Financial Performance - The company's operating revenue for the first half of 2021 was approximately ¥26.68 billion, representing a 61.20% increase compared to ¥16.55 billion in the same period last year[19]. - The net profit attributable to shareholders was a loss of approximately ¥1.43 billion, a decrease of 159.16% from a profit of ¥2.42 billion in the previous year[19]. - The net cash flow from operating activities was a negative ¥3.84 billion, worsening by 112.59% compared to a negative ¥1.81 billion in the same period last year[19]. - The total assets at the end of the reporting period were approximately ¥68.11 billion, an increase of 14.94% from ¥59.26 billion at the end of the previous year[19]. - The net assets attributable to shareholders decreased by 15.85%, from ¥23.25 billion at the end of the previous year to ¥19.57 billion[19]. - The basic earnings per share were -¥0.4544, a decline of 146.85% compared to ¥0.97 in the same period last year[19]. - The weighted average return on net assets was -6.58%, a decrease of 28.78% from 22.20% in the previous year[19]. - The company's operating costs increased by 97.23% to ¥23.88 billion, primarily due to the expansion of market share in feed and breeding[64]. - The company reported a net decrease in cash and cash equivalents of -¥7.52 billion, a significant decline of 428.51% compared to an increase of ¥2.29 billion in the previous year[65]. Production and Sales - The company reported a pig output of 6.9968 million heads during the reporting period, ranking second among A-share listed pig farming companies[27]. - The company’s pig output reached 6.9968 million heads, representing a year-on-year increase of 156.72%[45]. - The feed production volume in China for the first half of 2021 reached 139.33 million tons, a year-on-year increase of 21.1%, with pig feed production increasing by 71.4% to 62.46 million tons[31]. - The company's feed sales reached 2.3737 million tons, a year-on-year growth of 20.79%, with pig feed sales of 1.2966 million tons, up 19.93%[38]. - The company's veterinary drug sales revenue was 91 million yuan, reflecting a year-on-year increase of 113.44%[44]. Business Strategy and Operations - The company operates a complete agricultural and animal husbandry industry chain, integrating feed, veterinary medicine, and pig farming, which enhances its resilience against market risks[28]. - The company has adopted a "company + farmer" cooperative breeding model, which allows for rapid expansion without bearing market risks associated with pig farming[30]. - The company focuses on developing a distribution-oriented dealer model to enhance customer loyalty and product value[29]. - The company has implemented a "Four Grab" strategy, which includes seizing breeding sows, piglets, breeding indicators, and talent, leading to rapid expansion in scale[40]. - The company is focusing on cost control and has seen a decrease in costs due to improved efficiency and management practices[40]. - The company is enhancing its operational capabilities through digital management systems, improving efficiency and risk management[43]. - The company plans to continue expanding its financing channels and improve cash flow management to support strategic investments[42]. Research and Development - Research and development expenses amounted to ¥296.7 million, representing an 86.46% increase from ¥159.1 million, indicating the company's commitment to innovation and technology advancement[64]. - The company invested ¥2.97 billion in R&D during the reporting period, maintaining a leading position in the industry with a focus on feed formulation, disease prevention, breeding, and management[56]. - The company has developed four apps to optimize management processes, enhancing production and management efficiency[46]. - The company’s breeding technology utilizes genomic selection methods to improve breeding accuracy and efficiency[50]. Market Risks and Challenges - The company faces various risks, including price fluctuations in pork and live pigs, which could impact profitability[4]. - The company faces risks from animal diseases, which could increase production costs and affect market supply[93]. - Food safety risks are significant, as any issues could directly impact the company's brand and profitability[93]. - Natural disasters could adversely affect livestock numbers and operational efficiency, although the company's diversified layout mitigates this risk[95]. - The self-breeding model may face management and funding risks, potentially delaying expansion[98]. - The "company + farmer" cooperative breeding model has risks related to farmer behavior and market price fluctuations[98]. Environmental and Compliance - The company faced environmental penalties totaling 1.25 million yuan for various violations, with corrective measures implemented to ensure compliance[198]. - The company has established a dedicated environmental protection team to address and rectify environmental issues promptly[200]. - The company is actively developing eco-friendly farming models, including "pig-biogas-forest" and "pig-biogas-fruit" systems, to promote sustainable agriculture[200]. - The company has implemented a 24-hour environmental management system to monitor and prevent potential violations[198]. - The company has initiated a comprehensive review of its environmental practices to ensure compliance with national policies[199]. Subsidiaries and Investments - The company has completed capital increases in several subsidiaries, including a ¥251.28 million increase in Kalarqin Zhengbang Agricultural Co., Ltd. and a ¥264.51 million increase in Neijiang Zhengbang Breeding Co., Ltd.[79]. - The company is actively pursuing long-term funding strategies, with all capital increases categorized as long-term equity investments.[79]. - The company has reported zero revenue from several subsidiaries, indicating a need for operational improvements or market expansion strategies.[78]. - The company is involved in various agricultural and livestock projects, including pig breeding, feed production, and agricultural technology promotion.[79]. Stock Options and Incentives - The company adjusted the exercise price of stock options from 4.68 CNY/share to 4.63 CNY/share[114]. - A total of 938,700 stock options are exercisable at the price of 4.63 CNY/share for 429 eligible participants[114]. - The company completed the registration of 9,230,000 stock options cancellation, reducing the number of incentive participants to 443[113]. - The company decided to cancel 1,000,000 stock options for 14 individuals who did not meet performance criteria[114]. - The exercise price for the reserved stock options was adjusted from 5.01 CNY/share to 4.96 CNY/share[114].

[Important Notice, Table of Contents, and Definitions](index=2&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA%E3%80%81%E7%9B%AE%E5%BD%95%E5%92%8C%E9%87%8A%E4%B9%89) The company's board, supervisory board, and senior management ensure the annual report's truthfulness, accuracy, and completeness, assuming legal responsibility - The company's board of directors, supervisory board, and senior management ensure the truthfulness, accuracy, and completeness of the annual report, assuming corresponding legal responsibilities[2](index=2&type=chunk) - The company faces key risks including epidemics, food safety, natural disasters, hog price fluctuations, management models, lease operations, industrial policies, and corporate bond repayment[3](index=3&type=chunk) - The company's 2020 profit distribution plan is to distribute a cash dividend of **7 yuan (tax inclusive) per 10 shares**, with no bonus shares or capital reserve conversions[4](index=4&type=chunk) [Company Profile and Key Financial Indicators](index=6&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B%E5%92%8C%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) [Company Profile](index=6&type=section&id=%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B) Jiangxi Zhengbang Technology Co., Ltd. (stock code: 002157) is a Shenzhen Stock Exchange-listed company, with no significant changes in main business or controlling shareholder since listing Basic Company Information | Item | Content | | :--- | :--- | | **Stock Abbreviation** | Zhengbang Technology | | **Stock Code** | 002157 | | **Listing Exchange** | Shenzhen Stock Exchange | | **Legal Representative** | Lin Feng | | **Registered Address** | No. 569, Aixihu 1st Road, High-tech Development Zone, Nanchang City, Jiangxi Province | - While the company's main business scope has adjusted since listing, core operations remain unchanged, and the controlling shareholder, Zhengbang Group Co., Ltd., has not changed[11](index=11&type=chunk) [Key Accounting Data and Financial Indicators](index=7&type=section&id=%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) In 2020, the company achieved significant growth with revenue reaching **49.17 billion yuan**, net profit attributable to shareholders **5.74 billion yuan**, and total assets **59.26 billion yuan** Key Financial Indicators for 2020 | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (yuan)** | 49,166,305,434.56 | 24,517,770,453.37 | 100.53% | | **Net Profit Attributable to Shareholders (yuan)** | 5,744,137,065.25 | 1,647,054,637.52 | 248.75% | | **Net Cash Flow from Operating Activities (yuan)** | 4,553,054,241.70 | 3,923,605,316.93 | 16.04% | | **Basic Earnings Per Share (yuan/share)** | 2.2871 | 0.6857 | 233.54% | | **Weighted Average Return on Net Assets** | 45.06% | 21.56% | 23.50% | | **Total Assets (yuan)** | 59,259,566,548.38 | 30,832,450,719.87 | 92.20% | | **Net Assets Attributable to Shareholders (yuan)** | 23,252,100,795.55 | 9,393,269,327.22 | 147.54% | Key Quarterly Financial Indicators for 2020 (yuan) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 7,134,956,714.87 | 9,415,610,393.80 | 16,054,681,453.92 | 16,561,056,871.97 | | **Net Profit Attributable to Shareholders** | 905,617,024.79 | 1,511,600,023.37 | 3,015,794,755.30 | 311,125,261.79 | - In 2020, the company's non-recurring gains and losses totaled **-251 million yuan**, primarily due to a **-393 million yuan** loss from disposal of non-current assets, compared to a **480 million yuan** gain in 2019[19](index=19&type=chunk) [Company Business Overview](index=10&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E5%85%AC%E5%8F%B8%E4%B8%9A%E5%8A%A1%E6%A6%82%E8%A6%81) [Main Business and Operating Model](index=10&type=section&id=%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1%E5%8F%8A%E7%BB%8F%E8%90%A5%E6%A8%A1%E5%BC%8F) The company's core business includes feed, hog farming, and veterinary medicine, forming an integrated agricultural and animal husbandry industrial chain, with 2020 performance driven by rising hog prices - The company's core businesses are feed, hog farming, and veterinary medicine, forming an integrated agricultural and animal husbandry industrial chain to enhance risk resistance[20](index=20&type=chunk) - Hog farming adopts a self-breeding and 'company + farmer' light-asset expansion model, with **9.56 million heads** marketed in 2020, ranking second among A-share listed companies[20](index=20&type=chunk)[21](index=21&type=chunk)[31](index=31&type=chunk) - 2020 performance growth was primarily driven by rising hog prices and increased sales, with hog sales revenue growing by **206.04%** and gross margin increasing to **27.42%**[23](index=23&type=chunk)[24](index=24&type=chunk) - The company established a 'Biosecurity Six-Step' prevention and control system and developed apps like Bangfanbao and Bangyangbao, enhancing intelligent and refined management to effectively combat African Swine Fever[24](index=24&type=chunk)[25](index=25&type=chunk) [Core Competitiveness Analysis](index=14&type=section&id=%E6%A0%B8%E5%BF%83%E7%AB%9E%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competitiveness spans breeding stock advantages, biosecurity, intelligent management, talent, regional layout, technical services, and modern facilities, supported by a complete industrial chain - The company introduced high-quality breeding pigs from France, Denmark, Canada, and the US through its 'Ten Thousand Foreign Breeding Pigs Introduction Plan', enriching its gene pool and using whole-genome selection technology to build 'Zhengbang Core', establishing a breeding stock advantage[34](index=34&type=chunk) - The company established an industry-benchmark biosecurity control system, continuously upgrading it through process-oriented, standardized, and systematic construction, providing strong assurance for the rapid development of its hog farming business[36](index=36&type=chunk) - The company achieved standardized farming processes and refined, intelligent management by developing apps like Bangfanbao and Bangyangbao and applying IoT smart devices[37](index=37&type=chunk) - The company implemented a 'recruit at both ends, grow in the middle' talent strategy and launched combined incentive plans, including equity incentives and business partnerships, to attract and retain core talent[38](index=38&type=chunk) - The company has built an integrated industrial chain from 'feed → veterinary medicine → breeding pig propagation → commercial hog farming', effectively smoothing cyclical fluctuations of single businesses and enhancing risk resistance[43](index=43&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [Overview](index=16&type=section&id=%E6%A6%82%E8%BF%B0) In 2020, the company achieved **49.17 billion yuan** in revenue and **5.74 billion yuan** in net profit, driven by strong hog farming performance and strategic expansion 2020 Key Product Operating Performance | Main Product | Sales Volume (million tons/million heads) | YoY Sales Growth | Sales Revenue (billion yuan) | YoY Revenue Growth | Gross Margin | YoY Gross Margin Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Feed** | 4.53 | 11.68% | 13.65 | 16.03% | 9.80% | 0.08% | | **Farming** | 9.56 | 65.28% | 34.83 | 206.04% | 27.42% | 6.77% | | **Veterinary Medicine** | 0.01 | -10.19% | 0.30 | 31.87% | -2.53% | -16.79% | - The company implemented a 'Four Grabs' strategy (grabbing sows, piglets, farming quotas, and talent) to seize industry restructuring opportunities, achieving the second-highest hog market volume; this strategy, while increasing short-term costs, laid a foundation for long-term sustainable development[50](index=50&type=chunk) - The company culled **800,000 low-efficiency sows** in Q4 2020 and Q1 2021, signaling the near completion of herd optimization and an expected significant reduction in future piglet costs[50](index=50&type=chunk) - Hog farming primarily uses self-breeding and 'company + farmer' models; as of year-end 2020, **7,951 farmers** were contracted, with **6,409 having inventory**, and **77%** of annual market volume from farms with **1,000-5,000 heads**[52](index=52&type=chunk)[53](index=53&type=chunk) [Analysis of Main Business](index=19&type=section&id=%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) In 2020, hog farming became the primary revenue and profit driver, with its revenue share increasing to **70.85%** and gross margin reaching **27.42%**, while overall expenses rose due to scale expansion Operating Revenue Composition (by Industry) | Industry | 2020 Revenue (yuan) | Revenue Share | YoY Change | | :--- | :--- | :--- | :--- | | **Farming** | 34,833,930,063.80 | 70.85% | 206.04% | | **Feed** | 13,649,882,812.45 | 27.76% | 16.03% | | **Food** | 466,409,746.23 | 0.95% | 135.06% | | **Veterinary Medicine** | 94,344,534.36 | 0.19% | -10.19% | Gross Margin by Main Business | Industry | Operating Revenue (yuan) | Operating Cost (yuan) | Gross Margin | YoY Gross Margin Change | | :--- | :--- | :--- | :--- | :--- | | **Farming** | 34,833,930,063.80 | 25,282,755,441.33 | 27.42% | 6.77% | | **Feed** | 13,649,882,812.45 | 12,311,550,386.98 | 9.80% | 0.08% | Period Expense Changes (yuan) | Expense Item | 2020 | 2019 | YoY Change | Main Change Explanation | | :--- | :--- | :--- | :--- | :--- | | **Selling Expenses** | 472,290,613.72 | 646,612,491.76 | -26.96% | Transportation and handling fees reclassified to operating costs under new revenue standards | | **Administrative Expenses** | 2,781,036,289.08 | 1,215,112,561.79 | 128.87% | Increased due to company scale expansion, employee compensation, and other expenses | | **Financial Expenses** | 842,596,436.91 | 376,563,428.85 | 123.76% | Increased due to higher bank borrowings and interest expenses | | **R&D Expenses** | 527,591,957.71 | 394,318,802.83 | 33.80% | Company increased R&D investment | Key Cash Flow Statement Item Changes (yuan) | Item | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | 4,553,054,241.70 | 3,923,605,316.93 | 16.04% | | **Net Cash Flow from Investing Activities** | -9,567,667,851.69 | -5,470,604,269.09 | -74.89% | | **Net Cash Flow from Financing Activities** | 14,216,273,234.39 | 2,912,668,736.41 | 388.08% | | **Net Increase in Cash and Cash Equivalents** | 9,201,637,963.08 | 1,365,692,635.35 | 573.77% | [Analysis of Assets and Liabilities](index=26&type=section&id=%E8%B5%84%E4%BA%A7%E5%8F%8A%E8%B4%9F%E5%80%BA%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) As of year-end 2020, total assets grew **92.20%** to **59.26 billion yuan**, with significant increases in cash, inventory, biological assets, and prepayments reflecting rapid business expansion Key Asset Item Changes | Asset Item | Year-end 2020 Amount (yuan) | Share of Total Assets | Explanation of Change from Beginning of Year | | :--- | :--- | :--- | :--- | | **Monetary Funds** | 13,042,684,881.89 | 22.01% | Due to non-public issuance and accumulated operating cash | | **Inventory** | 13,447,839,992.80 | 22.69% | Increased due to expanded production and operations, and consumable biological assets | | **Fixed Assets** | 14,880,891,477.35 | 25.11% | Transferred from completed construction in progress | | **Productive Biological Assets** | 9,105,673,094.82 | 15.37% | Increased due to expanded production scale and higher breeding pig inventory | | **Prepayments** | 3,259,846,045.63 | 5.50% | Increased prepayments for feed raw material procurement | - As of the reporting period end, **1.33 billion yuan** in monetary funds, **96 million yuan** in fixed assets, **15 million yuan** in intangible assets, and **41 million yuan** in productive biological assets were restricted due to collateral or pledges[75](index=75&type=chunk) [Investment Analysis](index=27&type=section&id=%E6%8A%95%E8%B5%84%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) In 2020, company investments increased **43.96%** to **8.55 billion yuan**, primarily for expanding hog farming and trade subsidiaries, supported by significant fundraising for capacity expansion - During the reporting period, the company's investment amounted to **8.55 billion yuan**, a **43.96%** increase from **5.94 billion yuan** in the prior year, primarily for expanding farming capacity[76](index=76&type=chunk) - The company made significant equity investments totaling **5.70 billion yuan** in multiple new and existing farming and trade subsidiaries to support business expansion[77](index=77&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) Overall Use of Raised Funds (million yuan) | Fundraising Year | Fundraising Method | Total Raised Funds | Amount Used This Period | Total Amount Used Cumulatively | Unused Amount | | :--- | :--- | :--- | :--- | :--- | :--- | | **2016** | Non-public Issuance | 168,536.92 | 8,551.19 | 153,299.3 | 9.04 | | **2018** | Non-public Issuance | 99,274.49 | 14,845.74 | 74,544.68 | 23,380.85 | | **2020** | Convertible Bonds | 160,000 | 36,078.57 | 36,078.57 | 122,009.32 | | **2020** | Non-public Issuance | 750,000 | 300,000 | 300,000 | 447,925 | | **Total** | -- | 1,230,417.35 | 359,475.5 | 616,528.49 | 593,324.21 | [Outlook on Company's Future Development](index=49&type=section&id=%E5%85%AC%E5%8F%B8%E6%9C%AA%E6%9D%A5%E5%8F%91%E5%B1%95%E7%9A%84%E5%B1%95%E6%9C%9B) The company plans to strengthen its core hog feed and farming businesses by optimizing breeding stock, reducing costs, expanding self-breeding capacity, and exploring downstream food industries - Industry trends indicate increasing concentration in the feed sector and accelerated large-scale development in hog farming due to African Swine Fever, raising industry entry barriers[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - The company's development strategy is to build an integrated industrial chain, focusing on hog feed and farming; feed business will enhance service capabilities, while farming will expand scale based on cost reduction and leverage breeding stock advantages[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - 2021 operating plan: feed business to focus on hog feed and improve product profitability; hog farming to complete low-efficiency sow culling, leverage breeding advantages, expand self-breeding capacity, and continuously build talent reserves[116](index=116&type=chunk)[117](index=117&type=chunk) - The company faces key risks including epidemics, food safety, natural disasters, hog price fluctuations, subsidiary management, lease operations, industrial policies, and corporate bond repayment; the company has established biosecurity, integrated industrial chain, and information management systems to mitigate these risks[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) [Significant Matters](index=55&type=section&id=%E7%AC%AC%E4%BA%94%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) [Profit Distribution and Capital Reserve Conversion to Share Capital](index=55&type=section&id=%E5%88%A9%E6%B6%A6%E5%88%86%E9%85%8D%E4%B8%8E%E8%B5%84%E6%9C%AC%E5%85%AC%E7%A7%AF%E9%87%91%E8%BD%AC%E5%A2%9E%E8%82%A1%E6%9C%AC%E6%83%85%E5%86%B5) The company's 2020 profit distribution plan proposes a **7.0 yuan** cash dividend per 10 shares, representing **38.38%** of net profit, aligning with its three-year shareholder return plan - The company formulated a 'Shareholder Return Plan for the Next Three Years (2020-2022)', prioritizing cash dividends and stipulating that cumulative cash dividends over the past three years shall not be less than **30%** of the average annual distributable profit over the same period[128](index=128&type=chunk) Cash Dividend Situation Over the Past Three Years | Dividend Year | Cash Dividend Amount (yuan) | Share of Net Profit Attributable to Shareholders | | :--- | :--- | :--- | | **2020** | 2,204,314,074.90 | 38.38% | | **2019** | 175,230,020.07 | 10.64% | | **2018** | 94,873,469.56 | 49.05% | - The 2020 profit distribution plan proposes a cash dividend of **7.0 yuan (tax inclusive) per 10 shares** to all shareholders based on the total share capital on the record date, with no capital reserve conversion to share capital[132](index=132&type=chunk)[134](index=134&type=chunk) [Fulfillment of Commitments](index=58&type=section&id=%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) The company, its controlling shareholder, and actual controller strictly fulfilled all commitments made during asset restructuring, IPO, or refinancing, including avoiding competition and regulating related-party transactions - The company's controlling shareholder, Zhengbang Group, and actual controller, Mr. Lin Yinsun, committed to avoiding horizontal competition and minimizing related-party transactions with the company, and these commitments were strictly fulfilled during the reporting period[136](index=136&type=chunk)[137](index=137&type=chunk) - Regarding the 2020 public issuance of convertible corporate bonds and non-public issuance of shares, the company's controlling shareholder, actual controller, and directors, supervisors, and senior management all issued commitments to compensate for the dilution of immediate returns[138](index=138&type=chunk) - The share increase plan committed by the company's controlling shareholder, Zhengbang Group, and its concerted parties was completed on June 7, 2020, with no transfer of shares held during or within six months after the increase period[144](index=144&type=chunk) [Equity Incentive Plans](index=72&type=section&id=%E8%82%A1%E6%9D%83%E6%BF%80%E5%8A%B1%E8%AE%A1%E5%88%92) The company continued its 2017, 2018, and 2019 equity incentive plans, involving repurchase and cancellation of restricted shares, unlocking of eligible shares, and option price adjustments - 2017 Incentive Plan: During the reporting period, restricted shares of some resigned and underperforming personnel were repurchased and cancelled, and the exercise/unlocking of eligible first-grant third-tranche and reserved second-tranche stock options and restricted shares was processed[167](index=167&type=chunk)[191](index=191&type=chunk) - 2018 Incentive Plan: During the reporting period, restricted shares of some resigned and underperforming personnel were repurchased and cancelled, and the exercise/unlocking of eligible first-grant second-tranche and reserved first-tranche stock options and restricted shares was processed[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)[200](index=200&type=chunk) - 2019 Incentive Plan: Initial grant completed in January 2020, deferred grant in March, and reserved grant in July; during the reporting period, restricted shares of some resigned personnel were repurchased and cancelled[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Significant Related-Party Transactions](index=85&type=section&id=%E9%87%8D%E5%A4%A7%E5%85%B3%E8%81%94%E4%BA%A4%E6%98%93) The company engaged in various daily related-party transactions at market prices, and its 2020 non-public share issuance to controlling shareholders and other related parties constituted a significant related-party transaction Key Daily Related-Party Transactions (million yuan) | Related Party | Related Transaction Content | Amount Incurred This Period | Approved Transaction Limit | | :--- | :--- | :--- | :--- | | Shandong Hekangyuan Bio-Breeding Co., Ltd. | Product sales, product procurement, loans | 18,067.41 | 80,000 | | Jiangxi Zengxin Technology Co., Ltd. | Purchase of production equipment | 15,687.56 | 40,000 | | Jiangxi Yumin Bank Co., Ltd. | Deposits, fund settlement | 991,800.44 | 1,500,000 | - The subscribers for the company's 2020 non-public share issuance were the controlling shareholder Zhengbang Group, second-largest shareholder Jiangxi Yonglian, and other related parties, constituting a significant related-party transaction[205](index=205&type=chunk) [Significant Contracts and Their Performance](index=88&type=section&id=%E9%87%8D%E5%A4%A7%E5%90%88%E5%90%8C%E5%8F%8A%E5%85%B6%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) The company provided substantial guarantees totaling **10.66 billion yuan** to subsidiaries, representing **45.86%** of net assets, with all guarantees properly approved and no violations Summary of External Guarantees (million yuan) | Guarantee Situation | Total Approved Amount During Reporting Period | Total Actual Guarantee Balance at Period End | | :--- | :--- | :--- | | **Guarantees to Subsidiaries** | 3,379,551 | 1,066,246 | | **Total Company Guarantees** | 3,379,551 | 1,066,246 | - As of the reporting period end, the company's total actual guarantees accounted for **45.86%** of its net assets, with **6.76 billion yuan** in debt guarantees provided to entities with a debt-to-asset ratio exceeding **70%**[219](index=219&type=chunk)[221](index=221&type=chunk) [Share Changes and Shareholder Information](index=106&type=section&id=%E7%AC%AC%E5%85%AD%E8%8A%82%20%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E5%8F%8A%E8%82%A1%E4%B8%9C%E6%83%85%E5%86%B5) [Share Change Situation](index=106&type=section&id=%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) The company's total share capital increased from **2.46 billion** to **2.53 billion shares** due to equity incentive grants, option exercises, convertible bond conversions, and restricted share repurchases Share Change Situation (shares) | Category | Before This Change | Increase/Decrease This Change | After This Change | | :--- | :--- | :--- | :--- | | **I. Restricted Shares** | 237,831,165 | 13,455,451 | 251,286,616 | | **II. Unrestricted Shares** | 2,217,990,191 | 58,151,886 | 2,276,142,077 | | **III. Total Shares** | 2,455,821,356 | 71,607,337 | 2,527,428,693 | - Main reasons for share increase: 1) **49.37 million shares** granted under the 2019 restricted stock incentive plan; 2) **4.62 million shares** granted under the 2019 restricted stock incentive plan's reserved portion; 3) **23.78 million shares** from stock option exercises; 4) **57,000 shares** from convertible bond conversions[241](index=241&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk) - Main reason for share decrease: multiple repurchases and cancellations of restricted shares no longer meeting incentive conditions during the reporting period, totaling over **6.22 million shares**[243](index=243&type=chunk)[244](index=244&type=chunk) [Shareholders and Actual Controller Information](index=111&type=section&id=%E8%82%A1%E4%B8%9C%E5%92%8C%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E6%83%85%E5%86%B5) As of year-end 2020, the company had **137,423** shareholders; Jiangxi Yonglian and Zhengbang Group are the top two, acting in concert, with Mr. Lin Yinsun as the actual controller Top Ten Shareholders' Shareholding | Shareholder Name | Shareholding Percentage | Shares Held at Period End (shares) | Restricted Shares Held (shares) | | :--- | :--- | :--- | :--- | | Jiangxi Yonglian Agricultural Holding Co., Ltd. | 20.92% | 528,746,049 | 59,876,049 | | Zhengbang Group Co., Ltd. | 18.82% | 475,725,985 | 0 | | LIEW KENNETH THOW JIUN | 6.71% | 169,636,419 | 127,227,314 | | Hong Kong Securities Clearing Company Limited | 1.70% | 42,925,151 | 0 | - The company's controlling shareholder is Zhengbang Group Co., Ltd., and the actual controller is Mr. Lin Yinsun; Zhengbang Group and Jiangxi Yonglian Agricultural Holding Co., Ltd. are concerted parties[259](index=259&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) [Preferred Shares Information](index=116&type=section&id=%E7%AC%AC%E4%B8%83%E8%8A%82%20%E4%BC%98%E5%85%88%E8%82%A1%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) The company had no preferred shares during the reporting period - The company had no preferred shares during the reporting period[266](index=266&type=chunk) [Convertible Corporate Bonds Information](index=117&type=section&id=%E7%AC%AC%E5%85%AB%E8%8A%82%20%E5%8F%AF%E8%BD%AC%E6%8D%A2%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) The company publicly issued **1.6 billion yuan** in convertible bonds in June 2020, with the conversion price adjusted twice during the period due to share issuance - On June 17, 2020, the company publicly issued **1.6 billion yuan** in convertible corporate bonds (short name 'Zhengbang Convertible Bonds', code '128114') with an initial conversion price of **16.09 yuan/share**; the conversion price was adjusted twice during the reporting period due to additional share issuance and other reasons[267](index=267&type=chunk) Cumulative Conversion of 'Zhengbang Convertible Bonds' | Bond Abbreviation | Total Issued Volume (sheets) | Cumulative Conversion Amount (yuan) | Cumulative Converted Shares (shares) | Unconverted Amount (yuan) | Unconverted Ratio | | :--- | :--- | :--- | :--- | :--- | :--- | | Zhengbang Convertible Bonds | 16,000,000 | 923,400.00 | 57,345 | 1,599,076,600.00 | 99.94% | - In August 2020, Golden Credit Rating International upgraded the company's main body and 'Zhengbang Convertible Bonds' credit rating from **AA** to **AA+**, with a stable outlook[270](index=270&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=119&type=section&id=%E7%AC%AC%E4%B9%9D%E8%8A%82%20%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%92%8C%E5%91%98%E5%B7%A5%E6%83%85%E5%86%B5) [Changes and Shareholdings of Directors, Supervisors, and Senior Management](index=119&type=section&id=%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E5%92%8C%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%8F%98%E5%8A%A8%E4%B8%8E%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5) During the reporting period, there were changes in the company's directors and senior management, including Mr. Lin Feng's appointment as chairman and general manager, and some executives increased their shareholdings - In September 2020, Mr. Lin Yinsun resigned as director due to personal focus adjustment; Mr. Lin Feng assumed the roles of general manager and chairman, and Mr. Cheng Fangui transitioned from chairman to director[272](index=272&type=chunk) - In August 2020, Ms. Wang Fei resigned as Board Secretary and Deputy General Manager due to work changes, and the Board appointed Ms. Zhu Jianxia as the new Board Secretary[272](index=272&type=chunk) Remuneration of Directors, Supervisors, and Senior Management (million yuan) | Name | Position | 2020 Total Pre-tax Remuneration | | :--- | :--- | :--- | | Lin Feng | Chairman and General Manager | 63.5 | | Cheng Fangui | Director | 76 | | Wang Yonghong | Chief Financial Officer | 39.6 | | Zhu Jianxia | Board Secretary | 27.2 | [Employee Information](index=123&type=section&id=%E5%91%98%E5%B7%A5%E6%83%85%E5%86%B5) As of year-end 2020, the company's total workforce significantly increased to **52,322 employees**, primarily in production, with over **60%** holding college degrees or higher Employee Count and Composition | Category | Count (persons) | | :--- | :--- | | **Total Employees** | 52,322 | | **Professional Composition** | | | Production Personnel | 35,889 | | Technical Personnel | 9,271 | | Sales Personnel | 3,208 | | **Education Level** | | | Postgraduate and Above | 804 | | Undergraduate | 12,044 | | College Diploma | 18,761 | [Corporate Governance](index=125&type=section&id=%E7%AC%AC%E5%8D%81%E8%8A%82%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86) [Basic Corporate Governance Status](index=125&type=section&id=%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86%E5%9F%BA%E6%9C%AC%E7%8A%B6%E5%86%B5) The company's corporate governance structure complies with relevant laws and regulations, maintaining independence from its controlling shareholder in business, personnel, assets, organization, and finance - The company's corporate governance structure is standardized, with normal operation of the general meeting of shareholders, board of directors, and supervisory board, and strict adherence to regulations for information disclosure and investor relations management[288](index=288&type=chunk)[289](index=289&type=chunk) - The company maintains complete independence from its controlling shareholder in five aspects: business, personnel, assets, organization, and finance, possessing independent and complete operational capabilities[290](index=290&type=chunk) [General Meeting of Shareholders](index=126&type=section&id=%E8%82%A1%E4%B8%9C%E5%A4%A7%E4%BC%9A%E6%83%85%E5%86%B5) During the reporting period, the company held one annual and eight extraordinary general meetings, with all procedures complying with relevant regulations - In 2020, the company held **9** general meetings of shareholders, including **1** annual general meeting and **8** extraordinary general meetings[292](index=292&type=chunk) [Performance of Board's Special Committees](index=127&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E4%B8%8B%E8%AE%BE%E4%B8%93%E9%97%A8%E5%A7%94%E5%91%98%E4%BC%9A%E5%B1%A5%E8%81%8C%E6%83%85%E5%86%B5) The board's audit, strategy, remuneration & assessment, and nomination committees actively fulfilled their duties, reviewing financial reports, strategic plans, equity incentives, and personnel appointments - The Audit Committee held **5** meetings, reviewing annual and quarterly financial reports, internal control evaluation reports, and the use of raised funds[296](index=296&type=chunk)[297](index=297&type=chunk) - The Strategy Committee held **7** meetings, reviewing significant matters such as non-public issuance of A-shares, public issuance of convertible bonds, overseas bond issuance, and engaging in futures hedging[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk) - The Remuneration and Assessment Committee held **9** meetings, primarily reviewing proposals related to the grant, price adjustment, repurchase and cancellation, and unlocking of various equity incentive plans[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) [Corporate Bonds Information](index=132&type=section&id=%E7%AC%AC%E5%8D%81%E4%B8%80%E8%8A%82%20%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) [Basic Corporate Bond Information](index=132&type=section&id=%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E5%9F%BA%E6%9C%AC%E4%BF%A1%E6%81%AF) As of the reporting period end, the company had one outstanding corporate bond, '17 Zhengbang 01', with a balance of **60.50 million yuan** and a **4.50%** coupon rate Basic Information of '17 Zhengbang 01' | Item | Content | | :--- | :--- | | **Bond Abbreviation** | 17 Zhengbang 01 | | **Bond Code** | 112612 | | **Issue Date** | November 17, 2017 | | **Maturity Date** | November 16, 2022 | | **Bond Balance (million yuan)** | 60.50 | | **Interest Rate** | 4.50% | [Use of Raised Funds](index=133&type=section&id=%E5%8B%9F%E9%9B%86%E8%B5%84%E9%87%91%E4%BD%BF%E7%94%A8%E6%83%85%E5%86%B5) The raised funds from '17 Zhengbang 01' corporate bonds were fully utilized as per the prospectus for debt repayment and working capital, with no remaining balance at year-end - As of December 31, 2017, the raised funds from this bond issue were fully utilized as per the prospectus, with a year-end balance of **0**[313](index=313&type=chunk) [Key Accounting Data and Financial Indicators for the Past Two Years](index=134&type=section&id=%E8%BF%91%E4%B8%A4%E5%B9%B4%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) Company solvency significantly improved in 2020, with EBITDA growing **193.60%**, current ratio increasing to **122.29%**, debt-to-asset ratio decreasing to **58.56%**, and interest coverage ratio rising to **7.05x** Key Solvency Indicators | Item | 2020 | 2019 | YoY Change Rate | | :--- | :--- | :--- | :--- | | **EBITDA (million yuan)** | 965,133.56 | 328,719.98 | 193.60% | | **Current Ratio** | 122.29% | 66.17% | 56.12% | | **Asset-Liability Ratio** | 58.56% | 67.65% | -9.09% | | **Interest Coverage Ratio** | 7.05 | 4.23 | 66.67% | [Financial Report](index=136&type=section&id=%E7%AC%AC%E5%8D%81%E4%BA%8C%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A) [Audit Report](index=136&type=section&id=%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) Dahua Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion on the company's 2020 financial statements, with key audit matters being biological asset impairment and revenue recognition - The auditing firm, Dahua Certified Public Accountants (Special General Partnership), issued a standard unqualified audit opinion[322](index=322&type=chunk)[323](index=323&type=chunk) - Key audit matters were impairment of biological assets and revenue recognition; auditors deemed the related accounting treatments appropriate after understanding internal controls, conducting physical counts, querying market information, and performing cut-off tests[325](index=325&type=chunk)[326](index=326&type=chunk) [Financial Statements](index=138&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) The financial statements show significant growth in 2020, with total assets reaching **59.26 billion yuan**, net profit attributable to shareholders **5.74 billion yuan**, and healthy operating cash flow of **4.55 billion yuan** Consolidated Balance Sheet Summary (yuan) | Item | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | 59,259,566,548.38 | 30,832,450,719.87 | | **Total Liabilities** | 34,701,465,987.35 | 20,857,846,922.80 | | **Total Equity Attributable to Parent Company Owners** | 23,252,100,795.55 | 9,393,269,327.22 | Consolidated Income Statement Summary (yuan) | Item | 2020 Annual | 2019 Annual | | :--- | :--- | :--- | | **Total Operating Revenue** | 49,166,305,434.56 | 24,517,770,453.37 | | **Operating Profit** | 6,300,643,890.24 | 1,830,300,788.23 | | **Total Profit** | 5,990,620,544.77 | 1,704,330,590.25 | | **Net Profit Attributable to Parent Company Shareholders** | 5,744,137,065.25 | 1,647,054,637.52 | Consolidated Cash Flow Statement Summary (yuan) | Item | 2020 Annual | 2019 Annual | | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | 4,553,054,241.70 | 3,923,605,316.93 | | **Net Cash Flow from Investing Activities** | -9,567,667,851.69 | -5,470,604,269.09 | | **Net Cash Flow from Financing Activities** | 14,216,273,234.39 | 2,912,668,736.41 | [Significant Accounting Policies and Estimates](index=163&type=section&id=%E9%87%8D%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%8F%8A%E4%BC%9A%E8%AE%A1%E4%BC%B0%E8%AE%A1) The most significant accounting policy change was the adoption of new revenue standards from January 1, 2020, impacting contract liabilities, prepayments, and reclassification of certain expenses - The company adopted new revenue standards from January 1, 2020, adjusting the cumulative impact of uncompleted contracts at the initial adoption date, reclassifying **289 million yuan** of initial prepayments to contract liabilities[462](index=462&type=chunk)[463](index=463&type=chunk) - Adoption of new revenue standards resulted in the reclassification of **247 million yuan** in transportation and handling fees from selling expenses to operating costs in 2020[465](index=465&type=chunk) - The company uses the cost model for biological assets; consumable biological assets (piglets, market hogs) are costed based on necessary expenditures like feed and labor; productive biological assets (breeding pigs) are depreciated using the straight-line method over an estimated useful life of **3 years**[431](index=431&type=chunk)[434](index=434&type=chunk)[435](index=435&type=chunk) [Reference Documents](index=290&type=section&id=%E7%AC%AC%E5%8D%81%E4%B8%89%E8%8A%82%20%E5%A4%87%E6%9F%A5%E6%96%87%E4%BB%B6%E7%9B%AE%E5%BD%95) Reference documents include signed financial statements, the original audit report, and all publicly disclosed documents and announcements from the reporting period - Reference documents include financial statements signed and sealed by the company's responsible person, chief accountant, and head of accounting department, the original audit report, and originals of all publicly disclosed documents and announcements from the reporting period[777](index=777&type=chunk)