Production and Market Performance - The company reported a significant growth in hog production and fresh pork business, capitalizing on the industrial transformation in China[7]. - The stock of breeding sows in China was 42.96 million heads at the end of June, reflecting a 0.5% year-on-year increase and reaching 105% of the control target for normal production capacity[15]. - The company operates four modern slaughtering and processing bases in Jiangsu, Hubei, Jilin, and Inner Mongolia, enhancing its fresh pork distribution capabilities[9]. - The processed meat products segment includes three modern processing bases in Jiangsu, Hubei, and Guangdong, with brands "Maverick" and "Joycome" targeting first-tier cities[13]. - The company plans to further expand its hog production capacity across various provinces, including Jilin, Inner Mongolia, and Tianjin[8]. - "Joycome" chilled pork and "Maverick" low-temperature meat products are gaining popularity in major first-tier cities[7]. - The fresh pork segment focuses on branded business development, covering key markets in Shanghai, Beijing, and the Yangtze River Delta[9]. - In the first half of 2023, China's hog production volume reached 380 million heads, a year-on-year increase of 2.6%, while pork output was 30.32 million tons, reflecting a growth of 3.2%[18]. - The company's hog production volume grew by 7.9% year-on-year to 2.447 million heads in the first half of 2023, indicating an increase in capacity utilization[26]. - The company's segment sales for fresh pork increased by 13.0% during the reporting period, supported by brand promotion efforts[26]. - In the first half of 2023, China's pork imports amounted to 0.94 million tons, a year-on-year increase of 16.5%, accounting for 3.1% of domestic pork production[22]. - Beef imports during the same period reached 1.23 million tons, representing a year-on-year growth of 6.8% and accounting for 39.0% of domestic beef production[22]. Financial Performance - The total net profit before biological assets fair value adjustments for the company was RMB 168 million, an increase of RMB 1.568 billion compared to the same period last year[26]. - In the first half of 2023, the Group's revenue was RMB 5,818 million, an increase of 8.9% compared to RMB 5,345 million in the same period of 2022[36]. - The net profit before biological assets fair value adjustments was RMB 168 million, a significant recovery from a net loss of RMB 1,399 million in the same period of 2022[38]. - The gross profit margin before biological assets fair value adjustments was 6.5%, representing a year-on-year increase of 23.4 percentage points, mainly due to a 7.8% increase in the average selling price of finishing hogs[37]. - The sales volume of fresh pork reached 123 thousand tons, reflecting a year-on-year increase of 13.0%[29]. - The revenue from the hog production business increased by 14.3% year-on-year, driven by higher production volume and selling prices[36]. - The Group's selling and distribution expenses and administrative expenses amounted to RMB409 million, an increase of RMB46.57 million compared to RMB363 million for the same period last year[39]. - The Group's finance costs in the first half of 2023 were RMB71 million, a decrease of RMB6.60 million from RMB78 million in the same period of 2022, due to accelerated cash turnover and reduced borrowing balances[39]. - Other income, gains, and losses totaled RMB270 million in the first half of 2023, representing an increase of RMB238 million compared to the same period in 2022, primarily due to an exchange gain of RMB136 million[39]. - The EBITDA before biological assets fair value adjustments was RMB677 million in the first half of 2023, a significant improvement from RMB-843 million in the same period of 2022[45]. Cash Flow and Capital Management - As of June 30, 2023, the Group's cash and bank balances were approximately RMB511 million, down from approximately RMB1,040 million as of December 31, 2022, due to improved cash turnover efficiency[43]. - The current ratio as of June 30, 2023, was 0.85, compared to 0.80 as of December 31, 2022, indicating improved liquidity[43]. - The Group had unused bank credit facilities amounting to RMB14,232 million as of June 30, 2023[43]. - The Group did not have any significant investments or acquisitions during the first half of 2023, nor detailed future plans for material investments[42]. - The Group implemented intensive management for surplus capital to improve turnover efficiency for inventories and accounts receivables[42]. - In the first half of 2023, cash generated from operating activities was RMB977 million, a decrease from RMB1,145 million in the same period of 2022[48]. - Cash used in investment activities was RMB335 million, down from RMB403 million in the same period of 2022, with RMB418 million spent on property, plant, and equipment[48]. - Cash used in financing activities was RMB1,193 million, compared to cash generated of RMB1,503 million in the same period of 2022[48]. - As of June 30, 2023, the Group had interest-bearing bank loans of approximately RMB4,539 million, reduced from RMB5,998 million as of December 31, 2022[49]. - The net debt-to-equity ratio improved to approximately 46.1% as of June 30, 2023, down from 73.3% as of December 31, 2022[53]. - Capital expenditure for the first half of 2023 was RMB419 million, slightly up from RMB411 million in the same period of 2022[58]. Biological Assets and Fair Value Adjustments - The fair value of biological assets was RMB 2,361 million as of June 30, 2023, down from RMB 3,063 million as of December 31, 2022[61]. - Adjustments in the cost of sales due to changes in fair value of biological assets resulted in a decrease of RMB 227 million in the first half of 2023, compared to a decrease of RMB 317 million in the same period of 2022[61]. - Losses from changes in fair value of biological assets less cost of sales amounted to RMB 521 million in the first half of 2023, compared to gains of RMB 386 million in the same period of 2022[61]. - The total remuneration for employees was approximately RMB 671 million for the six months ended June 30, 2023, compared to RMB 621 million in the same period of 2022[61]. - The Group's biological assets included live hogs at various stages of development, classified as current assets, and breeding stock classified as non-current assets[173]. - The Group's breeding costs added during the period amounted to RMB3,978,920,000[173]. - Losses from changes in fair value less costs to sell of biological assets amounted to RMB880,450,000[173]. Risk Management and Compliance - The company has implemented various biosecurity control measures to mitigate epidemic risks, including a contingency plan for major animal diseases and a standard operating procedure for immunization in hog farms[65]. - Price risks are significant due to fluctuations in commodity prices, including corn, soybean meals, live hogs, and pork, which affect profitability[66]. - The Group's operations are impacted by epidemic risks, including diseases such as African swine fever, which can lead to hog mortalities and decreased production volume[64]. - The company has established various food safety management systems to mitigate risks related to food safety and ensure compliance[69]. - The company has implemented comprehensive safety production management regulations to prevent accidents and manage safety risks effectively[70]. - The company has developed environmental protection measures to address risks associated with excessive emissions and environmental pollution[73]. Corporate Governance and Shareholder Information - The Board and management are committed to high standards of corporate governance, which are essential for maintaining investor trust[87]. - The unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023, have been reviewed by the Audit Committee and the auditor, confirming compliance with applicable accounting standards[90]. - The Board resolved not to declare any interim dividend for the six months ended June 30, 2023, consistent with the previous year[90]. - The Group's financial information is prepared in accordance with Hong Kong Accounting Standard 34, ensuring transparency and accuracy[92]. - The total issued shares of the company were 4,581,998,323 as of June 30, 2023[85]. - Mainfield, a wholly-owned subsidiary of China Foods (Holdings), holds 1,078,377,782 shares, representing approximately 23.54% of the total issued shares[84]. - COFCO holds a total of 1,846,681,782 shares, which is approximately 40.30% of the total issued shares[84]. - No directors or chief executives had any interests or short positions in the shares of the company as of June 30, 2023[82]. - The Group did not purchase, sell, or redeem any of its listed securities for the six months ended June 30, 2023[87]. Future Outlook and Strategic Initiatives - The company aims to achieve its production capacity goals for the "14th Five-Year Plan" and accelerate the expansion of core businesses in the second half of 2023[74]. - The company plans to incorporate African swine fever prevention and control into routine practices to improve management efficiency and consolidate competitive advantages[74]. - The company will optimize futures hedging strategies dynamically to integrate futures and spot commodities effectively[74]. - The company is focused on promoting branding and differentiation of fresh products to enhance channel operating efficiency and expand brand influence[77]. - The company will further optimize the risk control system for its import business and deepen the integration of trading and processing[77].
中粮家佳康(01610) - 2023 - 中期财报