Financial Performance - The company recorded a net loss of approximately RMB 310.5 million, mainly due to a loss of RMB 414.6 million from changes in the fair value of other biological assets[9]. - The loss before tax was RMB 303.6 million, compared to a profit of RMB 201.0 million in the previous year, indicating a significant decline[15]. - The total comprehensive loss for the period was RMB 314.5 million, compared to a comprehensive income of RMB 181.7 million in the previous year[21]. - The gross profit decreased by 29.5% to RMB 312.5 million from approximately RMB 443.1 million, primarily due to operational efficiency challenges[37]. - The company's pre-tax loss was RMB 303.6 million, a decrease of 251.0% year-on-year, while the net loss attributable to shareholders was RMB 310.5 million, compared to a profit of RMB 194.1 million in 2022[96]. - EBITDA decreased to a loss of RMB 91.5 million, down 124.3% from a profit of RMB 376.1 million in 2022[101]. - Adjusted net loss decreased to RMB 304.9 million, compared to a profit of RMB 268.4 million in 2022, a decrease of 213.6%[104]. Revenue and Sales - Total revenue for the period was RMB 1,845.6 million, representing a 1.9% increase compared to RMB 1,810.5 million in 2022[15]. - Revenue from raw milk sales reached RMB 1,612,331 for the six months ended June 30, 2023, up from RMB 1,576,367 in the same period of 2022, indicating an increase of approximately 2.3%[54]. - The company's revenue for the reporting period increased by 1.9% year-on-year to RMB 1,845.6 million, compared to RMB 1,810.5 million in 2022[132]. - Total raw milk sales reached approximately 374,000 tons, representing a year-on-year increase of 10.7%[66]. - The total sales revenue from beef decreased by 5.3% to RMB 154.2 million, down from RMB 162.9 million in 2022, mainly due to a decline in sales volume and average selling price[153]. Cost and Profitability - The cost of feed per kilogram of raw milk rose by approximately 7.1% to RMB 2.55, impacting overall profitability[16]. - The total cost of sales for raw milk business was RMB 1,321.2 million, up from RMB 1,147.3 million in 2022, with direct material costs constituting 76.3% of total sales costs[138]. - The cost of raw milk direct materials was RMB 1,008.3 million, an increase of 18.5% compared to RMB 850.5 million in 2022, primarily due to rising feed prices and an increase in the number of breeding cows[156]. - The feed cost per kilogram for raw milk increased by 7.1%, but the company implemented measures to mitigate the impact of rising feed prices on sales costs[157]. Assets and Liabilities - As of June 30, 2023, the total non-current assets amounted to RMB 8,470,432 thousand, an increase from RMB 8,145,179 thousand as of December 31, 2022, representing a growth of 4%[22]. - The total current assets decreased to RMB 2,247,490 thousand from RMB 2,595,207 thousand, a decline of approximately 13.4%[22]. - The total liabilities for current liabilities were RMB 2,431,898 thousand, slightly down from RMB 2,488,343 thousand, indicating a decrease of about 2.3%[22]. - As of June 30, 2023, the total equity amounted to RMB 5,265,062, a decrease from RMB 5,573,801 as of December 31, 2022, reflecting a decline of approximately 5.5%[41]. - The total non-current liabilities increased to RMB 3,020,962 as of June 30, 2023, compared to RMB 2,678,242 as of December 31, 2022, representing a rise of about 12.8%[40]. Operational Efficiency - The average annual milk yield per cow increased to 13.4 tons, with a herd size of 124,269 cows, and raw milk sales volume grew by 10.7%[15]. - The average annual milk production per cow reached a new high of 13.4 tons, an increase of 3.1% during the reporting period[37]. - The company implemented systematic reviews and adjustments to feed formulas to mitigate cost pressures and improve gross margins[92]. - The self-owned premix feed plant commenced production in March 2023, which is expected to improve feed quality and help control feed costs[190]. - The company is focusing on enhancing operational efficiency and reducing greenhouse gas emissions per ton of raw milk produced[190]. Market and Industry Trends - The overall raw milk market is experiencing a significant oversupply, leading to declining gross profits and substantial losses across the industry[85]. - In the first half of 2023, the domestic raw milk supply is expected to grow at a compound annual growth rate (CAGR) of approximately 7.4%, reaching around 7.5 million dairy cows by 2025[61]. - The domestic milk production increased by 7.5% year-on-year in the first half of 2023, ranking first among major livestock categories[83]. - The beef consumption per capita in China remains significantly lower than in developed countries, indicating substantial growth potential in beef demand[165]. Corporate Governance and Future Plans - The company plans to change its presentation currency from USD to RMB to mitigate the impact of exchange rate fluctuations[10]. - The company aims to become one of the top three dairy farm operators globally in terms of operational efficiency and ecological sustainability[164]. - The company plans to commercialize embryo transfer services for external farms within the year, utilizing its core herd[128]. - The company plans to initiate a breeding program for high-quality Wagyu heifers and start embryo production and transfer in the second half of 2023[188]. - The company is committed to maintaining good corporate governance to provide long-term stable value for shareholders[196].

Financial Performance - Adjusted EBITDA for the reporting year was USD 130.7 million, a decrease of 25.7% from USD 175.9 million in 2021[16]. - Profit before tax for the year was USD 25.4 million, a decline of 76.2% compared to the previous year[17]. - The company recorded a loss of USD 23.4 million from changes in the fair value of biological assets, an increase of 107.1% from USD 11.3 million in 2021[20]. - Gross profit decreased to USD 130.7 million, primarily due to a 7.4% decline in the average selling price of raw milk to USD 688 per ton[16]. - Profit for the year fell by 77.6% to USD 23.4 million, compared to USD 104.6 million in 2021, reflecting the challenging operating environment[84]. - The Group's total gross profit margin decreased to 23.2% in 2022 from 33.7% in 2021, reflecting the impact of lower raw milk prices and increased feed costs[169][170]. Revenue and Sales - AustAsia achieved a solid revenue growth of 7.8% in 2022, reaching approximately $563 million, primarily driven by a 20.9% increase in raw milk sales volume compared to 2021[34]. - In 2022, the company's revenue increased by 7.8% to USD 562.8 million, compared to USD 521.9 million in 2021[78]. - Revenue from raw milk sales rose by 12.0% year-on-year to USD 490.5 million, up from USD 438.0 million in 2021[141]. - Revenue from the beef cattle business accounted for 9.9% of total revenue, reaching USD 55.7 million, representing a 10.3% increase compared to 2021[119]. - Revenue from ancillary businesses decreased significantly to approximately USD 16.6 million in 2022, down from USD 33.4 million in 2021, primarily due to COVID-19 related lockdowns[130]. Production and Operations - The Group's raw milk production volume and sales volume reached the highest level in its history in 2022, solidifying its position as the 3rd largest raw milk producer in China's dairy farm operating industry according to Frost & Sullivan[34]. - The average milk yield (AMY) per milkable cow reached 13.3 tons in 2022, maintaining the top rank for 8 consecutive years in terms of operational efficiency[36]. - The herd size of dairy cows increased by 11.1% to 117,950 heads in 2022, up from 106,174 heads in 2021[79]. - The herd size of beef cattle grew by 16.5% to 29,615 heads in 2022, compared to 25,414 heads in 2021[79]. - The total volume of beef cattle sold was 11,338 tons, representing a 22.1% increase in sales volume[119]. Costs and Expenses - Finance costs increased to USD 32.5 million, representing a year-over-year increase of 50.3% from USD 21.6 million in 2021[13]. - Other expenses rose to USD 6.8 million, a significant increase of 386% from USD 1.4 million in 2021, mainly due to foreign exchange losses[12]. - Feed costs per kilogram of raw milk increased by 16% to RMB 2.44 in 2022, compared to RMB 2.10 in 2021, contributing to the decline in gross profit[83]. - Direct feed costs increased by 34.7% from USD 202.7 million in 2021 to USD 273.0 million in 2022[112]. - The cost of sales increased by 12.0% from USD 438.0 million in 2021 to USD 490.5 million in 2022[112]. Sustainability and Environmental Impact - The company aims to minimize its environmental impact and has set medium to long-term sustainability targets, focusing on improving operational efficiency and reducing GHG emissions per ton of raw milk produced[45]. - AustAsia is committed to exploring new technologies and facilities to increase resource usage efficiency and waste management, including the potential use of green energy for production activities[45]. - In 2022, AustAsia signed a 5-year sustainability-linked club loan of RMB1.05 billion to finance the construction of two new dairy farms in Dezhou, Shandong[49]. - AustAsia signed contracts for 1 photovoltaic power generation project and 4 biogas power generation projects in 2022 to optimize energy structure and reduce GHG emissions[47]. Financing and Investments - Net cash flows used in investing activities amounted to USD 167.3 million, primarily due to payments for biological assets of USD 170.7 million and property, plant, and equipment of USD 92.4 million[9]. - The Group's interest-bearing borrowings increased to USD311.9 million in 2022 from USD267.98 million in 2021, reflecting the need for additional financing[184]. - Net cash flows generated from financing activities were USD44.5 million, driven by new bank borrowings of USD163.7 million and gross proceeds from an IPO of USD25.2 million[187]. - The Group anticipates funding needs related to Pure Source Farm 3, which is set to commence operations in 2023[192]. Market Trends and Challenges - The dairy farming industry in China faced significant pressure from rising feed costs due to global price increases, impacting profit margins[98][101]. - Imported milk products in China saw an 18% decline in volume for the first time in over a decade, attributed to high prices and weaker demand[89][99]. - The Chinese government aims for domestic raw milk production to reach 41 million tons by 2025, with an average milk yield of 9 tons per cow[97][100].