[年报]新 希 望(000876):2023年年度报告（英文版）
原标题:新 希 望:2023年年度报告（英文版） 2023 Annual Report Section 1 Important Note, Table of Contents and Definitions The board of directors, board of supervisors, directors, supervisors and senior executives of the Company warrant that the contents of this annual report are true, accurate and complete and free of any false recordings, misleading statements or significant omissions, and that they will be jointly and severally liable for the legal consequences. As declared by Liu Chang (chairman of the Company), Chen Xingyao (chief accountant) and Su Xiaodan (the person in charge of accounting organization & accountant in charge): the financial report in this annual report is true, accurate and complete. All directors of the Company attended the board meeting deliberating this report. I. Animal disease and natural disaster risks Animal disease is the main risk faced in the development of livestock industry. There are three kinds of risks arising out of the occurrence of epidemic disease. First, the occurrence of epidemic disease is likely to result in death of livestock, directly resulting in reduced yield, increased costs and lower prices. Second, the occurrence and prevalence of animal disease on a large scale easily influence the consumer psychology, leading to a contraction in market demand, and also affecting the feed production and operation. For example, the first outbreak of the swine fever in China in middle 2018 caused a huge shock to the whole industry. Although the industry initially explored the prevention, control and treatment methods of comprehensive biosafety prevention and control combined with precise elimination in 2019 and 2020, the swine fever experienced a weakened mutation at the turn of winter and spring between the end of 2020 and beginning of 2021, making it more spread channels, longer incubation time, and more difficult to detect and eliminate. In recent years, the swine fever has gradually become normal, especially in winter and early spring when the temperature is low, the impact is particularly serious in the north of China. In terms of the natural disaster risk, the feed and slaughter are closely related to planting and livestock breeding industry. Therefore, the natural disasters such as temperature anomalies, drought, flood, earthquake, hail, and snow disaster will all adversely affect the industry operation and development. Natural disasters occurring in and around the Company’s production facilities may result in substantial damages to production infrastructure or equipment. Furthermore, natural disasters and extreme weather events can also drive up prices for certain feed ingredients and meat. For example, at the beginning of 2023, southwest China experienced winter and spring drought, leading to the continuous development of drought conditions in some regions, and affecting various aspects of the industry chain, including cultivation and livestock farming to varying degrees. In the middle of 2023, central China experienced a wide range of persistent rainy weather, causing a large range of crop disasters, which also had an impact on the price of feed raw materials and affected the quality of raw materials. The extensive heavy rain caused by a typhoon in southern China also brought adverse effect on disease prevention and control of pig breeding. Risk countermeasures: facing animal disease, the farms constructed by the Company are normalized and standardized farms staffed with professional breeding technologists and equipped with strict anti- epidemic measures to effectively prevent and control the occurrence of epidemic diseases. The Company has also summarized approaches and measures responding to major animal diseases through years of accumulation, which allow the Company to eliminates the impact of various animal diseases. Since 2014, the Company has been guiding technicians to better serve self-owned farms and external farmers by establishing animal healthcare laboratories in various areas, creating nationwide animal healthcare system, and conducting the monitoring and warning of animal diseases in real time. Specifically, regarding the swine fever outbreak in 2018, the Company formulated comprehensive set of prevention and control measures. These measures encompass various aspects, including the Company’s self-owned pig farms, collaborative fattening farms, pig feed production plants, internal animal healthcare laboratories, with a view to ensuring proper prevention and control at the source of animal nutrition. Meanwhile, actively participating in industry exchanges and exploring more effective containment methods with peers allowed the Company’s biosafety prevention system and pig production indicators to achieve industry-leading levels. From late 2020 to early 2021, the outbreak of a new round of attenuated swine fever in many northern provinces brought new challenges to the industry at the initial stage of the outbreak. However, the Company continues to summarize its experience and upgrade prevention and control and purification methods, including dual antibody and dual screening in the whole group serum, application of thermal imaging devices, and safe storage and disinfection of materials; the prevention and control process is continuously optimized to ensure quicker return to normal production and reduce unnecessary prevention and control costs. In response to natural disasters, the Company’s extensive domestic and international business presence ensure that specific regions experiencing natural disasters do not have a significant impact on the overall operations of the Company. Especially concerning the frequent occurrence of rainstorm and flooding in southern China, the Company has accumulated a large wealth of experience in recent years. It has established mature emergency response plans and maintains sufficient flood prevention supplies in stock year-round, which allow the Company to flexibly guide farmers through production plan adjustments when the flood season begins in preparation for disaster relief together. At the same time, the Company can also take the advantage of its nationwide presence to allocate funds, raw materials, equipment, and staff timely and effectively to resume production as soon as possible and reduce the losses caused by natural disasters. II. Risk of price fluctuations of feed ingredients The cost of main feed ingredients for feed production accounts for more than 90% of total cost of feed production. In the past, the proportion of feed business in the Company’s revenue was large, but as the feed industry generally adopts the cost-plus pricing method, the fluctuations in prices of feed ingredients can be partly transmitted to the downstream breeding operations, to relieve the pressure from the rising prices of feed ingredients. However, as the pig farming business accounts for a relatively large proportion of the Company’s revenue, the impact of rising raw material prices on the Company’s overall operating costs has increased. Since 2020, due to various factors such as the macroeconomic situation at home and abroad, international trade relations and crop yield in main grain-producing areas of various countries, the prices of main feed ingredients such as corn and soybean meal continuously rose. In 2023, the global agricultural market faced greater challenges, with frequent extreme weather, escalating geopolitical conflicts, and the enactment of trade restriction policies in many countries and other uncertain factors, disturbing the global agricultural production and trade expectations, and the price of agricultural products fluctuated greatly. Among them, corn and wheat prices fluctuated continuously; oil, barley and soybean meal prices declined, but overall were still at a higher position than in the years before 2020 (as shown in the figure below). Risk countermeasures: the Company is the largest feed enterprise in China, with scale advantages and a considerable bargaining power in the raw material procurement. Since 2020, the Company applied hedging tools more to control the ingredient price fluctuation risk. In 2021, the Company further reinforced processing in bonded zones and other methods. In 2023, the Company actively purchased imported low-price ingredients and alternative ingredients such as wheat, sorghum and brown rice to continually optimize ingredient costs. Now, the Company has established strategic partnerships with many domestic and overseas best-run raw material suppliers, while actively exploring domestic and foreign high-quality and safe local raw materials and opening up the raw material supply network at home and abroad, conducted the supply chain financing of various forms actively, and optimized its purchasing cost and related financial expenses. III. Risk of price fluctuations of livestock and poultry As the Company’s feed is sold to the downstream livestock and poultry breeding, the price fluctuation of livestock and poultry affects the profit of the breeding segment, and gradually spreads to the upstream, affecting the sales volume and profit margin of the feed segment. On this basis, with the rapid development of the pig farming business of the Company in recent years, 17.68 million hogs were sold in 2023, making the pig farming business contribute more to the entire revenue and profits of the Company, and the pig price affect the levels of revenue and profits of the Company even more directly and remarkably. In 2023, due to the difficulties in excess capacity reduction caused by long-term excess supply, coupled the year, with an average price of only about 15 yuan/kg, making it the lowest since 2020 (as shown in the figure below). Risk countermeasures: the process of livestock and poultry prices going down itself is a process of the survival of the fittest in the industry. When some participants withdraw, the total supply declines and the prices rise again, survived businesses are likely to gain a greater market share and a higher return on investment than before. In recent years, the Company has fully entered the stage of robust operation in pig business, and is gradually improving its business operation efficiency, reducing farming costs and restoring its original competitiveness by enhancing its internal management capabilities in many ways. On the other hand, unlike most of agricultural and livestock companies, the Company has slaughtering and food processing business at the downstream part of farming and feed business at the upstream part of farming, which happens to hedge against the farming process. The price decline of livestock and poultry means that the cost of raw meat in the slaughtering and processing businesses falls too and its profit margin will be increased; the declining prices of livestock and poultry also mean the farming volume of livestock and poultry is at high levels, which also helps increase the profitability of feed business. Such an industry chain presence can moderately mitigate the effects of declining prices of livestock and poultry on the Company. IV. Impact of environmental protection policies In recent years, the government and society have increasingly attached importance to environmental protection, and relevant laws and regulations have been continuously introduced. In 2014, China began to implement the Regulations on Pollution Prevention and Control of Large-scale Livestock and Poultry Farming. In 2015, the new Environmental Protection Law came into effect. Since 2018, the central environmental protection inspectors have conducted several “follow-up reexaminations”, as the efforts to investigate pollution caused by livestock farms were strengthened across the country, ordering some breeding households to shut down for environmental remediation or close once for all due to their livestock farming facilities failing to meet the environmental standards or discharging wastewater beyond the set standards. In 2020, in the context of the sharp shortage of domestic hog supply caused by the swine fever, local governments have gradually relaxed the environmental protection requirements for farm construction to promote the resumption of hog production to ensure supply. However, after 2021, as the hog production capacity gradually recovered to the normal range, the environmental protection policies related to breeding returned to a more stringent situation. These pressures from the environmental protection policies will force some livestock and poultry farms failing to meet the environmental standards out of the market, and lead to reduced breeding quantities, which will have a certain impact on the Company’s feed business growth and its acquisition of hogs for slaughtering business and will increase the cost of the Company’s investment in the construction of breeding capacity. In the long run, however, the withdrawal of backward production capacity that does not meet the environmental standards will allow the qualified producers that remain in the industry to acquire higher profitability, which is still of a positive significance to the entire industry. Risk countermeasures: in light of the changes in external environment, on the one hand, the Company makes every effort to maintain production capacity, and strengthens its cooperation with medium and large- sized farms and farmers that meet the environmental standards by changing its feed marketing model and utilizing its industrialized supporting and integrated services. In the process of exploring a new breeding model, the primary considerations in project design of the Company are ecology, environmental protection, efficiency, and safety. By helping farmers remodel and build sheds and stalls that meet the higher environmental standards, increase the profitability of breeding business, and actively drive the domestic livestock and poultry farming industry to grow healthily. On the other hand, the Company actively grows its inventories by cultivating new livestock and poultry farming bases in areas with environmental conditions through construction, acquisition, joint venture, and cooperation using its existing business portfolio across the country, thus ensuring the stability of its breeding resources. V. Risk of food safety Food safety concerns the public’s health and life safety and it is even a matter of life and death for food enterprises. The implementation of the revised Food Safety Law in 2015 also means that China has brought its focus on food safety to an unprecedented level. The outbreak of the swine fever in 2018 raised even more demanding requirements for food safety control, and more costs need to be invested in the swine fever prevention and control in the process of pig recycling and slaughter, pork transportation and trafficking. In 2019, the State Council issued the Opinions on Deepening Reforms and Strengthening Food Safety Efforts, which clearly proposed to use strictest standards, the strictest supervision, the most severe punishment, and the most serious accountability to further strengthen food safety regulation and ensure the “safety on the dining table” of the public. Risk countermeasures: the Company has always been highly concerned about food safety by seriously ensuring food safety in every link of production and management. In 2015, the Company established Safety and Environmental Protection Department to ensure safety, health and environmental protection. In 2022, the Company further separated the Food Safety and Quality Management Department from the Safety and Environmental Protection Department to focus more on food safety-related work. The Company has established its food safety management system and safety traceability system for the entire industrial chain from feed, breeding, farming to food. Carry out the whole process of safety supervision from the front end of the supply chain to the terminal, forming the three-level safety and quality management system and the three-level safety and quality audit system including the headquarters, business units and subsidiaries. VI. Risk of exchange rate fluctuations Currently, the globalization of raw material procurement for feed production is improved sharply, and the feed enterprises have been increasingly affected by the exchange rate in terms of feed ingredients purchasing centered on foreign supply such as corn, soybean, whey powder, fish meal and DDGS. At the same time, as the Company expands its presence abroad, in the foreign investment and overseas operations, the cross-border capital transaction and settlement amounts involved are growing, thus making the Company more vulnerable to exchange rate fluctuations. In recent years, due to the impact of factors such Company operates experienced extraordinary fluctuations, and the exchange rate of these currencies against the US dollar has dropped sharply, combined with the trend of US dollar interest rate increase, which poses a great challenge to foreign exchange management and operational difficulties of the Company. Risk countermeasures: in response to the growing needs for overseas raw material procurement and investment and operation, the Company has been building Singaporean branch into an overseas commercial and trading center and investment and financing center, actively conducted international centralized procurement of raw materials, foreign direct financing, supply chain finance, foreign exchange risk management, funds management and raw materials purchasing risk management to reduce the impact of exchange rate fluctuations on its cash flow in overseas operations. In the context of the increasing uncertainty in the macro environment and sharp exchange rate fluctuations in recent years, the Company has reinforced efforts to improve the ability of exchange rate forecasting and fund management, continued to pay attention to the dynamics of the Federal Reserve’s interest rate hike, and guaranteed the value of funds through hedging and other means and tools. Meanwhile, the Company further strengthened its close connection and communication with overseas financial institutions, overseas agencies of the Chinese government and host governments to analyze the trends of local currency exchange rates in host countries from time to time, make financial arrangements and ease the adverse impact of exchange rate fluctuations by means of direct investment in local currency abroad, etc. The Company plans not to distribute cash dividends or allot bonus shares or increase its share capital with provident fund. Table of Contents Section 1 Important Note, Table of Contents and Definitions ....................................................... 2 Section 2 Company Profile and Key Financial Indicators ........................................................... 13 Section 3 Management Discussion and Analysis ........................................................................... 18 Section 4 Corporate Governance .................................................................................................... 91 Section 5 Environmental and Social Responsibilities ................................................................. 117 Section 6 Important Matters ......................................................................................................... 229 Section 7 Changes in Shares and Information about Shareholders .......................................... 277 Section 8 Details Related to Preferred Shares ............................................................................. 288 Section 9 Details Related to Bonds ............................................................................................... 289 Section 10 Financial Report .......................................................................................................... 295 List of Reference Documents (I) Financial statements bearing the signatures and seals of the CEO, the person in charge of accounting work and the person in charge of accounting agencies (accountant in charge) of the Company. (II) Original auditor’s report bearing the seal of the accounting firm and signatures and seals of CPAs. (II) Originals of all corporate documents and manuscripts of announcements publicly disclosed on China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and www.cninfo.com.cn during the reporting period. Definitions
Section 2 Company Profile and Key Financial Indicators I. Company Information
Accounting firm engaged by the Company
?Applicable □Not applicable
□Applicable ?Not applicable VI. Key accounting data and financial indicators Whether the Company needs to retroactively adjust or restate the accounting data of previous years ?Yes □No Reason for retroactive adjustment or restatement Changes in accounting policies
single transaction that is not subject to initial recognition exemption” of the Interpretation of Accounting Standards for Business Enterprises No. 16 promulgated by the Ministry of Finance, the single transactions subject to this provision occurred between the beginning of the earliest period of presentation of the financial statements for the first implementation of the provision and the date of the first implementation are adjusted according to the provision. The lower of net profits of the Company before and after deduction of non-recurring profit and loss in the most recent three accounting years were negative, and the most recent year’s auditor’s report shows that the Company’s ability as a going concern is uncertain. □Yes ?No ?Yes □No
standards and Chinese accounting standards □Applicable ?Not applicable The Company had no difference in net profits and net assets in financial reports disclosed under either international accounting standards and Chinese accounting standards during the reporting period. 2. Difference in net profits and net assets in financial reports disclosed under both overseas accounting standards and Chinese accounting standards □Applicable ?Not applicable The Company had no difference in net profits and net assets in financial reports disclosed under either overseas accounting standards and Chinese accounting standards during the reporting period. VIII. Quarterly key financial data Unit: yuan
and semiannual reports disclosed by the Company □Yes ?No IX. Items and amounts of non-recurring profit and loss ?Applicable □Not applicable Unit: yuan
□Applicable ?Not applicable The Company had no other profit or loss items that conform to the definition of non-recurring profit or loss. Description of non-recurring profit or loss items enumerated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public– Non-recurring Profit or Loss classified as recurring profit or loss items ?Applicable □Not applicable
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