capitalization of additional paid-in capital will be made for FY2023. This proposal is pending to be submitted to the Annual General Meeting. VI. Risk statement on forward-looking statements The forward-looking statements contained in this report such as business plans, development strategies and other information, should not be regarded as a commitment by the Company to investors. Please beware of the investment risks. VII. There has been no occurrence of the Company's non-business capital being appropriated by the controlling shareholder and his related parties. VIII. There have been no instances where the Company has breached its decision making process when providing external guarantees. IX. There have been no incidents where more than half of the directors can’t guarantee the authenticity, accuracy and completeness of the annual report published by the Company. X. Material Risk Warning The Company has described in detail the relevant risks that may exist in this report, please refer to "Potential Risks" in "Section III Business Operations Analysis". XI. This annual report has been published in both Chinese and English versions. In the event of any discrepancy or inconsistency between the English and Chinese versions, the Chinese version shall prevail. The Chinese version of 2023 Annual Report is available at www.sse.com.cn. Contents Section I Glossary ............................................................................................................................... 4 Section II Company Profile and Key Financial Information ................................................................. 5 Section III Business Operation Analysis ................................................................................................ 9 Section IV Corporate Governance ...................................................................................................... 47 Section V Environment and Social Responsibility ............................................................................. 61 Section VI Important Disclosures ....................................................................................................... 77 Section VII Changes in Common Shares and Shareholder Information .............................................. 87 Section VIII Preference Share ............................................................................................................... 91 Section IX Corporate Bond ................................................................................................................. 92 Section X Financial Statements ......................................................................................................... 95
I.Glossary
Section II Company Profile and Key Financial Information I.Company Information
II.Contact Person
III.Basic Information of the Company
IV.Place where the Annual Report is Prepared
V.Stock Information
VII.Key Accounting Data and Financial Performance Indicators for the Latest Three Years 1.Key accounting data CNY
CNY
IX.Extraordinary Items CNY
CNY
Section III Business Operation Analysis I.Business Operation Analysis In FY2023, the Company’s revenue amounted to CNY 35.97 billion, an increase of 9.63% over the previous year, the net profit attributable to equity shareholders recorded CNY -457 million, a decrease of 189.13% compared with a year earlier, and the net profit attributable to equity shareholders less extraordinary items amounted to CNY -503 million, a decrease of 196.95% over the previous year. Since the completion of the IPO in 2014, the Company's revenue has continued to grow at a compound annual growth rate of 16.44%. The progresses of the Company’s primary businesses are as blow. 1.Feed business In FY2023, the consolidated subsidiaries sold 4.31 million tons of feed with a year-on-year growth of 7.88%, of which, premixes increased by 23.54%, concentrate feed decreased by 1.41%, and compound feed increased by 7.86%.
In FY2023, the feed material market was complicated and volatile, the downstream farming industry was in sluggish, and the margins of domestic feed companies reminded under pressure. In order to cope with challenges in all aspects, the Company has strengthened operations management, with many departments actively cooperating to strictly control product quality and reduce costs as well as increase efficiency. In terms of technology, the Company's diversified formulation system has become increasingly mature, and effective progress has been made in reducing formulation costs by improving the accuracy of raw material dosage through continuous comparison of various formulation solutions. In terms of procurement, the Company continued to recruit key personnel to make up for the shortage of some raw materials, and internal experts cooperated with external brains to strengthen research and evaluation of raw material prices. On the production side, the Company intensified its efforts in production inspection, cost analysis and inventory management, continued to upgrade and reconstruct equipment, and optimized the whole process of the pelleting system. As a result, indicators such as production loss, energy consumption, efficiency and stability have all steadily improved. At present, each business area of the feed business has been vigorously strengthening its cross-sector links and collaboration, significantly improving the responsiveness to market changes and strengthening core competitiveness. B.Focusing on key directions and accelerating business transformation In FY2023, the Company continued to pursue the transition of its business model from "dealer-led" to "equal emphasis on dealer and large farm direct sales". To this end, each region of the feed business division set up independent large farm marketing service team. The training center of the head office, the marketing center and the business units in each region jointly developed 12 standard courses, carried out 15 training sessions on professional skills of marketing and service of large farms, and the Company's internal benchmark teams shared their experiences via live streaming, with more than 2,000 sales staff completing all the above courses. In terms of business progress, in the northeast region, the Company relied on its regional advantages to integrate resources to support large-scale pig farm customers, while outside the northeast region, the Company set up the "large-scale pig farm value service club", actively introduced technical service experts to improve its technical service for large-scale customers. In 2023, the Company's sales of bulk feed for large-scale farms increased by more than 30% year on year, and the share of large-scale farms was significantly increased. C.Controlling the risk of bad debts with a focus on strengthening receivables management In FY2023, consumption remained weak, the livestock and broiler farming markets were in the doldrums, some farms were in the red for long periods with very tight cash flow, and feed companies faced greater challenges in controlling bad debt risk. While vigorously expanding market, the Company has placed increasing emphasis on the accounts receivable, and the departments such as marketing, finance, legal, information technology and human resources cooperated with each other in an effort to reduce the risk of bad debts. In terms of marketing, the Company has strengthened its market research and data analysis to improve the selection of high-quality customers and focused its sales efforts on these customers. On the financial side, the Company has strengthened the analysis and monitoring of accounts receivable, continuously improved customer risk assessment and expanded the third-party financing channels. On the legal side, it has improved the management regulations of accounts receivable, enhanced inspections and actively promoted the progress of default litigation. In terms of information technology, the Company has improved the comprehensive data analysis system and strengthened data penetration to assist the head office in real-time supervision. In terms of human resources, it has adhered to the performance appraisal principle of focusing on the trinity of "sales volume, net profit and accounts receivable" at the same time for basic-level managers, to promote the business to realize "virtuous growth with speed and quality". 2.Broiler integration In the year under review, broiler breeder prices were running at a high level, and the recovery speed of consumer demand was not as fast as expected, coupled with the fact that pig prices were still at a low level and chicken prices were also weak, the profit of the industrial chain was concentrated in the breeder side. In FY2023, under the sustained driving force of ensuring safety, controlling expansion pace, adjusting industrial structure, advancing business ecosystem, compressing costs, improving efficiency and increasing profit, the Company steadily expanded its production scale, constantly improved the operations management, which has enhanced the core competencies. A. Steadily expanding market share and promoting capacity layout In FY2023, the Company’s broiler business promoted production layout in an orderly manner in accordance with the strategic plan, reasonably controlled the expansion pace of each sector, and further expanded market share. In terms of breeding, it continued to expand the size of the parent stock, rationalized the breeding plan, and aimed for rapid full-load production in new plants. On the farming side, the commercial broiler farming, like slaughtering, has always maintained a steady pace of expansion to provide slaughterhouses with a stable, sufficient and high-quality supply of market ready broilers. On the slaughtering side, the production and sales scale of slaughtering and processing business continued to expand, with operating levels and profitability well above the industry average. In the first quarter, a new plant in Hebei was successfully put into operation, bringing the Company’s annual slaughtering capacity (including associates) to over 1.1 billion broilers. During the period under review, the Company's holding and associated companies slaughtered a total of 810 million broilers, representing a year-on-year growth of 13%, and produced and sold 2.12 million tons of parts products with a year-on-year growth of 14%. Broilers slaughtered since the IPO in 2014: B. Investing in strengthening operation management and steady improving production performance In FY2023, the broiler integration business, adhering to the development path of lean management, continuously optimized production indexes, improved operational efficiency and strictly controlled product quality, while reasonably compressing costs. On the breeding side, as the quality of domestic breeders declined, the Company paid more and more attention to the quality of breeders, insisted on long-term strategic cooperation with suppliers of excellent breeders, and continuously improved the purification process of chick source and strengthened bio-security system to maximize the protection of the quality of commercial day-old chicks. In terms of farming, the Company has always been committed to building a strict and standard farming management process, and this year set up an inspection department to further strengthen supervision, which has steadily improved production performance, for example, the feed-to-meat ratio dropped to 1. 55 and the European production index rose to 415. On the slaughtering side, the Company continued to pay close attention to production efficiency, reduce operating costs, strengthen quality management and rapidly expand economies of scale after commissioning new projects to make money as soon as possible. On the financial side, the Company strictly managed accounts receivable and rationalized capital expenditure to ensure sufficient cash flow. C. Actively developing end markets to maintain food business growth In FY2023, the recovery of consumer demand was slow, the growth rate of group consumption and outdoor consumption was significantly lower than expected, and the low price of pork also inhibited the growth of chicken consumption to some extent. In the face of market pressure, the Company further strengthened the quality of chicken products, significantly increased the proportion of fresh products, continued to develop the sales channels for broiler parts products through the "multi-brand strategy", promptly adjusted the product structure according to the fluctuations in market demand and market conditions, optimized the customer structure, and endeavored to increase the proportion of high value-added products. In addition, in the unfavorable environment of generally high inventory in the broiler slaughtering industry, the Company’s slaughtering entities have always maintained a high inventory turnover rate and maximized the capacity utilization based on the production and sales balance. As for the food business, the scale of production and sales of new projects has expanded rapidly and the operating capacity has been further consolidated, while the old projects have continuously strengthened product advantages and gradually improved the quality of customers. At present, the Company has reached cooperation agreements with several convenience store chains, such as Lawson, Family Mart and 7-11. During the reporting period, the Company's holding and associated companies produced and sold a total of 32,000 tons of prepared and cooked food, representing a year-on-year increase of 19%. 3.Pig farming business In FY2023, domestic pig prices continued to fluctuate at a low level, the speed of capacity reduction and consumption recovery was slower than expected, and the trend of eliminating uncompetitive companies in the industry intensified. Under the guidance of newly revised development strategy of pig business, the Company strictly controlled the scale of pig farming business, continuously optimized investment portfolios, strengthened the management of pig farms and made every effort to promote the process performance management system. During the year, the Company's holding and associated companies sold a total of 1.16 million heads of pig, of which 910,000 were finishers, 210,000 were piglets and 40,000 were breeders. A. Maintaining stable operation to strictly control scale, enhancing development pillars and optimizing structure In FY2023, under the environment of heavy losses in the pig farming industry and increased capital pressure on most companies, the Company’s pig farming business took scale control and structure adjustment as the main development strategy, strictly controlled the production scale, endeavored to reduce debts and ensure cash flow, making efforts to steadily overcome the industry downturn. In addition, the Company continued to adjust business portfolios, gradually focusing its resources on high-quality projects and regions suitable for pig farming, increasing the capacity utilization and equity share of competitive projects, while reasonably improving the performance appraisal standards of farms and resolutely eliminating backward production capacity, including poorly performing sows, substandard breeding farms and contract farms. Although losses have been incurred in the short term, the overall asset quality of pig business division has been significantly improved, with positive implications for continuous cost reduction and efficiency improvement. B. Continuously strengthening breeding management and making every effort to ensure bio-security In FY2023, the Company made great efforts to optimize the core breeding stock, to continuously improve the breeding system. In the northeast region, the nutrition, veterinary medicine and production departments worked together to refine the genetic selection program and further expand the breeding scale, striving to build "the largest high-quality French genetic breeding base in the northeast". Outside the northeast region, the Company steadily promoted the production capacity of the two main breeds of the French and Danish lines and implemented the dynamic selection and grading management program for breeders, timely eliminating the sows with low reproductive performance, and gradually forming the core herds through external introduction and internal selection. In addition, the Company has always attached great importance to bio-security. This year, health management centers have been set up in each region and professional veterinarians have been introduced, establishing an epidemic monitoring and early warning system to provide sufficient data support for epidemic prevention and early warning. At the same time, the reward and punishment mechanism has been further improved to ensure that team members could always maintain a high degree of responsibility and vigilance. C. Striving to build core competencies, deepening talent team management In FY2023, the Company continued to implement the process performance management system in its pig farming business, and held monthly business analysis meetings at three levels involving the head office, regions and local farms. Through learning from the competitors and copying from internal benchmarks, the Company constantly identified the core and key issues of each pig farm, established task lists and effectively implemented improvement plans. Under this management mode, the Company’s fattening business has made great strides in its production performance this year. In terms of team building, the Company accelerated the introduction of young technical and management backbones, continuously strengthened the training of basic and middle-level managers, and focused on helping young farm managers to grow rapidly through tracking and training with targeted support. At the same time, the Company conducted regular talent analysis, strengthened the performance appraisal of basic and middle-level farm managers to dynamically optimize the talent team, while complementing this with scientific and reasonable salary incentive programs, the initiative of the farm managers has been significantly enhanced. 4.Major awards received by the Company in 2023 II.Industry in which the Company operated during the reporting period 1.Feed industry In FY2023, the prices of raw materials such as corn and soybean meal were volatile, the downstream farming industry was relatively sluggish, and the upstream feed industry continued to be affected by the dual impact of weak demand and rising costs, with market competition intensifying and overall margins remaining under pressure. The trend towards survival of the fittest in the feed industry has become increasingly evident. Leading feed companies have clear advantages such as technology, sourcing, operation, service and branding, their market shares have further expanded, and industry consolidation has continued to improve. On the supply side, the total feed production reached a new high in 2023, with total output reaching 321.627 million tons, up 6.6% year-on-year. From the perspective of major varieties, pig feed amounted to 149.752 million tons, up 10.1% year-on-year, layer feed amounted to 32.744 million tons, up 2.0% year-on-year, broiler feed amounted to 95.108 million tons, up 6.6% year-on-year, ruminant feed amounted to 16.715 million tons, up 3.4% year-on-year, and aquatic feed amounted to 23.444 million tons, down 4.9% year-on-year. From the perspective of sales model, the national bulk feed totaled 130.502 million tons, up 21.9% year-on-year, accounting for 43.7% of the total output of compound feed, 5.4 percentage points higher than the previous year. From the perspective of consolidation, there were 33 large feed groups with annual output of more than one million tons this year, whose feed output together accounted for 56.1% of the national feed output. On the demand side, although pig prices were low in the first half of the year, demand for pig feed was supported by the high pig stock and the slowdown in the culling of breeding sows. In the second half of the year, pig prices weakened further, pig farming continued to loss money, companies and farms in the industry were still facing financial pressure, which accelerated the cutting of pig production capacity and reduced the demand for pig feed. In the poultry feed sector, layer production was profitable, but external sales from the north-eastern production areas declined, egg production dropped significantly, and the demand for layer feed decreased. White-feathered broiler stock remained high, driving up demand for broiler feed. As for ruminant feed, beef and mutton prices continued to fall, ruminant stocks were adjusted downwards, thus, feed demand weakened significantly. Overall, under the dual pressure of downstream industry losses and upstream price shocks, competition in feed industry remained fierce in FY2023, with inefficient production capacity being continuously eliminated and market share gradually centralized among outstanding leading enterprises. Note: The above data was sourced from the China Feed Industry Association Statistical Report and Boyar Industry Analysis Report. 2.Broiler industry In FY2023, broiler prices showed a trend of high before and low after. In the first half of the year, the prices of products in each link of the industrial chain dropped after a sharp rise, but the prices were more sluggish in the second half of the year. The difference in the profits made by each link in the chain became more obvious, with the profits mainly concentrated in the breeding sector and the losses in the farming and slaughtering sector getting ever greater. On the supply side, the supply of chicks continued to decline in the first quarter of 2023, due to factors such as the extensive molting of parent stock at the end of the previous year, leading to a decline in the supply of broilers, followed by a sustained increase in the prices of market ready broilers and chicken. After the second quarter, the supply of chicks continued to increase, and the supply of broilers increased with the reproduction of molted parent stock. Affected by high temperatures, the increase in market ready broilers was not obvious in July, but from August to the fourth quarter, market ready broilers increased significantly, broiler and chicken prices fell sharply, thus broiler farming suffered serious losses. For the whole year, the number of market ready broilers in China increased by 10.5% year-on-year, broiler parts products increased by 9.7% year-on-year, with the supply of broilers rising sharply, putting great pressure on the supply side. On the demand side, demands for catering, group meals and travel gradually increased as social activities and consumption scenarios resumed in 2023, but the overall recovery in final consumption was not as fast as expected. On the alternative consumption side, the low price of pork hampered the consumption demand for chicken. Due to the lack of confidence, merchants' expectations for holiday stocking weakened and they adopted a low-stock sales strategy, which led to the slow movement of chicken products, and pushed the cooperates’ inventory rates to a high level. For the whole year, the comprehensive sales price of broiler part products rose sharply in the first quarter, fell rapidly in the second quarter, weakened again after a slight rebound in the third quarter, and fell to a low level in the fourth quarter, with the average price of CNY 9,270 per ton in December, down 18.0% year-on-year, and significantly lower than the average price of CNY 10,760 per ton for the whole year. Due to the sluggish development of chicken consumption, the broiler slaughtering industry as a whole was in the red, but the profitability level of different enterprises varied greatly due to differences in operation management and production efficiency. Overall, the broiler market in 2023 showed a trend of strong supply and weak demand, due to lower than expected downstream consumer demand and barriers to the top-down transmission of costs and prices, profits within the industry were unbalanced, with profits mainly concentrated in breeder companies, and losses in the downstream farming and slaughtering segments. Note: The above data was sourced from Boyar Industry Analysis Report. 3.Pig farming industry In 2023, the national hog prices were always in the bottoming out phase, during which there was a brief upturn, but the overall market supply and demand pattern was weak and pig farming sector suffered heavy losses throughout the year, which greatly increased the cash flow pressure on the relevant companies. On the supply side, the high stock of breeding sows and slow capacity culling in the first three quarters of 2023 were partly due to increased industry consolidation and the growing ability of large companies to withstand short-term losses and risks, and partly due to the improving pig production performance. In addition, the prolonged round of price recovery and lucrative profits in the pig market in 2022 forced the interruption of capacity cuts, leading to high supply of pig in 2023. Entering the fourth quarter, piglet prices fell below the break-even cost line due to the weakening of restocking sentiment, losses in the farming business led to increased cash pressure in the industry chain, with large-scale companies tending to have tighter cash flows and rising asset-liability ratio. Meanwhile, under the influence of frequent epidemics, the industry passively accelerated the culling of sows, prematurely eliminated low-weight pigs and accelerated the elimination of underperforming capacity. On balance, the supply side of pig market was under pressure in 2023, with the annual number of market ready pigs up 3.8% year-on-year and pork production up 4.6% year-on-year. Influenced by low pig prices and epidemics, the industry's losses widened further, and capacity reductions accelerated in the fourth quarter. On the demand side, the rebound in consumption has led to significant growth in food and drink industry revenues in 2023 compared with last year. Pork consumption continued to grow, but the growth rate of pork demand was weaker than that of supply, the imbalance between supply and demand has persisted, and consumption recovery was less than expected. Factors such as the domestic population gradually peaking and a shift in the meat consumption structure towards diversification have resulted in insufficient growth momentum and space for pork in final consumption. In 2023, the pig-to-pork ratio was at a historically low level, and warm winter temperatures weakened curing consumption demand, market sentiment was poor, the storage rate of frozen products was at a historically high level, the funds of slaughter plants were tightened, further restricting the operating rates of slaughter plants and improving the number of broilers slaughtered. Under the background of a weak recovery in consumption, the pig market performed poorly throughout the year, with insufficient consumer demand. Overall, in 2023, the pig market supply exceeded demand with low and weak pig prices, the industry entered a long loss cycle, the pressure on company survival has increased significantly, pushing the （未完）  |