Production Capacity and Business Segments - The company reported a significant growth in hog production capacity, with modern production bases established in multiple provinces including Jilin, Inner Mongolia, and Henan, aiming for further expansion [6]. - The fresh pork segment includes four modern slaughtering and processing bases, with operations in Jiangsu, Hubei, Jilin, and Inner Mongolia, and a cutting center in Guangdong, enhancing distribution capabilities [7]. - The processed meat products segment operates three processing bases in Jiangsu, Hubei, and Guangdong, focusing on western-style low-temperature processed meat products under the "Maverick" and "Joycome" brands [10]. - The company is actively developing its branded business, with the "Joycome" brand gaining recognition in major cities such as Shanghai and Beijing, contributing to market penetration [7]. - The meat import segment combines imported raw materials with domestic processing capacity, providing high value-added products to well-known food processors and large chain catering enterprises [11]. Financial Performance - In the first half of 2022, the company's hog production volume reached 2.268 million heads, representing a year-on-year increase of 35.7% [19]. - The average selling price of hogs significantly decreased, leading to a loss of RMB1.286 billion in the hog production segment, contributing to a total loss before fair value adjustment of RMB1.399 billion for the company [16]. - The fresh pork segment reported a profit of RMB16.45 million, a turnaround from loss, with sales volume increasing by 67.7% compared to the same period last year [16]. - In the first half of 2022, the company's revenue was RMB5,345 million, a decrease of 28.8% compared to RMB7,503 million in the same period of 2021 [31]. - The Group recorded a loss of RMB1,399 million before biological assets fair value adjustments in the first half of 2022, compared to a profit of RMB1,561 million in the same period of 2021 [36]. Market Conditions and Risks - The company faced significant risks from epidemic diseases, including African swine fever, which could lead to hog mortalities and increased operating costs [59]. - The COVID-19 epidemic posed risks to employee health, work resumption, and demand for meat products, affecting production and sales efficiency [62]. - Price risks from fluctuations in commodity prices, including corn, soybean meals, and live hogs, are expected to impact profitability [63]. - The company established a pandemic prevention leadership team to ensure employee safety and smooth production and sales amidst ongoing COVID-19 risks [64]. Corporate Governance and Management - The company was listed on the main board of the Stock Exchange on November 1, 2016, under stock code 1610, establishing its presence in the meat business sector [5]. - The Board believes that the separation of roles between the chairman and the chief executive officer is essential for effective governance, following the resignation of Mr. Xu Jianong on June 10, 2022 [83]. - The current Board composition includes one executive director, two non-executive directors, and three independent non-executive directors, ensuring a strong element of independence [83]. - The Company has adopted the principles of the Corporate Governance Code and complied with all code provisions throughout the six months ended June 30, 2022 [82]. Financial Position and Cash Flow - As of June 30, 2022, the cash and bank balances amounted to approximately RMB996 million, stable compared to RMB1,041 million on December 31, 2021 [38]. - The current ratio as of June 30, 2022, was 0.79, down from 0.89 on December 31, 2021 [38]. - The Group had interest-bearing bank loans of approximately RMB7,117 million as of June 30, 2022, compared to RMB6,109 million on December 31, 2021 [42]. - Cash generated from financing activities was RMB1,503 million in the first half of 2022, compared to cash used of RMB679 million in the same period of 2021 [41]. Biological Assets and Inventory - The fair value of biological assets was RMB 2,664 million as of June 30, 2022, compared to RMB 1,853 million as of December 31, 2021 [55]. - The carrying value of the Group's biological assets as of June 30, 2022, was RMB 2,663,886,000, a decrease from RMB 2,346,584,000 as of June 30, 2021, representing an increase of 13.4% year-over-year [161]. - The estimated market price and rearing costs significantly impact the fair value of biological assets, indicating sensitivity to market fluctuations [169]. Segment Revenue and Contributions - Total revenue for the six months ended June 30, 2022, was RMB5,344,506,000, with contributions from hog sales (RMB1,907,492,000), fresh pork sales (RMB1,804,592,000), processed meat products (RMB373,579,000), and imported meat products (RMB1,258,843,000) [120]. - The revenue from hog sales accounted for approximately 35.7% of total revenue, while fresh pork sales contributed about 33.7% [120]. - The total sales of processed meat products were RMB373,579,000, representing a significant segment of the Group's revenue [120]. Cost Management and Expenses - The total cost of sales for the six months ended June 30, 2022, was RMB 5,930,895, a decrease of 19.6% compared to RMB 7,377,547 in the same period of 2021 [148]. - Distribution and selling costs rose to RMB 211,107, compared to RMB 180,784 in the previous year, indicating increased operational expenses [96]. - Administrative expenses were RMB 151,457, up from RMB 141,183 in the same period last year, showing a trend of rising administrative costs [96]. Future Strategies and Outlook - The company aims to seize opportunities in the industrial transformation and upgrading, forming a strategic layout across the country to enhance its market position [5]. - The company plans to optimize hedging strategies dynamically to manage market volatility and achieve a combination of futures and in-stock operations [73]. - The company intends to promote differentiation and branding of fresh products, particularly linseed-fed pork, to enhance brand scale and influence [73].
中粮家佳康(01610) - 2022 - 中期财报