WESTERN ANIMAL(300106)2017-04-27 16:00Financial Performance - The company's operating revenue for 2016 was CNY 664,584,792.47, an increase of 10.78% compared to CNY 599,902,012.38 in 2015[21]. - The net profit attributable to shareholders was a loss of CNY 52,214,745.06, representing a decrease of 325.91% from a profit of CNY 23,112,793.83 in 2015[21]. - The net cash flow from operating activities was a negative CNY 269,566,013.01, a decline of 470.41% compared to CNY 72,775,916.45 in 2015[21]. - The total assets at the end of 2016 were CNY 2,772,892,881.81, an increase of 22.11% from CNY 2,270,877,509.36 at the end of 2015[21]. - The net assets attributable to shareholders increased by 51.05% to CNY 985,702,909.14 from CNY 652,580,583.93 in 2015[21]. - The company reported a basic earnings per share of -CNY 0.26, a decrease of 285.71% from CNY 0.14 in 2015[21]. - The company experienced a significant increase in non-operating income, with government subsidies amounting to CNY 49,145,169.11 in 2016, compared to CNY 41,571,802.83 in 2015[27]. - The total liabilities increased significantly, reflecting the company's financial challenges during the year[21]. Dividend Policy - The company reported a cash dividend of 0.10 yuan per 10 shares and no bonus shares, based on a total of 211,332,310 shares[10]. - The cash dividend distribution for 2016 was set at CNY 0.10 per 10 shares, totaling CNY 2,113,323.10, which represents 100% of the profit distribution[173]. - The company has a clear cash dividend policy, ensuring that at least 10% of the distributable profit is distributed as cash dividends annually, provided certain financial conditions are met[167]. - The company will not distribute cash dividends in years without profit, ensuring that profit distribution does not harm its sustainable operation[168]. - The company’s profit distribution plan is subject to approval by shareholders holding more than 50% of the voting rights at the general meeting[170]. Government Support and Subsidies - The company has received multiple government subsidies for its agricultural projects, which are crucial for its financial performance[10]. - The company has received continuous subsidies since 2014, indicating strong government support for its operations[30]. - The company reported a total of 49,145,169.11 CNY in various project funding, including 76,263,600.00 CNY in livestock subsidies closely related to its main business[30]. - The company received government subsidies amounting to ¥127,551,021.74, significantly contributing to its non-operating income[128]. Risk Management - The company has implemented measures to control animal disease risks, including a breeding center for improving livestock genetics[6]. - The company faces significant risks from fluctuations in fresh milk prices, which have been affected by international market trends[7]. - The company is exposed to natural disaster risks that could impact livestock and feed supply, but has taken steps to mitigate these risks through infrastructure improvements[9]. - The company is committed to continuous improvement in risk management and internal controls to address potential quality and safety issues[8]. Product and Market Development - The company has expanded its production capabilities for various dairy products, including long-life milk and yogurt, to enhance market presence[10]. - The company has a diversified product line, including dairy, meat, and oil products, which helps to spread operational risks[8]. - The company aims to enhance its market position by focusing on modern, intensive livestock farming and biotechnology[33]. - The company has a strong focus on quality and safety, with investments in quality assurance systems and technology integration[30]. - The company has developed new feeding technologies that improve feed efficiency and reduce dairy farming costs, with feed accounting for over 70% of fresh milk production costs[55]. - The company has established a stable supply chain by collaborating with dairy farmers, ensuring high-quality fresh milk without contamination issues[66]. - The company has a diverse product portfolio, including milk beverages, yogurt, and infant food products, catering to various consumer needs[83]. Competitive Landscape - The competitive landscape includes a first tier of major brands like Yili and Mengniu, with the company positioned as a regional leader[37]. - Major dairy companies are focusing on controlling high-quality milk sources to ensure product quality, which has become a key competitive factor[44]. - The market share of Yili in the yogurt segment ranked first, while Bright Dairy and Mengniu ranked second and third respectively in 2012[39]. - The dairy industry has seen a rapid increase in the number of large enterprises, with market share concentrating among well-known brands following regulatory scrutiny[39]. Research and Development - The company has established partnerships with multiple universities and research institutions, enhancing its innovation capabilities and technical expertise[97]. - The company has completed 77 various technology projects, contributing to the transformation and upgrading of the livestock industry[93]. - The company has achieved over 10 national and local awards for its technological achievements, including 25 patents and 15 significant technological results[93]. - The company has a strong technical team, including 17 PhDs and various experts in animal breeding and nutrition[96]. Subsidiaries and Investments - The company has invested in and acquired local dairy processing companies, such as Huayuan Dairy and Xinjiang Ximu Dairy, to expand its product line and industry chain[66]. - The company established a wholly-owned subsidiary in September 2016, expanding its operational scope into the restaurant sector[115]. - The company has established a wholly-owned subsidiary, Shihezi Shishang Ximu Beef Hotpot Restaurant Co., Ltd., with a registered capital of 2 million yuan to expand its meat industry sales efforts[184]. - The company made significant equity investments, including 96,800,000.00 CNY in Xinjiang Huashang Agricultural Development Co., Ltd., representing a 76.96% stake[135]. Operational Efficiency - The company has implemented standardized large-scale feeding techniques, ensuring balanced nutrition and improved quality of feed, which enhances the genetic potential of dairy cows[67]. - The company has introduced foreign experts to improve technology and training, impacting its operational efficiency positively[122]. - The company has developed a large data cloud platform for intelligent management of large-scale dairy farms[95]. - The company has invested in advanced technologies such as IoT-based feeding machines, enhancing operational efficiency in dairy farming[85]. Challenges and Future Plans - The overall performance of the subsidiaries indicates challenges in profitability, primarily due to market price fluctuations and operational inefficiencies[153]. - The company plans to achieve a cattle stock of 20,285 heads and produce 46,240 tons of fresh milk by the end of 2017[104]. - The company aims to strengthen brand image and expand market reach, particularly in the infant formula segment, while developing e-commerce platforms to enhance sales and profitability[159]. - The company intends to reduce production costs by increasing the scale of farming and improving the mechanization of feed planting, aiming to narrow the cost gap with foreign competitors[160].