Group 1 - COFCO Jiajia Kang (01610.HK) was fined 120,900 yuan for transporting unquarantined pigs, raising concerns about supply chain management and food safety [3] - The company has not issued cash dividends for three consecutive years, with the last payout in 2021, despite cumulative net profits exceeding 4.4 billion yuan from 2020 to 2024 [3] - As of 2024, COFCO Jiajia Kang's cash on hand is only 1.064 billion yuan, nearly halved from the previous year, while short-term debts due within a year amount to 2.6 billion yuan, resulting in a cash-to-short-debt ratio of 0.41 [3] Group 2 - The company has increasingly relied on external financing to manage liquidity risks, with significant fluctuations in financing cash flow from 2022 to 2024, indicating a fragile cash flow situation [4] - The pig farming industry is significantly affected by the "pig cycle," requiring companies to have strong risk resilience; COFCO Jiajia Kang must improve cash flow management and compliance to avoid a passive position under competitive and debt pressures [4] - Investors are concerned whether the company will prioritize debt repayment over shareholder returns given its high debt levels [4]

Investment Rating - Investment rating for the agriculture, forestry, animal husbandry, and fishery industry is "Positive" (maintained) [1] Core Viewpoints - The industry is experiencing a supply contraction due to overselling of live pigs since June, leading to a potential increase in pig prices in Q3 2025. The average selling price of live pigs in June 2025 was 14.28 yuan/kg, down 2.28% month-on-month and down 21.99% year-on-year [4][15] - The supply-demand dynamics are improving, with the gross white price difference strengthening month-on-month. As of July 17, 2025, the gross white price difference was 4.71 yuan/kg, an increase of 0.45 yuan/kg compared to June, although lower than the same period in 2024 [5][27] - The industry is entering a critical supply contraction phase, with expectations for the price center of live pigs to rise monthly [4][15] Summary by Sections Industry Overview - Since June, the overselling of live pigs has intensified, leading to a supply contraction. The average price of live pigs in June 2025 was 14.28 yuan/kg, reflecting a month-on-month decrease of 2.28% and a year-on-year decrease of 21.99% [4][15] - The monitoring sample indicated a slaughter volume of 4.3168 million heads in June 2025, down 6.20% month-on-month but up 12.22% year-on-year [4][15] Supply and Demand Dynamics - The gross white price difference has improved, indicating a stronger supply-demand balance. The national frozen product storage rate was 16.85%, down 0.03 percentage points year-on-year [5][27] - The industry is currently in a supply contraction phase, with expectations for the price center of live pigs to rise gradually [4][15] Company Performance - As of July 10, 2025, 12 listed pig farming companies reported a total of 16.1481 million heads sold in June, a year-on-year increase of 45.98% [6][34] - The average selling prices for major listed pig companies decreased month-on-month, with specific companies reporting the following prices: Muyuan Foods at 14.08 yuan/kg, Wens Foodstuff Group at 14.39 yuan/kg, and New Hope Liuhe at 14.18 yuan/kg [7][41]

Group 1 - The Dalian Commodity Exchange has increased the maximum quantity of standard warehouse receipts for the pig group of COFCO Meat Investment Co., Ltd. from 1,200 tons to 3,600 tons [1] - The daily delivery speed has been expanded from 80 tons to 240 tons [1] - The maximum deliverable quantity per day at the designated delivery site, COFCO Jiajia Kang (Jilin) Co., Ltd., has also been increased from 80 tons to 240 tons [1]

Investment Rating - The industry investment rating is "Positive" (maintained) [2] Core Viewpoints - In April 2025, the national average selling price of live pigs was 14.80 yuan/kg, with a month-on-month increase of 1.33% and a year-on-year decrease of 1.95% [6][18] - The supply gap in May is expected to lead to a further increase in the price center of live pigs, driven by limited increases in supply and improving demand [6][18] - The average weight of pigs sold is expected to gradually decline, but the narrowing price difference between different grades of pigs will have limited pressure on prices [7][22] Summary by Sections Industry Overview - April saw a non-seasonal increase in pig prices, with expectations for further price increases in May due to supply constraints and improving demand [6][18] - The average price of live pigs in April was 14.80 yuan/kg, with a month-on-month increase of 1.33% [6][18] - The slaughter volume in April was 4.213 million heads, a month-on-month decrease of 4.54% but a year-on-year increase of 6.76% [6][18] Supply and Demand Dynamics - The supply of pigs is expected to be limited in May due to previous culling and disease impacts, while demand for pork is showing marginal improvement [6][18] - The planned output for May is expected to increase by 1.98% compared to actual output in April [6][18] Profitability and Market Performance - The average profit for self-bred pigs in April was 69.44 yuan/head, a month-on-month increase of 63.63% [8][26] - The number of breeding sows in April increased by 0.96% month-on-month [8][26] - The price of 15kg piglets reached 630 yuan/head, indicating a high price level during the replenishment season [8][26] Company Performance - In April, 12 listed pig farming companies collectively sold 16.2368 million pigs, a year-on-year increase of 37.22% [9][28] - Major companies such as Muyuan Foods and Wens Foodstuffs reported significant year-on-year increases in sales volume [9][28] - The average selling prices varied among companies, with some experiencing increases while others saw declines [9][35]

Group 1 - The core viewpoint of the news is that COFCO Joycome (1610.HK) has shown significant growth in its pig sales, with a 80% year-on-year increase in the first four months of 2025 compared to the same period in 2024 [1] - In April 2025, the company reported a pig shipment volume of 472,000 heads, bringing the total for the first four months to 1.934 million heads [1] - As of May 9, 2025, COFCO Joycome's stock price has seen a slight increase of 6.47% year-to-date [1] Group 2 - Guoyuan Securities International noted that COFCO Joycome has strengthened its brand communication and channel development, particularly with its newly developed flaxseed pork products, which have received antibiotic-free certification and achieved a doubling in sales year-on-year in Q1 2025 [3] - The flaxseed pork product aims to enhance the intake of alpha-linolenic acid among consumers and has recently won the ITI International Taste Award, marking a first for a Chinese fresh pork brand [3] Group 3 - The company is expanding its brand influence through various marketing strategies, including segmented, experiential, and online brand communication, while deepening partnerships with major retail channels such as Hema, Sam's Club, and major e-commerce platforms [5] - Guoyuan Securities International forecasts COFCO Joycome's EPS for 2025, 2026, and 2027 to be 0.09, 0.17, and 0.28 respectively, with a target price of HKD 1.65 per share, indicating over 10% upside potential from the current price [6]

Product Quality and Safety - COFCO Joycome Foods achieved recognition as a "National Agricultural Product Quality Safety Good Traceability Monitoring Point" for its Jiangsu operations, showcasing its commitment to product quality[9]. - The company maintains a commitment to quality and safety in its food products, contributing to the health of consumers[122]. - Food safety risks are managed through established protocols and regular inspections to ensure compliance with safety standards[97]. Financial Performance - In 2024, the company's total revenue was RMB 16.326 billion, a decrease of RMB 0.912 billion compared to RMB 17.238 billion in 2023[68]. - The net profit before fair value adjustment of biological assets was RMB 275 million, an increase of RMB 123 million from RMB 152 million in 2023[68]. - Operating revenue decreased by 5.3% year-on-year to RMB 16.33 billion, primarily due to a decline in live pig sales and a proactive reduction in meat imports[40]. - The company recorded a profit before fair value adjustment of biological assets of RMB 275 million in 2024, compared to RMB 152 million in 2023[74]. - The gross profit margin before fair value adjustment of biological assets in 2024 was 7.4%, an increase of 1.9 percentage points year-on-year, driven by improved pig farming market conditions and a month-on-month improvement in costs[70]. Sales and Market Performance - The number of live pigs sold decreased by 31.5% year-on-year to 3,560 thousand heads in 2024[37]. - Fresh pork sales volume increased by 7.1% year-on-year to 262 thousand tons[37]. - The sales volume of branded packaged pork increased by 9.8% year-on-year to 42,317 thousand boxes[37]. - The proportion of branded revenue in the fresh pork business increased by 2.8 percentage points year-on-year to 29.4%[37]. - The company achieved a significant increase in sales of anti-antibiotic certified flaxseed pork products, with annual sales rising over 70%[42]. Technological Innovation and Development - COFCO Joycome Foods has integrated smart farming technologies in its new pig farming projects in Jilin, aiming to reduce production costs and enhance operational efficiency[14]. - The company is focusing on technological innovation and brand premium advantages to reshape the traditional industry and expand market opportunities[45]. - The company has established an industry-leading integrated platform for genomic breeding and production, achieving stable growth in key indicators such as feed-to-meat ratio and litter size[44]. - The introduction of smart farming technologies is expected to address management pain points and improve operational efficiency[99]. Strategic Partnerships and Acquisitions - In 2024, the company completed a strategic acquisition of COFCO Jiahua, enhancing feed processing capacity and optimizing business structure to improve profitability stability[47]. - The company established a strategic partnership with leading research institutions to enhance genetic breeding accuracy and improve key performance indicators[33]. Corporate Governance and Management - The board has fulfilled all corporate governance responsibilities for the fiscal year ending December 31, 2024[127]. - The company has adopted a governance code and has complied with all relevant provisions since April 15, 2024, following the appointment of new leadership[121]. - The board consists of three independent non-executive directors, accounting for over one-third of the total board members[134]. - The company emphasizes the importance of maintaining high corporate governance standards to ensure investor trust and operational integrity[119]. Environmental and Social Responsibility - The company is committed to green farming practices, producing approximately 25 million cubic meters of biogas and achieving 100% compliance in pollution source monitoring across its subsidiaries[44]. - The company has invested in environmental protection initiatives, including a comprehensive waste treatment system for resource utilization[123]. - The company made charitable donations totaling RMB 10.74 million during the year 2024[197]. Risk Management - The company has established internal control systems covering procurement, sales, financial management, and other key areas to minimize risks[170]. - A comprehensive risk assessment was conducted, identifying the top five major risks for 2024: price risk, epidemic risk, operational efficiency risk, food safety risk, and safety production risk[169]. - The company faced significant price risks due to fluctuations in commodity prices, particularly for corn and soybean meal, which are essential feed ingredients[95]. Employee and Talent Development - The total number of employees increased to 13,006 as of December 31, 2024, from 11,951 in 2023, with total employee compensation approximately RMB 1.818 billion[93]. - A talent development system will be established to enhance the reserve of professionals in veterinary production, breeding research, and brand marketing[99]. - The company aims to attract and select outstanding talent by creating a safe and healthy work environment[122]. Future Outlook and Guidance - The company has provided guidance for the next fiscal year, projecting revenue growth of B% and an expected EBITDA margin of C%[118]. - New product launches are anticipated to contribute an additional D million in revenue, with a focus on innovative technologies in the market[119]. - The company is expanding its market presence in regions E and F, aiming for a market share increase of G% by the end of the next fiscal year[119].

Group 1 - The core viewpoint of the news highlights the impact of the recent tariff increases between China and the United States on domestic agricultural prices, particularly pork prices, which are expected to rise due to increased costs of feed and imported meat [1][2] - China has announced a 34% tariff on all imports from the U.S., which, combined with previous tariffs, brings the total tariff rate on U.S. goods to 54% [1] - The domestic supply and demand outlook suggests that pork prices will have support in the medium term, with a gradual upward trend expected as the market adjusts to the new tariff environment [1] Group 2 - COFCO Jiajia Kang reported a revenue of 16.326 billion RMB for the fiscal year 2024, a decrease of 5.29% year-on-year, but achieved a net profit of 538 million RMB, reversing a loss from the previous year [2] - The improvement in profitability is attributed to significant cost reductions in pig farming, driven by better management practices and operational efficiencies [2] - The company has increased its breeding stock to 345,000 heads by the end of 2024, a 4.5% increase compared to the previous year, with plans for further capacity expansion [2]

Financial Performance - The company reported a total operating revenue of RMB 16.33 billion for the year ending December 31, 2024, a decrease of 5.3% compared to RMB 17.24 billion in 2023[2]. - The company's net profit attributable to shareholders was RMB 2.59 billion, down from RMB 5.38 billion in the previous year, reflecting a significant decline[5]. - The basic earnings per share decreased to RMB 0.0566 from RMB 0.1175 in the previous year[2]. - Total revenue for the year ending December 31, 2024, is projected to be RMB 16,326,201 thousand, with contributions from various segments including live pig farming (RMB 3,231,292 thousand) and feed sales (RMB 5,758,906 thousand)[23]. - For the fiscal year ending December 31, 2024, total revenue from external customers reached RMB 16,326,201 thousand, a decrease from RMB 17,237,951 thousand in 2023, representing a decline of approximately 5.3%[33]. - The total segment profit for the fiscal year 2024 was RMB 497,530 thousand, compared to RMB 269,266 thousand in 2023, indicating an increase of approximately 84.8%[33]. - The company reported a pre-tax profit of RMB 609,757 thousand for 2024, a significant recovery from a pre-tax loss of RMB 832 thousand in 2023[33]. - The total income tax expense for the year ended December 31, 2024, was RMB 55,495,000, compared to RMB 33,794,000 in 2023, reflecting an increase of 64%[44]. Sales and Production - The number of live pigs sold decreased by 31.5% year-on-year to 3,560 thousand heads, primarily due to herd rotation and the closure of inefficient factories[5]. - The average selling price of commodity pigs increased by 13.6% to RMB 16.53 per kilogram, compared to RMB 14.55 per kilogram in the previous year[2]. - The sales volume of fresh pork increased by 7.1% to 262 thousand tons, while the sales volume of branded packaged pork rose by 9.8% to 42,317 thousand boxes[2]. - The total segment revenue for the pig farming segment was RMB 6,370,286 thousand in 2024, down from RMB 7,312,910 thousand in 2023, a decrease of approximately 12.9%[33]. - The feed segment generated revenue of RMB 5,758,906 thousand in 2024, while the fresh pork segment reported a revenue of RMB 4,795,181 thousand, reflecting a decrease of 1.3% and an increase of 15.8% respectively compared to 2023[33]. - The company achieved a revenue of RMB 2.59 billion in the pig farming segment, representing a year-on-year growth of 137.4%[64]. - The fresh pork segment saw a 9.8% increase in sales volume of branded packaged pork, with the sales of the upgraded "no antibiotic" flaxseed pork rising over 70% year-on-year[64]. Assets and Liabilities - Non-current assets increased to RMB 14,043,794,000 in 2024 from RMB 11,946,609,000 in 2023, representing a growth of approximately 17.5%[9]. - Current assets decreased to RMB 6,313,027,000 in 2024 from RMB 6,848,029,000 in 2023, a decline of about 7.8%[9]. - Total liabilities rose to RMB 10,763,517,000 in 2024, up from RMB 8,130,276,000 in 2023, indicating an increase of approximately 32.3%[12]. - The company reported a net asset value of RMB 9,593,304,000 in 2024, down from RMB 10,664,362,000 in 2023, reflecting a decrease of about 10.1%[12]. - The company’s current liabilities net exceeded current assets by RMB 2,128,591,000 in 2024, compared to RMB 551,164,000 in 2023, indicating a worsening liquidity position[12]. - The company’s total equity decreased to RMB 9,593,304,000 in 2024 from RMB 10,664,362,000 in 2023, a decline of about 10.1%[12]. Cash Flow and Financing - The company’s cash and bank balances decreased significantly to RMB 1,063,987,000 in 2024 from RMB 2,063,915,000 in 2023, a drop of about 48.6%[9]. - The company incurred financing costs of RMB 123,727 thousand in 2024, compared to RMB 142,933 thousand in 2023, showing a reduction of about 13.4%[33]. - The financing cost for 2024 was RMB 124 million, a decrease of RMB 19 million from RMB 143 million in 2023, attributed to improved cash turnover[83]. - The company’s liquidity ratio (current ratio) decreased to 0.75 in 2024 from 0.93 in 2023[90]. - The company’s net debt to equity ratio increased to 52.8% in 2024 from 28.5% in 2023[95]. - The company’s total interest-bearing bank borrowings were approximately RMB 4.231 billion as of December 31, 2024, down from RMB 4.496 billion in 2023[93]. Strategic Initiatives - The company is focusing on the "flaxseed pork" core product and expanding its marketing efforts to enhance brand influence[5]. - The company completed a strategic acquisition of COFCO Jiahua Industrial Co., enhancing its feed processing capacity and optimizing its business structure[54]. - The company is expanding its pig farming capacity with new projects in Jilin, including a 330,000-head facility that has commenced operations[55]. - The company is focusing on smart farming initiatives in 2024, including the installation of digital equipment and the establishment of a smart farming operation platform to enhance efficiency and reduce costs[67]. - The company has strengthened its brand influence through multi-channel marketing strategies, achieving significant progress in retail and e-commerce partnerships[75]. Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange's listing rules and has complied with the code throughout the fiscal year ending December 31, 2024[110]. - The roles of the Chairman and CEO are now separated, with Dr. Gao Xiang serving as Chairman and Dr. Zhang Nan appointed as CEO from April 15, 2024, ensuring compliance with governance code C.2.1[111]. - The company did not purchase, sell, or redeem any listed securities during the fiscal year ending December 31, 2024[113]. - The board has resolved not to declare a final dividend for the fiscal year ending December 31, 2024[115]. Risk Management - The company faces significant price risks due to fluctuations in procurement and sales prices, particularly in the pork business, which affects profitability[103]. - The company has implemented various measures to mitigate epidemic risks, including the establishment of biosecurity control procedures and emergency response plans[104]. - The company has developed a comprehensive food safety management system to prevent risks associated with food safety and ensure compliance with safety standards[105].

[Corporate Information](index=2&type=section&id=Corporate%20Information) The report provides basic company information including directors, committee members, legal advisors, principal bankers, share registrars, and main office addresses - The report provides basic company information including directors, committee members, legal advisors, principal bankers, share registrars, and main office addresses[4](index=4&type=chunk)[5](index=5&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [I. COMPANY PROFILE](index=5&type=section&id=I.%20COMPANY%20PROFILE) COFCO Joycome is COFCO Group's meat business platform, covering the entire industry chain from feed production to meat imports, offering high-quality products [Company Introduction](index=5&type=section&id=Company%20Introduction) The company, COFCO Group's meat business platform, listed on HKEX in 2016, is a leading integrated meat enterprise in China - The company's business covers a complete industry chain from feed production to meat product sales and imports, with its brands 'Joycome' and 'Wanweike' having high recognition in major first-tier cities in China[7](index=7&type=chunk)[9](index=9&type=chunk) [Segments Introduction](index=5&type=section&id=Segments%20Introduction) The company operates four segments: hog farming, fresh pork, processed meat, and meat imports, with modern production bases strategically located nationwide - The company's business segments include: - **Hog Farming**: Modern farming bases and supporting feed mills in Jilin, Inner Mongolia, and other regions - **Fresh Pork**: Four slaughtering and processing bases and two cutting centers, primarily featuring the 'Joycome' brand of chilled fresh pork - **Processed Meat Products**: Two processing bases in Jiangsu and Guangdong, primarily featuring 'Wanweike' and 'Joycome' brands - **Meat Imports**: Imports pork, beef, poultry, lamb, and their by-products for domestic distribution[8](index=8&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) [II. MARKET OVERVIEW](index=7&type=section&id=II.%20MARKET%20OVERVIEW) In H1 2024, China's hog market saw easing oversupply and rising prices from May, with consumption recovering and demand for quality food increasing - Hog supply decreased, prices rebounded: National hog slaughter volume decreased by **3.1% year-on-year** in H1, and sow inventory decreased by **8%** from its peak; hog prices increased by **22.4%** by end of June compared to end of 2023[14](index=14&type=chunk) - Consumption market recovered, quality demand increased: Total retail sales of consumer goods increased by **4% year-on-year** in H1, and catering revenue increased by **7.9%**; consumers increasingly prefer high-quality, standardized branded packaged pork[14](index=14&type=chunk) - Pork import volume significantly decreased, beef import maintained growth: Pork import volume decreased by **45.3% year-on-year** in H1, while beef import volume increased by **17.0% year-on-year**[16](index=16&type=chunk) [III. RESULTS OF OPERATION](index=8&type=section&id=III.%20RESULTS%20OF%20OPERATION) In H1 2024, the company recorded a net loss due to Q1's low hog prices, but Q2 saw price recovery, with fresh pork losses narrowing and processed meat and import businesses strengthening - During the reporting period, the company recorded a net loss of **RMB 389 million** before fair value adjustments of biological assets, primarily due to overall losses in the hog farming business[18](index=18&type=chunk)[20](index=20&type=chunk) [Hog production business](index=9&type=section&id=Hog%20production%20business) The company actively builds new capacity in Jilin, enhancing refined management through technology and advancing genetic breeding to improve herd performance - The company piloted the installation of digital intelligence equipment in new projects to explore smart farming and enhance refined management[21](index=21&type=chunk) - The company increased the number of genetic chip tests and accelerated herd rotation, significantly increasing the proportion of high-performance breeding pigs[22](index=22&type=chunk)[23](index=23&type=chunk) [Fresh pork business](index=10&type=section&id=Fresh%20pork%20business) The fresh pork business expanded brand influence by optimizing capacity, accelerating R&D, and increasing promotion, narrowing losses by **RMB 16.06 million year-on-year** - The Beijing Pinggu cutting center commenced operations in August 2024, aiming to respond more efficiently to demand in the North China market[26](index=26&type=chunk) - In H1, fresh pork sales reached **120,100 tons**, with flaxseed pork sales growing over **100% year-on-year**, and the segment's loss narrowed by **RMB 16.06 million** year-on-year[26](index=26&type=chunk) - The company strengthened the 'Joycome' brand's sports gene and healthy image through sports marketing activities, including renewing its partnership with the National Sports General Administration Training Bureau and sponsoring marathons[28](index=28&type=chunk)[31](index=31&type=chunk) [Meat import business and processed meat product business](index=11&type=section&id=Meat%20import%20business%20and%20processed%20meat%20product%20business) Despite falling domestic beef prices, the company achieved counter-cyclical profitability by optimizing market analysis and internal synergy, significantly improving both meat import and processed meat businesses Meat import and processed meat product business profitability (H1 2024) | Business Segment | Profit (RMB million) | Year-on-Year Growth | | :--- | :--- | :--- | | Meat Import | 28.21 | 19.9% | | Processed Meat | 21.68 | 197.2% | [IV. FINANCIAL REVIEW](index=12&type=section&id=IV.%20FINANCIAL%20REVIEW) In H1 2024, group revenue decreased by **21.4%** to **RMB 4.571 billion**, resulting in a net loss of **RMB 389 million** before fair value adjustments, compared to a net profit of **RMB 168 million** last year [Overall Performance](index=12&type=section&id=Overall%20Performance) Group revenue decreased in H1 2024 due to lower hog slaughter volume and reduced meat imports, leading to a shift from profit to loss Key Financial Indicators H1 2024 | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Operating Revenue | 4.571 billion yuan | 5.818 billion yuan | | Net Profit/Loss (before fair value adjustment of biological assets) | Net loss 389 million yuan | Net profit 168 million yuan | [Revenue and Gross Profit Margin](index=12&type=section&id=Revenue%20and%20Gross%20Profit%20Margin) In H1 2024, group operating revenue decreased by **21.4%** to **RMB 4.571 billion** due to lower hog slaughter and reduced meat imports, resulting in a **-3.5%** gross margin before fair value adjustments - Revenue decreased by **21.4%** to **RMB 4.571 billion**, mainly attributed to lower hog slaughter volume year-on-year and proactive reduction in meat import business[33](index=33&type=chunk) - Adjusted gross margin was **-3.5%**, a **10.0 percentage point** decrease year-on-year, primarily due to the hog farming business[33](index=33&type=chunk) [Expenses and Costs](index=12&type=section&id=Expenses%20and%20Costs) The company reduced sales, administrative, and finance costs by improving operational efficiency and capital turnover, while other income and losses decreased due to prior period exchange gains - Total sales and distribution expenses and administrative expenses were **RMB 380 million**, a year-on-year decrease of **RMB 28.79 million**, primarily due to improved operational efficiency[33](index=33&type=chunk) - Finance costs were **RMB 61 million**, a year-on-year decrease of **RMB 10.51 million**, mainly due to accelerated capital turnover[33](index=33&type=chunk) [Capital Resources and Liquidity](index=13&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains a prudent financial policy, ensuring liquidity through diversified financing and centralized fund management, with cash balances decreasing but ample unused bank facilities Liquidity and Cash Flow Status | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and Bank Balances | 507 million yuan | 1.169 billion yuan | | Current Ratio | 0.91 | 0.82 | | Unused Bank Facilities | 12.927 billion yuan | - | - Cash used in operating activities was **RMB 650 million** in H1 2024, compared to cash generated of **RMB 977 million** in the prior year[41](index=41&type=chunk)[42](index=42&type=chunk) [Capital Structure](index=16&type=section&id=Capital%20Structure) As of June 30, 2024, the group's interest-bearing bank borrowings and related party loans increased, raising the net debt-to-equity ratio from **37.6%** to **50.0%** Capital Structure Changes | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Interest-bearing Bank Borrowings | 2.928 billion yuan | 4.041 billion yuan | | Loans from Related Parties | 2.327 billion yuan | 606 million yuan | | Net Debt | 4.749 billion yuan | 3.477 billion yuan | | Net Debt to Equity Ratio | 50.0% | 37.6% | [Capital Expenditure & Commitments](index=17&type=section&id=Capital%20Expenditure%20%26%20Commitments) In H1 2024, group capital expenditure increased to **RMB 523 million** for farming facilities and the Beijing cutting center, with capital commitments significantly rising to **RMB 1.095 billion** Capital Expenditure and Commitments | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Capital Expenditure | 523 million yuan | 419 million yuan | | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Capital Commitments | 1.095 billion yuan | 346 million yuan | [Biological Assets](index=18&type=section&id=Biological%20Assets) As of June 30, 2024, the fair value of biological assets significantly increased to **RMB 3.073 billion** from **RMB 2.202 billion**, with fair value adjustments contributing a net gain of **RMB 638 million** to profit - The carrying value of biological assets increased from **RMB 2.202 billion** at the end of 2023 to **RMB 3.073 billion** as of June 30, 2024[49](index=49&type=chunk) - The net impact of fair value adjustments of biological assets on profit for the period was a gain of **RMB 638 million**, compared to a loss of **RMB 654 million** in the prior year[51](index=51&type=chunk)[53](index=53&type=chunk) [V. HUMAN RESOURCES](index=19&type=section&id=V.%20HUMAN%20RESOURCES) As of June 30, 2024, the group's employee count was **9,800**, a slight decrease, with H1 total remuneration of approximately **RMB 659 million**, largely flat Human Resources Overview | Indicator | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Number of Employees | 9,800 | 10,029 | | Total Remuneration (H1) | Approx. 659 million yuan | Approx. 671 million yuan | [VI. SIGNIFICANT RISKS AND UNCERTAINTIES](index=20&type=section&id=VI.%20SIGNIFICANT%20RISKS%20AND%20UNCERTAINTIES) The group faces significant risks including price fluctuations, epidemics, food safety, and production safety, addressed by established internal controls and emergency plans [Price Risks](index=20&type=section&id=Price%20Risks) Price risk refers to losses from increased costs or reduced revenue due to fluctuations in raw material procurement and product sales prices - The company faces price risks from fluctuations in raw material procurement prices and product sales prices[55](index=55&type=chunk) [Epidemic Risks](index=21&type=section&id=Epidemic%20Risks) Epidemics like African Swine Fever pose major threats to the livestock industry, potentially causing mortality and efficiency loss, which the group addresses with comprehensive biosecurity controls - To address epidemic risks, the group has established various systems, including 'Biosecurity Control Procedures' and 'Major Animal Epidemic Emergency Plans,' and formed an African Swine Fever prevention and control team to enhance professional response capabilities[57](index=57&type=chunk)[58](index=58&type=chunk) [Food Safety & Production Risks](index=22&type=section&id=Food%20Safety%20%26%20Production%20Risks) The company faces risks of product recalls and property losses from food safety and production accidents, addressed by established management regulations and emergency plans - The group strengthens full-process management and risk control through regulations such as 'Food Safety Management Regulations' and 'Production Safety Management Regulations' to prevent food safety and production safety risks[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) [VII. OUTLOOK](index=23&type=section&id=VII.%20OUTLOOK) For H2 2024, the company will focus on five core tasks: operations, management, layout, risk prevention, and team building, emphasizing efficiency, cost reduction, and smart farming - Key strategic priorities for H2 include: - **Operations**: Improve slaughter volume and farming efficiency, comprehensively reduce costs, and optimize futures hedging strategies - **Management**: Build an epidemic prevention system, enhance refined management, and narrow inter-farm disparities - **Layout**: Accelerate core business expansion, fully introduce smart farming technology in new projects - **Risk**: Build a production safety system, implement food safety requirements, and develop sustainable models - **Team**: Improve talent development system and optimize incentive measures[63](index=63&type=chunk) [Corporate Governance Highlights and Other Information](index=24&type=section&id=Corporate%20Governance%20Highlights%20and%20Other%20Information) [Interests and Short Positions](index=24&type=section&id=Interests%20and%20Short%20Positions) As of June 30, 2024, no disclosable interests or short positions were held by directors or chief executives, while COFCO Group and its subsidiaries held approximately **40.30%** of total issued shares - As of June 30, 2024, directors and chief executives had no disclosable share interests[64](index=64&type=chunk) - Major shareholder COFCO Group, through its subsidiaries, collectively held **1,846,681,782 shares**, representing **40.30%** of the total issued shares of the company[68](index=68&type=chunk)[69](index=69&type=chunk) [Corporate Governance and Compliance](index=26&type=section&id=Corporate%20Governance%20and%20Compliance) The company maintains high corporate governance standards, complying with the Code, except for a temporary deviation on Chairman/CEO role separation, rectified on April 15, 2024 - For the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities[71](index=71&type=chunk) - The company temporarily deviated from Code Provision C.2.1 (separation of Chairman and CEO roles), but since April 15, 2024, Dr. Gao Xiang serves as Chairman and Dr. Zhang Nan as General Manager, with roles held by different individuals[73](index=73&type=chunk) [Board and Director Information](index=27&type=section&id=Board%20and%20Director%20Information) Subsequent to the reporting period, Board changes occurred, including Mr. Shi Bo's resignation, Mr. Chen Zhigang's appointment as Non-executive Director, and committee membership adjustments - Changes to the Board since the date of the 2023 annual report include Mr. Shi Bo's resignation, Mr. Chen Zhigang's appointment as Non-executive Director, and adjustments to certain committee memberships[76](index=76&type=chunk) [Review of Interim Report and Dividend](index=28&type=section&id=Review%20of%20Interim%20Report%20and%20Dividend) The group's unaudited interim financial information for H1 2024 was reviewed by the Audit Committee and BDO Limited, with the Board resolving not to declare an interim dividend - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024, consistent with the prior year[78](index=78&type=chunk) [Report on Review of Condensed Consolidated Financial Statements](index=29&type=section&id=Report%20on%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) [Auditor's Conclusion](index=29&type=section&id=Auditor%27s%20Conclusion) The auditor, BDO Limited, reviewed the condensed consolidated financial statements, concluding that they were prepared in all material respects in accordance with HKAS 34 - The auditor's conclusion is that, based on their review, nothing has come to their attention that causes them to believe the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34[84](index=84&type=chunk)[85](index=85&type=chunk) [Condensed Consolidated Interim Financial Information](index=31&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Information) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=31&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For H1 2024, the group recorded revenue of **RMB 4.571 billion** (**-21.4% YoY**), a net loss of **RMB 389 million** before fair value adjustments, but a profit of **RMB 249 million** after adjustments H1 2024 Statement of Profit or Loss Key Data (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 4,570,820 | 5,818,410 | | Gross (Loss)/Profit | (56,751) | 603,169 | | Profit/(Loss) Before Tax | 251,214 | (487,592) | | Profit/(Loss) for the Period | 249,296 | (485,232) | | Profit/(Loss) Attributable to Owners of the Company | 251,445 | (469,646) | | Basic Earnings/(Loss) Per Share | RMB 0.0549 | RMB (0.1099) | [Condensed Consolidated Statement of Financial Position](index=34&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total assets were **RMB 17.039 billion**, liabilities **RMB 7.549 billion**, and net assets **RMB 9.491 billion**, with net current liabilities narrowing from **RMB 1.135 billion** to **RMB 564 million** Statement of Financial Position Key Data (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-current Assets | 11,588,104 | 11,109,373 | | Current Assets | 5,450,974 | 5,120,959 | | Current Liabilities | 6,014,571 | 6,256,381 | | Non-current Liabilities | 1,533,916 | 727,768 | | Net Assets | 9,490,591 | 9,246,183 | [Condensed Consolidated Statement of Changes in Equity](index=36&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2024, total equity attributable to owners increased to **RMB 9.379 billion** from **RMB 9.132 billion** at end of 2023, primarily due to **RMB 247 million** in comprehensive income - Equity attributable to owners of the company increased from **RMB 9.132 billion** at the end of 2023 to **RMB 9.379 billion** as of June 30, 2024[101](index=101&type=chunk) - The increase in equity was primarily due to total comprehensive income of **RMB 244 million** recorded for the period, which included a profit for the period of **RMB 249 million**[101](index=101&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=38&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2024, the group reported net cash outflows from operating (**RMB 650 million**) and investing (**RMB 520 million**) activities, a net cash inflow from financing (**RMB 507 million**), and a net decrease in cash of **RMB 663 million** Cash Flow Statement Key Data (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash From/(Used In) Operating Activities | (650,401) | 976,669 | | Net Cash Used In Investing Activities | (519,574) | (335,377) | | Net Cash From/(Used In) Financing Activities | 507,382 | (1,192,692) | | Net Decrease in Cash and Cash Equivalents | (662,593) | (551,400) | [Notes to the Condensed Consolidated Financial Statements](index=40&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the financial statements' basis, accounting policies, and breakdowns of revenue, segments, profit/loss, balance sheet items, related party transactions, and fair value measurements [Note 4 Segment Information](index=44&type=section&id=Note%204%20Segment%20Information) In H1 2024, hog farming was the primary loss source (**RMB 375 million**), while fresh pork loss narrowed to **RMB 27.63 million**, and processed meat and meat import segments achieved profits H1 2024 Segment Performance (RMB thousand) | Segment | H1 2024 Segment Performance | H1 2023 Segment Performance | | :--- | :--- | :--- | | Hog Farming | (375,158) | 183,885 | | Fresh Pork | (27,633) | (43,697) | | Processed Meat | 21,675 | 7,294 | | Meat Import | 28,208 | 23,519 | [Note 13 Biological Assets](index=54&type=section&id=Note%2013%20Biological%20Assets) The fair value of biological assets increased from **RMB 2.202 billion** to **RMB 3.073 billion** by June 30, with Level 3 fair value measurement relying on unobservable inputs like market prices - The carrying value of biological assets increased from **RMB 2.202 billion** at the beginning of the year to **RMB 3.073 billion** at the end of the period[156](index=156&type=chunk) - Fair value measurement is Level 3, with valuation primarily relying on market price estimates for piglets and fattening pigs, and replacement cost estimates for breeding pigs[158](index=158&type=chunk)[164](index=164&type=chunk) [Note 20 Bank Borrowings and Loans from Related Companies](index=66&type=section&id=Note%2020%20Bank%20Borrowings%20and%20Loans%20from%20Related%20Companies) The group obtained **RMB 2.976 billion** in new bank loans and repaid **RMB 4.101 billion**, while current loans from related companies increased to **RMB 2.223 billion**, providing significant financial support - Loans from related companies classified as current liabilities significantly increased from **RMB 503 million** at the beginning of the year to **RMB 2.223 billion** at the end of the period[190](index=190&type=chunk)[192](index=192&type=chunk) [Note 23 Related Party Transactions](index=68&type=section&id=Note%2023%20Related%20Party%20Transactions) The group engages in frequent related party transactions with COFCO Group, including goods purchases (**RMB 518 million**), sales, fund deposits/loans, and interest income/expenses Major Transactions with COFCO Group and its Subsidiaries (H1 2024, RMB thousand) | Transaction Type | Amount | | :--- | :--- | | Purchase of Goods | 518,015 | | Sale of Goods | 29,621 | | Interest Expense | 14,803 | | Interest Income | 3,572 | - As of June 30, 2024, the group had deposits of **RMB 308 million** with related party COFCO Finance[203](index=203&type=chunk) [Glossary](index=75&type=section&id=Glossary) This section defines specific terms used in the report, such as 'Board', 'COFCO', and 'the Group', to ensure consistent reader understanding - This section defines specific terms used in the report, such as 'Board', 'COFCO', 'COFCO Hong Kong', and 'the Group', to ensure consistent reader understanding[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)

Financial Performance - The company reported a revenue of RMB 4.57 billion for the six months ended June 30, 2024, a decrease of 21.4% compared to RMB 5.82 billion in the same period last year[2]. - The company incurred a loss attributable to shareholders of RMB 386.57 million, compared to a profit of RMB 251.45 million in the same period last year[2]. - The basic loss per share was RMB (0.0844), compared to a profit of RMB 0.0549 per share in the previous year[2]. - The company reported a net loss before fair value adjustment of biological assets was RMB 389 million, compared to a net profit of RMB 168 million in the same period of 2023[52]. - The company incurred a pre-tax loss of RMB 487,592,000 for the six months ended June 30, 2024, compared to a profit of RMB 171,001,000 for the same period in 2023[16][17]. - The company’s EBITDA before fair value adjustment of biological assets was RMB 103 million, down from RMB 677 million in the same period of 2023[54]. Sales and Revenue Breakdown - The company’s livestock sales generated RMB 1,226,591 thousand, while fresh pork sales contributed RMB 2,063,075 thousand, and meat products sales accounted for RMB 376,803 thousand[13]. - The pig farming segment reported a revenue of RMB 2,663,310,000, while the fresh pork segment generated RMB 2,097,176,000, indicating a significant contribution to total revenue[17]. - Fresh pork sales volume slightly decreased by 2.2% year-on-year to 120 thousand tons[2]. - The average selling price of commodity pigs increased by 4.6% year-on-year to RMB 15.28 per kilogram[2]. Assets and Liabilities - As of June 30, 2024, total non-current assets amounted to RMB 11,588,104 thousand, an increase of 4.3% from RMB 11,109,373 thousand as of December 31, 2023[7]. - Current assets totaled RMB 5,450,974 thousand, up from RMB 5,120,959 thousand, reflecting a growth of 6.4%[7]. - The company reported a net asset value of RMB 9,490,591 thousand, compared to RMB 9,246,183 thousand, indicating an increase of 2.6%[8]. - The company’s bank borrowings decreased significantly from RMB 3,990,977 thousand to RMB 2,107,020 thousand, a reduction of 47.3%[8]. - The current liabilities net amount improved from RMB (1,135,422) thousand to RMB (563,597) thousand, indicating a positive shift in liquidity[8]. Dividends and Shareholder Returns - The company has decided not to declare an interim dividend for the six months ended June 30, 2024[3]. - The company reported no interim dividends for the six months ended June 30, 2024, consistent with the previous year[28]. - The board has resolved not to declare an interim dividend for the six months ending June 30, 2024, consistent with the previous period[69]. Market and Industry Trends - In the first half of 2024, the national pig output was 364 million heads, a year-on-year decrease of 3.1%, while pork production was 29.81 million tons, down 1.7%[41]. - By the end of June 2024, the national breeding sow inventory was 40.38 million heads, an 8% reduction from the peak of 43.90 million heads in 2022[41]. - The average selling price of live pigs in major cities was 18.00 RMB/kg at the end of June 2024, an increase of 22.4% compared to the end of 2023[41]. Operational Efficiency and Cost Management - The company reduced its sales and distribution expenses and administrative expenses to RMB 380 million, down from RMB 409 million in the same period of 2023[50]. - Total sales costs decreased to RMB 4,627,571 thousand in 2024 from RMB 5,215,241 thousand in 2023, reflecting a reduction of approximately 11.3%[26]. - The company has implemented various risk management strategies to mitigate price, epidemic, food safety, and production safety risks[64][65][66][67]. Investments and Future Plans - The company plans to further expand pig breeding capacity, focusing on modern breeding bases in Jilin and other provinces[37]. - The company aims to accelerate the expansion of its core business while enhancing the quality of its layout by integrating intelligent breeding technologies into new projects[68]. - Capital expenditure for the first half of 2024 was RMB 523 million, an increase of 25% compared to RMB 419 million in the same period of 2023[59]. Governance and Compliance - The company has adopted corporate governance principles and is committed to maintaining high standards of governance to ensure operational integrity and investor trust[69]. - The interim financial results for the six months ending June 30, 2024, have been reviewed and deemed compliant with applicable accounting standards[72].