Financial Performance - Revenue for the six months ended June 30, 2024, reached RMB 9,407,081 thousand, a significant increase from RMB 7,504,846 thousand in the same period of 2023[3] - Profit before tax for the six months ended June 30, 2024, was RMB 1,791,714 thousand, compared to a loss of RMB 2,352,631 thousand in the same period of 2023[3] - Net profit attributable to equity shareholders of the company for the six months ended June 30, 2024, was RMB 1,766,453 thousand, a substantial improvement from a loss of RMB 2,181,210 thousand in the same period of 2023[3] - Basic and diluted earnings per share for the six months ended June 30, 2024, were RMB 4.54, compared to a loss per share of RMB 6.03 in the same period of 2023[3] - The company's profit before fair value adjustment of biological assets for the six months ended June 30, 2024, was RMB 363,125 thousand, compared to a loss of RMB 1,117,560 thousand in the same period of 2023[3] - The company achieved a net profit of RMB 1,791 million in the first half of 2024 after biological asset fair value adjustment, compared to a net loss of RMB 2,353 million in the same period of 2023[16] - Adjusted net profit for the first half of 2024 was RMB 363.125 million, compared to a loss of RMB 1,117.56 million in the same period of 2023[25] - EBITDA for the first half of 2024 was RMB 2,461.831 million, a significant improvement from a loss of RMB 1,712.708 million in the first half of 2023[25] - Revenue for the six months ended June 30, 2024, increased to RMB 9,407,081 thousand, up from RMB 7,504,846 thousand in the same period in 2023, reflecting a growth of approximately 25.4%[60] - Gross profit for the period was RMB 1,165,948 thousand, a significant improvement from a gross loss of RMB 387,606 thousand in 2023[60] - Operating profit for the six months ended June 30, 2024, was RMB 2,015,268 thousand, compared to an operating loss of RMB 2,126,152 thousand in the same period in 2023[60] - Net profit attributable to equity shareholders of the company was RMB 1,766,453 thousand, a substantial recovery from a net loss of RMB 2,181,210 thousand in 2023[60] - Earnings per share for the six months ended June 30, 2024, were RMB 4.54, a significant improvement from a loss per share of RMB 6.03 in the same period in 2023[60] - The company's comprehensive pre-tax profit was RMB 1,791,714 thousand in 2024, compared to a loss of RMB 2,352,631 thousand in 2023[78] - The company reported a net profit attributable to equity shareholders of RMB 1,766,453 thousand in the first half of 2024, compared to a loss of RMB 2,181,210 thousand in the same period of 2023[85] Segment Performance - The company's pig segment revenue reached RMB 7,449 million in the first half of 2024, a year-on-year increase of 27.5%[16] - The average selling price of pigs in the first half of 2024 increased by 4.1% compared to the same period in 2023[16] - The average cost of pigs decreased by 14.4% year-on-year in the first half of 2024 due to cost management and lower feed prices[16] - The company's poultry segment saw a 7.1% increase in average selling price for chickens in the first half of 2024 compared to 2023[16] - The average cost of chickens decreased by 11.9% year-on-year in the first half of 2024[16] - The poultry segment revenue for the first half of 2024 was RMB 1,543 million, a year-on-year increase of 0.9%, driven by a 7.1% increase in average selling price and an 11.9% decrease in average cost[19] - The auxiliary products segment revenue surged 211.5% year-on-year to RMB 414 million in the first half of 2024, primarily due to the launch of fresh meat business[20] - Total revenue for the first half of 2024 increased by 25.3% year-on-year to RMB 9,407 million, mainly driven by growth in the swine segment[20] - Revenue from sales of pigs and related products increased to RMB 7,449,257 thousand in 2024, up from RMB 5,842,287 thousand in 2023, representing a growth of 27.5%[72] - Revenue from sales of poultry and related products slightly increased to RMB 1,543,403 thousand in 2024 from RMB 1,529,529 thousand in 2023, a growth of 0.9%[72] - Revenue from sales of auxiliary products surged to RMB 414,421 thousand in 2024 from RMB 133,030 thousand in 2023, a significant increase of 211.5%[72] - Total external customer revenue for the company reached RMB 9,407,081 thousand in 2024, up from RMB 7,504,846 thousand in 2023, a growth of 25.3%[72] - The company's reportable segment profit for pig sales was RMB 1,023,486 thousand in 2024, compared to a loss of RMB 303,746 thousand in 2023[77] - The company's reportable segment profit for poultry sales was RMB 192,100 thousand in 2024, compared to a loss of RMB 88,529 thousand in 2023[77] - The company's reportable segment profit for auxiliary products was RMB 137,083 thousand in 2024, up from RMB 95,166 thousand in 2023[77] - Total reportable segment profit for the company was RMB 1,352,669 thousand in 2024, compared to a loss of RMB 297,109 thousand in 2023[77] Cost and Margin Analysis - Gross margin improved significantly from -5.2% in the first half of 2023 to 12.4% in the first half of 2024, attributed to higher swine and poultry prices and reduced costs[21] - The average cost of pigs decreased by 14.4% year-on-year in the first half of 2024 due to cost management and lower feed prices[16] - The average cost of chickens decreased by 11.9% year-on-year in the first half of 2024[16] - Financial costs decreased to RMB 223,155 thousand in the first half of 2024, down from RMB 226,479 thousand in the same period of 2023[81] - Employee costs rose to RMB 675,938 thousand in the first half of 2024, up from RMB 542,875 thousand in the same period of 2023[82] - Depreciation expenses for owned property, plant, and equipment increased to RMB 284,000 thousand in the first half of 2024, compared to RMB 246,088 thousand in the same period of 2023[83] - R&D expenses slightly decreased to RMB 111,760 thousand in the first half of 2024, down from RMB 114,944 thousand in the same period of 2023[83] Cash Flow and Liquidity - Cash and cash equivalents increased to RMB 3,490 million as of June 30, 2024, up from RMB 2,545 million at the end of 2023[24] - The company's current ratio improved to 1.0 as of June 30, 2024, compared to 0.8 at the end of 2023[24] - Net cash generated from operating activities in the first half of 2024 was RMB 1,513 million, compared to RMB 32 million in the same period of 2023[26] - Operating cash flow for the six months ended June 30, 2024, was RMB 1,512,675 thousand, a significant increase from RMB 31,830 thousand in the same period in 2023[67] - Net cash used in investing activities for the six months ended June 30, 2024, was RMB 260,462 thousand, slightly higher than RMB 256,291 thousand in the same period in 2023[67] - Net cash used in financing activities for the six months ended June 30, 2024, was RMB 314,918 thousand, compared to RMB 173,043 thousand in the same period in 2023[67] - Cash and cash equivalents increased by RMB 937,295 thousand to RMB 3,489,545 thousand as of June 30, 2024[67] - The company's cash and cash equivalents increased to RMB 3,489,545 thousand as of June 30, 2024, up from RMB 2,544,830 thousand as of December 31, 2023[62] - Cash and cash equivalents increased to RMB 4,065,712 thousand as of June 30, 2024, from RMB 3,044,625 thousand as of December 31, 2023[97] Debt and Capital Structure - Total bank loans and other borrowings as of June 30, 2024, were RMB 6,399 million, with interest rates ranging from 2.55% to 5.70%[27] - Net debt to equity ratio decreased to 102.1% as of June 30, 2024, from 156.5% as of December 31, 2023[27] - Capital expenditures for the first half of 2024 were RMB 259 million, a decrease from RMB 529 million in the same period of 2023[31] - The net interest-bearing debt to net assets ratio decreased to 163.9% as of June 30, 2024, from 338.9% as of June 30, 2023[29] - Interest-bearing borrowings increased to RMB 6,399,371 thousand as of June 30, 2024, from RMB 6,099,089 thousand as of December 31, 2023[101] - Lease liabilities increased to RMB 2,859,249 thousand as of June 30, 2024, from RMB 2,478,557 thousand as of December 31, 2023[102] Biological Assets and Fair Value Adjustments - The fair value of biological assets as of June 30, 2024, was RMB 6,631 million, up from RMB 4,923 million as of December 31, 2023[33] - The net impact of biological asset fair value adjustments on profit for the first half of 2024 was a gain of RMB 1,428 million, compared to a loss of RMB 1,235 million in the same period of 2023[33] - The total value of biological assets increased to RMB 6,630,839 thousand as of June 30, 2024, up from RMB 4,922,869 thousand at the beginning of the year[87] - The fair value of biological assets increased by RMB 655,882,000 if market prices and replacement costs rose by 10% as of June 30, 2024[92] - The fair value of biological assets decreased by RMB 668,619,000 if market prices and replacement costs fell by 10% as of June 30, 2024[92] Market and Industry Trends - China's pig slaughter volume in the first half of 2024 was 363.95 million heads, a year-on-year decrease of 3.1%[14] - China's pork production in the first half of 2024 was 29.81 million tons, a year-on-year decrease of 1.7%[14] - The average pig price in China rose to RMB 18.36 per kilogram at the end of June 2024, a 25.0% increase from the end of 2023[14] - China's breeding sow inventory at the end of June 2024 was 40.38 million heads, a year-on-year decrease of 6.0%[14] - The company's operating performance is significantly affected by the cyclical fluctuations in the prices of pigs and poultry products, as well as the prices of feed and raw materials[40] Corporate Governance and Shareholder Information - The company has adopted the principles and code provisions of the Corporate Governance Code as the benchmark for its corporate governance practices[43] - The company submitted an application to the China Securities Regulatory Commission (CSRC) on December 25, 2023, to convert certain domestic shares into H-shares, and received the filing notice on January 17, 2024, approving the conversion of up to 61,944,501 domestic shares (approximately 15.93% of the total issued share capital) into H-shares[44] - On January 22, 2024, the Hong Kong Stock Exchange approved the listing and trading of 61,944,501 H-shares, and the conversion was completed on January 30, 2024, with the shares commencing trading on January 31, 2024[44] - As of June 30, 2024, Mr. Wang Degen, a director, held 11,915,198 domestic shares (4.57% of total shares) and 11,666,269 H-shares (9.11% of H-shares) as a beneficial owner, and controlled 119,400,900 domestic shares (45.78% of total shares) through controlled entities[45] - Mr. Wang Dehui, another director, held 5,957,599 domestic shares (2.28% of total shares) and 5,596,243 H-shares (4.37% of H-shares) as a beneficial owner, and controlled 5,596,242 domestic shares (2.15% of total shares) through controlled entities[45] - Mr. Yao Hailong, a director, held 2,978,799 domestic shares (1.14% of total shares) and 977,879 H-shares (0.76% of H-shares) as a beneficial owner, and held 977,879 domestic shares (0.37% of total shares) through an employee持股平台[45] - Mr. Hu Wei, a director, held 8,936,398 domestic shares (3.43% of total shares) as a beneficial owner[45] - As of June 30, 2024, the total issued share capital of the company was 388,875,636 shares[45] - On January 30, 2024, 4,734,536 domestic shares and 861,707 domestic shares held by employee持股平台众诚金宜 and同创德恒, respectively, were converted into H-shares as part of the H-share全流通 process[46] - The company disclosed that no other significant post-reporting period events occurred as of the date of the interim report[44] - Desheng Ronghe holds 119,400,900 domestic shares, representing 45.78% of the relevant shares and 30.70% of the total share capital[48] - Zhang Qiang holds 131,316,098 domestic shares, representing 50.35% of the relevant shares and 33.77% of the total share capital[48] - Chen Yuxin holds 44,681,989 H-shares, representing 34.89% of the relevant shares and 11.49% of the total share capital[48] - Guangkong Mailang holds 37,570,873 domestic shares, representing 14.41% of the relevant shares and 9.66% of the total share capital[48] - Guangkong Huiling Investment (Shanghai) Co., Ltd. holds 40,277,640 domestic shares, representing 15.44% of the relevant shares and 10.36% of the total share capital[48] - Everbright Shenzhen holds 52,556,983 domestic shares, representing 20.15% of the relevant shares and 13.52% of the total share capital[48] - China Everbright Limited holds 52,556,983 domestic shares, representing 20.15% of the relevant shares and 13.52% of the total share capital[48] - Honorich Holdings Limited holds 52,556,983 domestic shares, representing 20.15% of the relevant shares and 13.52% of the total share capital[48] - China Everbright Group holds 52,556,983 domestic shares, representing 20.15% of the relevant shares and 13.52% of the total share capital[48] - Central Huijin Investment holds 52,556,983 domestic shares, representing 20.15% of the relevant shares and 13.52% of the total share capital[48] Fund Utilization and Capital Commitments - Global offering net proceeds amounted to HKD 952.5 million, with HKD 601.9 million (63.2%) utilized as of June 30, 2024, leaving HKD 350.6 million unused[54] - Funds allocated for expanding existing pig and yellow-feathered broiler farming: HKD 476.3 million, with HKD 381 million utilized and HKD 95.3 million remaining[54] - Funds allocated for food processing business development: HKD 142.9 million, with HKD 56.6 million utilized and HKD 86.3 million remaining[54] - Funds allocated for R&D and IT systems: HKD 95.3 million, with HKD 50.7 million utilized and HKD 44.6 million remaining[54] - Funds allocated for strategic investments or potential acquisitions: HKD 95.3 million, with none utilized as of June 30, 2024[54] - Funds allocated for repayment of bank loans: HKD 47.6 million, fully utilized[54] - Funds allocated for working capital and general corporate purposes: HKD 95.1 million, with HKD 66 million utilized and HKD 29.1 million remaining[54] - Total capital commitments as of June 30, 2024, were RMB 467 million, up from RMB 308 million as of December 31, 2023[32] - Unprovided capital commitments increased by RMB 158,375 thousand to RMB 466,741 thousand as of June

Financial Performance - For the six months ended June 30, 2024, the company sold 3,925,495 heads of commodity pigs, an increase from 3,111,692 heads in the same period of 2023, representing a growth of approximately 26.1%[2] - Revenue for the six months ended June 30, 2024, was RMB 9,407,081 thousand, up 25.3% from RMB 7,504,846 thousand in the same period of 2023[3] - The company reported a profit before tax of RMB 1,791,714 thousand, a significant recovery from a loss of RMB 2,352,631 thousand in the prior year[3] - Basic and diluted earnings per share for the period were RMB 4.54, compared to a loss of RMB 6.03 per share in the same period of 2023[3] - The gross profit for the six months ended June 30, 2024, was RMB 1,165,948 thousand, compared to a gross loss of RMB 387,606 thousand in the same period of 2023[5] - The fair value change of biological assets for the period was RMB 1,428,256 thousand, recovering from a loss of RMB 1,235,470 thousand in the previous year[5] - For the six months ended June 30, 2024, the company reported revenue of RMB 9,407,081,000, a 25.4% increase from RMB 7,504,846,000 for the same period in 2023[10] - The sales of live pigs and related products generated RMB 7,449,257,000, up from RMB 5,842,287,000, reflecting a growth of 27.5%[10] - The net profit after fair value adjustment of biological assets for the first half of 2024 was RMB 1,791 million, compared to a net loss of RMB 2,353 million in the same period of 2023[28] - The overall gross margin improved from -5.2% in the first half of 2023 to 12.4% in the first half of 2024, due to rising prices and effective cost management[35] Assets and Liabilities - The company's non-current assets increased to RMB 11,235,532 thousand as of June 30, 2024, from RMB 10,807,632 thousand at the end of 2023[6] - Current biological assets rose significantly to RMB 5,374,938 thousand from RMB 3,846,424 thousand, indicating a growth of approximately 39.8%[6] - The company's cash and cash equivalents increased to RMB 3,489,545 thousand from RMB 2,544,830 thousand, reflecting a growth of approximately 37.0%[6] - The net current liabilities improved to RMB (205,411) thousand from RMB (1,564,020) thousand, indicating a significant reduction in liabilities[6] - The company's net asset value increased to RMB 5,649,944,000 as of June 30, 2024, compared to RMB 3,855,063,000 as of December 31, 2023, marking a growth of 46.5%[7] - Total equity rose to RMB 5,649,944,000, up from RMB 3,855,063,000, indicating a significant increase of 46.5%[7] - As of June 30, 2024, the company's total bank loans and other borrowings amounted to approximately RMB 6,399 million, an increase from RMB 6,099 million as of December 31, 2023[47] - The net debt to equity ratio decreased to 102.1% as of June 30, 2024, from 156.5% as of December 31, 2023, reflecting improved financial stability[49] Operational Highlights - The company's slaughterhouses in Yibin and Meishan have commenced operations, with an annual slaughter capacity exceeding 2 million pigs, expanding the business into fresh meat production[24] - The company has implemented a vertical integration model covering the entire supply chain from feed production to sales, enhancing control over food quality and safety[20] - The breeding stock's genetic performance has improved significantly over the years, contributing to better production efficiency in the pig farming segment[21] - The company’s business segments include pig farming, poultry, and auxiliary products, with a focus on optimizing breeding and production processes[20] - The pig segment revenue for the first half of 2024 was RMB 7,449 million, reflecting a year-on-year growth of 27.5%[29] - The poultry segment revenue was RMB 1,543 million in the first half of 2024, a 0.9% increase year-on-year, driven by a 7.1% rise in average selling prices[31] - The auxiliary products segment saw a revenue increase of 211.5% to RMB 414 million, attributed to the development of fresh meat business[32] Cost and Expenses - The company incurred employee costs of RMB 675,938,000 for the six months ended June 30, 2024, compared to RMB 542,875,000 for the same period in 2023, representing a rise of 24.5%[13] - The cost of biological assets sold was RMB 7,805,937,000, slightly up from RMB 7,750,529,000, reflecting a marginal increase of 0.7%[14] - The company’s finance costs totaled RMB 231,154,000 for the six months ended June 30, 2024, down from RMB 240,095,000 in the previous year, a decrease of 3.9%[12] - Research and development expenses were RMB 111,760,000, a slight decrease from RMB 114,944,000 in the same period last year, showing a decline of 2.8%[14] Corporate Governance - The company has established an audit committee to oversee financial reporting, risk management, and internal control systems[68] - The audit committee reviewed the unaudited interim financial statements for the six months ending June 30, 2024, and found existing systems effective and sufficient[69] - KPMG conducted a review of the interim financial results without any modifications, ensuring compliance with Hong Kong accounting standards[70] - The company emphasizes its commitment to high standards of corporate governance and compliance with applicable laws and regulations[65] Future Plans and Investments - The company aims to steadily expand core business capacity and increase production of yellow-feathered broilers, driving growth in both the pig and poultry segments[60] - The company plans to optimize feed formulas and precision feeding to reduce breeding costs while ensuring optimal growth conditions for pigs[61] - The net proceeds from the global offering amount to approximately HKD 952.5 million, with 50% allocated to expanding existing pig and yellow-feathered chicken breeding businesses[64] - 15% of the proceeds will be used to develop food processing businesses, amounting to approximately HKD 142.9 million[64] - 10% of the proceeds, approximately HKD 95.3 million, will be invested in R&D and information technology systems[64] Dividends and Share Capital - The company will not declare any interim dividend for the six months ending June 30, 2024, consistent with the previous period[63] - The company has submitted an application to convert approximately 61,944,501 domestic shares (about 15.93% of total issued share capital) into H-shares, which were approved for listing on January 22, 2024[62]

Summary of Conference Call Notes on Dekang Agriculture Company Overview - **Company**: Dekang Agriculture - **Key Figures**: Wang Siyang, President Yao, General Manager Jiang, General Manager Zeng - **Investment Bank**: CICC - **Business Model**: Light asset, low cost, high elasticity, collaboration with farmers, "No. 2 Farm" model Industry Insights - **Challenges in Livestock Industry**: - Financial difficulties and layoffs within the industry - Limited land resources and changes in land use policies, such as reforestation initiatives - **Response to Challenges**: - Strong management and technology investments to mitigate external uncertainties - Unique "No. 2 Farm" model significantly increases farmers' annual income to nearly one million, ensuring stable income for farmers and creating a win-win situation for business expansion and farmer economic improvement [2][2] Key Business Model Features - **No. 2 Farm Model**: - Advantages include unique corporate culture and operational model - Farm owners invest personal assets and are highly engaged, achieving operational standards close to global top levels - The model promotes light asset, low cost, and high growth objectives, similar to the transition from traditional fuel vehicles to new energy vehicles in China [2][2] - **Investment Requirements**: - Founders need certain self-funding, typically leveraging local policy support, government platform investments, bank loans, and direct corporate funding - Total investment for starting with 200 sows is approximately 6 million RMB, with government support covering about 50% and farmers covering 15%-30% [2][2] Financial Aspects - **Cost Management**: - Land costs are controlled through leasing, averaging around 500 RMB per mu annually - Investment of approximately 300,000 RMB for fixed asset construction and equipment purchase, including land transfer fees [4][4] - **Income Generation**: - Average income from "No. 1 Farm" and "No. 2 Farm" was around 160,000 RMB and over 1 million RMB respectively last year - "No. 1 Farm" has minimal expenses, while "No. 2 Farm" mainly incurs costs for weaning sows and operational feed and medical expenses, with most remaining as profit [4][4] Technological Integration - **High-Tech Pig Farming**: - The company develops efficient pig breeds that yield over 100 RMB additional profit per pig - Establishes a comprehensive foster system, allowing farmers to raise breeding sows with precise technical guidance and support [5][5] Risk Management - **Farmer Engagement**: - The company believes pig farming is easy for farmers, making it a key income source - Focuses on high-value tasks like technology development and management platform construction to avoid direct competition and ensure farmers benefit [6][6] - **Profit Distribution**: - Farmers' income is based on specific metrics, with a fixed income expectation to mitigate cash flow risks from price fluctuations [9][9] - **Operational Oversight**: - Strict monitoring and training for farmers to prevent improper practices that could lead to economic losses [12][12] Conclusion - **Growth Potential**: - The "No. 2 Farm" model enhances company dependency and farmer engagement, requiring ongoing quality support from the company - The model's success is attributed to its ability to adapt to market changes while ensuring farmer profitability and operational efficiency [8][8][10][10]

Financial Performance - In 2023, the company's revenue reached RMB 16,155,412 thousand, a 7.4% increase from RMB 15,037,027 thousand in 2022[7]. - The company reported a net loss of RMB 1,992,136 thousand in 2023, compared to a profit of RMB 909,755 thousand in 2022[7]. - Basic and diluted loss per share was RMB (4.88) in 2023, down from earnings of RMB 2.74 in 2022[7]. - The company's overall gross margin decreased from 13.8% in 2022 to 0.7% in 2023, attributed to a 19.5% drop in average selling price of pigs[51]. - The adjusted loss for the year 2023 was RMB 1,278,520 thousand, compared to a profit of RMB 604,960 thousand in 2022, indicating a significant decline in performance[65]. - The adjusted EBITDA for 2023 was RMB 8,752 thousand, a sharp decrease from RMB 1,734,800 thousand in 2022, reflecting operational challenges[66]. - The net cash generated from operating activities in 2023 was RMB 742 million, down from RMB 2,192 million in 2022, highlighting reduced cash flow[67]. - Total cash and cash equivalents decreased by RMB 296 million in 2023, indicating liquidity pressures[67]. - As of December 31, 2023, the company's net assets were approximately RMB 3,855 million, down from RMB 5,064 million in 2022, showing a decline in equity[70]. - The net debt as of December 31, 2023, was approximately RMB 5,533 million, with a net debt-to-equity ratio of 143.5%, up from 113.6% in 2022, indicating increased leverage[70]. Sales and Production - The total sales volume of market pigs was 6,659,735 heads, representing a 30.4% increase compared to 4,972,795 heads in 2022[6]. - The sales volume of yellow feather broilers increased by 12.9%, totaling 88,733,327 birds in 2023 compared to 78,599,963 birds in 2022[6]. - In 2023, the company's swine segment revenue reached RMB 12,255 million, representing a year-on-year increase of 4.3%[43]. - The poultry segment generated revenue of RMB 3,333 million in 2023, reflecting a year-on-year growth of 3.7% driven by increased sales of yellow-feathered chickens[47]. - The auxiliary products segment saw revenue rise to RMB 567 million in 2023, a significant increase of 640.5% due to higher sales of feed raw materials and the development of fresh meat business[48]. - The total pork production in China for 2023 was 57.9 million tons, with a year-on-year growth of 4.6%[39]. - The average price of commodity chickens fell by approximately 10% compared to 2022[40]. - The average selling price of market pigs decreased from RMB 2,317 to RMB 1,832, while the average price for breeding pigs increased from RMB 2,124 to RMB 2,341[6]. Operational Strategies - The company aims to strengthen production management and improve efficiency to counter challenges such as low pig prices and rising raw material costs[18]. - The company plans to expand its pig and yellow-feathered chicken farming business through a combination of self-operated and family farms, enhancing cost-effectiveness and efficiency[24]. - Continued investment in research and development is aimed at improving breeding and farming technologies, further enhancing farming efficiency and cost-effectiveness[24]. - The company aims to enhance production efficiency and capacity utilization, aligning with industry trends towards larger-scale pig farming operations[40]. - The company has increased its research and development investment to improve breeding performance of its pigs[43]. - The introduction of high-quality breeding pigs has led to a competitive advantage, with new commercial pigs reaching market weight 12 days earlier than mainstream varieties, and a marginal contribution increase of approximately RMB 100 per pig[20]. - The company has implemented cost reduction measures, achieving a cost reduction of RMB 100 per head with the introduction of the DeKang E series[43]. Corporate Governance - The company was officially listed on the Hong Kong Stock Exchange on December 6, 2023, marking a significant milestone in its development[18]. - The board consists of five executive directors and three independent non-executive directors, ensuring a balanced composition for effective decision-making[100][110]. - The company has adopted the corporate governance code as per the listing rules to safeguard the interests of stakeholders[95]. - The board meets at least four times a year, with all directors actively participating in meetings[102]. - The audit committee includes three members, with two being independent non-executive directors, ensuring oversight of financial reporting and external audit processes[121]. - The company has established three committees: the audit committee, the remuneration committee, and the nomination committee, each with defined responsibilities[120]. - The company has established a whistleblowing policy allowing employees to report misconduct confidentially[157]. - A robust anti-corruption policy is in place to prevent internal corruption and bribery, with anonymous reporting channels available[158]. Employee and Social Responsibility - As of December 31, 2023, the company employed 9,854 staff, an increase from 8,202 in 2022, with total employee compensation amounting to RMB 1,174 million, up from RMB 981 million in 2022[83]. - The company has established a compensation committee to review employee compensation policies in line with industry standards and individual performance[83]. - The company is committed to ESG initiatives, including the "Hundred Villages, Million" project, to promote sustainable agricultural practices[90]. - The company has established a comprehensive ESG policy framework, focusing on risk management, business ethics, and environmental protection[198]. - No fines or penalties were incurred for non-compliance with health, safety, or environmental laws during the reporting period[199]. Shareholder Communication - The company is committed to effective communication with shareholders, particularly through annual general meetings and other shareholder meetings[173]. - The company encourages shareholders to attend general meetings and allows them to appoint representatives to vote on their behalf if they cannot attend[179]. - Shareholders holding more than 10% of the company's shares have the right to propose a special general meeting, with the board required to respond within 10 days[165]. - The company will publish announcements and other documents on the Stock Exchange's website in accordance with listing rules[177]. - The company declared a dividend of RMB 100 million to shareholders as of December 26, 2022, which will be paid in December 2023[191]. - The board does not recommend the distribution of a final dividend for the year ending December 31, 2023[192].

Financial Performance - The company reported a revenue of RMB 16,155,412 thousand for the year ended December 31, 2023, representing an increase of 7.4% compared to RMB 15,037,027 thousand in 2022[5]. - The company incurred a loss of RMB 1,992,136 thousand for the year, compared to a profit of RMB 909,755 thousand in 2022, marking a substantial decline[5]. - The basic and diluted loss per share was RMB (4.88) in 2023, compared to earnings of RMB 2.74 per share in 2022[5]. - The company reported a pre-tax profit of RMB 1,775,126,000 for the year, compared to a profit of RMB 992,866,000 in 2022, marking an increase of 78.9%[25]. - The company recorded a net loss of RMB 1,992 million after fair value adjustments of biological assets in 2023, compared to a net profit of RMB 910 million in 2022[50]. - The overall gross margin dropped to 0.7% in 2023 from 13.8% in 2022, primarily due to falling average selling prices of pigs and poultry[60]. Sales and Production - The total sales volume of commodity pigs reached 6,659,735 heads in 2023, a significant increase of 33.9% from 4,972,795 heads in 2022[3]. - Sales of live pigs and related products generated RMB 12,254,966,000, up from RMB 11,745,056,000, reflecting a growth of 4.3%[16]. - The average selling price of commodity pigs decreased to RMB 1,832 per head in 2023 from RMB 2,317 per head in 2022, reflecting a decline of 20.9%[3]. - The poultry segment's revenue in 2023 was RMB 3,333 million, reflecting a 3.7% year-on-year increase due to higher sales of yellow-feathered broilers[55]. - The auxiliary products segment saw revenue of RMB 567 million in 2023, a significant increase of 640.5% attributed to enhanced sales of feed raw materials and the launch of fresh meat business[56]. Costs and Expenses - The total cost of sales increased to RMB 16,035,739 thousand in 2023 from RMB 12,968,848 thousand in 2022, resulting in a gross profit of only RMB 119,673 thousand[7]. - Total employee costs rose to RMB 1,174,243,000, a significant increase of 19.7% compared to RMB 981,295,000 in 2022[22]. - Administrative expenses increased by 21.7% to RMB 1,288 million in 2023, driven by higher depreciation and increased insurance costs related to pig mortality[64]. - The company recorded a loss of RMB 714 million from changes in the fair value of biological assets in 2023, compared to a gain of RMB 305 million in 2022[61]. Assets and Liabilities - The company’s non-current assets totaled RMB 10,807,632 thousand as of December 31, 2023, compared to RMB 10,085,844 thousand in 2022[8]. - Current liabilities increased to RMB 9,690,620 thousand in 2023 from RMB 9,084,396 thousand in 2022, leading to a net current liability position of RMB (1,564,020) thousand[8]. - The company’s total equity decreased to RMB 3,855,063 thousand in 2023 from RMB 5,063,802 thousand in 2022, indicating a decline in shareholder value[9]. - The net debt to equity ratio increased to 143.5% in 2023 from 113.6% in 2022, indicating a higher leverage level[81]. Future Plans and Investments - The company plans to continue expanding its market presence and product offerings, focusing on enhancing operational efficiency and profitability in the upcoming fiscal year[11]. - The company plans to steadily expand its core business capacity, including the growth of self-operated farms and the network of family farms[98]. - Investment in research and development will focus on nutritional improvements and feed raw material substitutions to reduce breeding costs[100]. - The company will utilize pig futures hedging to reduce operational risks[100]. Corporate Governance and Shareholder Matters - The company is committed to maintaining high standards of corporate governance and has adhered to the corporate governance code since the listing date[107][108]. - The annual general meeting is scheduled for May 10, 2024, with a suspension of share transfer registration from May 7 to May 10, 2024, to determine voting rights[117][119]. - The company does not recommend a final dividend for the year ending December 31, 2023[103]. Capital and Financing - The company maintained a strong relationship with banks, ensuring sufficient financing support for at least the next twelve months[13]. - The company had unused bank credit facilities amounting to RMB 4,775 million as of December 31, 2023, providing a buffer for future liquidity needs[74]. - The company’s total bank loans and other borrowings amounted to approximately RMB 6,099 million as of December 31, 2023, down from RMB 6,896 million in 2022[78]. Employee and Operational Metrics - As of December 31, 2023, the company had 9,854 employees, an increase from 8,202 employees in 2022[91]. - The average number of ordinary shares outstanding increased slightly to 363,881,000 from 361,964,000 in 2022[25]. - The company has implemented strict biosecurity measures to mitigate disease risks in pig and poultry farming[95].