SMAC(SH:600073)2023-08-29 16:00Financial Performance - The company's operating revenue for the first half of 2023 was CNY 11.41 billion, a decrease of 11.76% compared to CNY 12.93 billion in the same period last year[21]. - The net profit attributable to shareholders for the first half of 2023 was CNY 334.08 million, down 1.46% from CNY 339.03 million year-on-year[21]. - The net cash flow from operating activities was negative CNY 407.40 million, a significant decline from a positive CNY 425.40 million in the previous year, primarily due to the impact of international red meat market prices[21]. - Basic earnings per share for the first half of 2023 were CNY 0.356, a decrease of 1.66% from CNY 0.362 in the same period last year[22]. - The weighted average return on net assets was 6.77%, down 0.73 percentage points from 7.50% year-on-year[22]. - The company reported a decrease of 11.56% in net profit after deducting non-recurring gains and losses, amounting to CNY 266.54 million compared to CNY 301.37 million in the previous year[21]. Assets and Liabilities - The net assets attributable to shareholders at the end of the reporting period increased by 3.65% to CNY 5.02 billion from CNY 4.85 billion at the end of the previous year[21]. - Total assets at the end of the reporting period were CNY 15.37 billion, a slight decrease of 0.02% compared to CNY 15.38 billion at the end of the previous year[21]. - The company's cash and cash equivalents decreased by 11.25% to ¥3,423,067,883.79, compared to ¥3,857,024,753.53 at the end of the previous year[58]. - Short-term borrowings increased by 31.16% to ¥2,408,324,901.94, up from ¥1,836,175,810.26 in the previous year[58]. - The company's inventory increased by 9.32% to ¥3,264,865,768.74, compared to ¥2,986,475,537.67 in the previous year[58]. Market and Industry Trends - The average price of pork remained low in 2023, with the company facing challenges in profitability due to excess supply and weak demand[29]. - The beef consumption per capita in China has increased from 1.51 kg in 2013 to 2.5 kg in 2021, indicating significant growth potential in the beef market[32]. - The company is positioned to benefit from the rising demand for high-protein meat products as consumer preferences shift towards healthier options[32]. - The overall market for red meat saw a continuous price decline since October 2022, impacting sales and profitability across the industry[50]. Product Development and Innovation - The company is focusing on the development of deep-processed meat products, which currently account for less than 10% of total meat production in China[31]. - The company launched 182 new products across 9 major series during the year, with 45 new products in the pipeline[43]. - The company is committed to product innovation to cater to younger consumers' tastes, leveraging brand IP and promotional strategies to increase brand awareness[38]. - The company is expanding its product offerings in the meat sector, introducing various flavors of canned meat and new ready-to-eat meals[44]. Operational Strategies - The company is enhancing its supply chain integration by developing cold chain logistics to improve meat supply stability and quality[30]. - The sales strategy shifted from "selling pigs" to "selling meat," expanding sales channels and improving internal resource integration to better respond to market fluctuations[47]. - The company is actively exploring new sales channels, including chain specialty stores and e-commerce platforms, to expand its market reach[36]. - The company is transitioning its business model to focus on offline supermarkets while supplementing with internet marketing strategies[39]. Environmental Responsibility - The company is committed to environmental responsibility, as indicated by its compliance with pollution discharge standards[83]. - The company has implemented pollution control facilities that operate normally and meet discharge standards[93]. - The company has engaged third-party operators for some wastewater treatment processes to enhance efficiency[93]. - The company is committed to sustainable practices, including the ecological recycling of livestock waste through anaerobic fermentation technology[106]. Governance and Management - The company continues to focus on governance and management changes to enhance operational efficiency and strategic direction[79]. - The chairman of the board, Wu Jian, retired due to age, and Li Junlong was elected as the new chairman on May 10, 2023[79]. - The company held its annual general meeting on May 31, 2023, where 11 proposals were approved, including the 2022 financial report and profit distribution plan[77]. Financial Transactions and Related Parties - The company reported a total deposit amount of RMB 2,570,840,625.05 with Guangming Financial Company as of June 30, 2023, including RMB 868,024,625.05 in demand deposits and RMB 1,702,816,000 in time deposits[120]. - The company engaged in related party transactions, with purchases from Guangming Dairy and its subsidiaries totaling RMB 6,515,799.07 in the current period, compared to RMB 3,898,057.23 in the previous period[121]. - The total amount of purchases from Guangming Food Group Shanghai Farm and its subsidiaries was RMB 10,743,155.97, down from RMB 44,085,834.91 in the previous period[122]. Risks and Challenges - The company has identified potential risk factors affecting its operations, which are discussed in detail in the management analysis section of the report[7]. - The African swine fever remains a significant risk for the pig farming industry, with no effective vaccine available, necessitating strict biosecurity measures to prevent outbreaks[72]. - The company faces macroeconomic risks, including weakened international market demand and geopolitical tensions, which may impact its operations as a food production and sales enterprise[71].