HAID GROUP(SZ:002311)2017-08-17 16:00Financial Performance - The company reported a revenue of RMB 3.5 billion for the first half of 2017, representing a year-on-year increase of 15% compared to RMB 3.04 billion in the same period of 2016[2]. - The company's operating revenue for the first half of 2017 was CNY 14,532,337,762.58, representing a 25.06% increase compared to CNY 11,620,378,224.28 in the same period last year[27]. - The net profit attributable to shareholders was CNY 518,711,606.53, up 34.89% from CNY 384,541,050.94 year-on-year[27]. - The net profit after deducting non-recurring gains and losses was CNY 498,007,805.62, reflecting a 37.71% increase from CNY 361,639,564.91 in the previous year[27]. - The basic earnings per share increased to CNY 0.33, a rise of 32.00% compared to CNY 0.25 in the same period last year[27]. - The total profit reached 64,763.39 million yuan, with a year-on-year increase of 31.17%[57]. - The feed sales volume increased by 14.55% to 3.7 million tons, with sales revenue of 1,125,161.09 million yuan, a growth of 23.26%[57]. - The sales of animal health products reached 21,311.47 million yuan, growing by 35.12% with a gross margin above 50%[60]. - The company achieved a net profit of CNY 131.23 million from its subsidiary Guangdong Hainet Biotechnology Group during the reporting period[110]. - The subsidiary Qingyuan Haibei Biotechnology achieved a net profit of CNY 120.93 million, benefiting from high product gross margins[111]. Cost and Profitability - The gross profit margin for the first half of 2017 was 18%, slightly down from 19% in the same period last year, indicating increased cost pressures[2]. - The cost of goods sold increased by 25.24% to ¥12.93 billion, driven by the growth in revenue[66]. - The gross margin for water feed products increased by 2 percentage points, significantly enhancing profitability[59]. - The gross margin for the feed industry improved slightly to 10.92%, up from 10.65% in the previous year[70]. Investment and R&D - The company has invested heavily in R&D, with nearly 1,000 personnel dedicated to animal nutrition and feed formulation technology, ensuring a strong response to raw material price fluctuations[17]. - The company invests approximately 200 million annually in R&D, focusing on animal nutrition, feed formulation technology, and health farming models[45]. - Research and development expenses rose by 15.12% to ¥109.95 million, reflecting increased investment in feed formulation technology and health farming models[66]. - The company has a mature research team of nearly 1,000 people dedicated to animal nutrition and feed formulation technology, investing significant funds annually in R&D[118]. Market and Industry Trends - The feed industry in China is currently in a consolidation phase, with the number of companies decreasing from over 15,000 to around 6,000, indicating increased competition and market consolidation[39]. - The company anticipates continued growth in the feed industry, driven by the expansion of large-scale farming operations and increasing demand for high-quality feed products[15]. - The company is facing risks from significant fluctuations in raw material prices, particularly for corn and soybean meal, which could impact feed and breeding costs[117]. - The introduction of environmental regulations has led to the exit of smaller, non-compliant producers, allowing larger scale producers to expand their market share and improve production structure[120]. Risk Management - The company is facing risks from major raw material price volatility, particularly in corn and soybean meal, which have shown significant price fluctuations in the first half of 2017[16]. - The company is actively managing foreign exchange risks due to its global procurement and overseas operations, ensuring careful selection of settlement currencies[19]. - The company has implemented a dual procurement strategy for raw materials, combining centralized purchasing for bulk commodities with local sourcing to enhance responsiveness[17]. - The company has developed comprehensive risk control measures for its foreign exchange hedging activities[90]. Production and Capacity Expansion - The company plans to expand its production capacity in Southeast Asia to mitigate risks associated with regional weather anomalies and disease outbreaks in livestock[15]. - The company is focusing on expanding its production and sales capabilities through a multi-point layout and integrated professional support centers[37]. - The company is adjusting its production capacity to quickly respond to industry changes, utilizing shared production lines for various feed types, including pig, chicken, duck, and fish feed[121]. - The company plans to optimize its production capacity in regions with abundant resources and strong environmental carrying capacity to capture new market opportunities[121]. Corporate Governance and Shareholder Matters - The company will not distribute cash dividends or issue bonus shares for the reporting period, focusing on reinvestment for growth[7]. - The company has committed to conducting cash dividends annually, with a minimum of 30% of the average distributable profit over three years to be distributed in cash[129]. - The company has implemented an employee stock ownership plan[134]. - The company granted 14.395 million restricted stocks at a price of 5.64 CNY per share and 10.425 million stock options at an exercise price of 11.41 CNY per share to 459 incentive participants[136]. Social Responsibility and Community Engagement - The company has invested in 25 projects in national or provincial poverty-stricken counties, creating 1,785 jobs[167]. - In the first half of 2017, the company invested 108,000,000 in poverty-stricken counties, generating taxable income of 24,000,000 and creating 126 new jobs[167]. - The company provided educational support worth 22,000 RMB to impoverished students in rural areas[169]. - A total of 417 impoverished students received financial assistance for education[170].