Wellhope(SH:603609)2019-04-28 16:00Financial Performance - The company's operating revenue for 2018 was CNY 15,750,798,120.67, representing a 15.00% increase compared to CNY 13,695,843,458.67 in 2017[25] - The net profit attributable to shareholders of the listed company was CNY 551,928,618.35, an increase of 17.18% from CNY 471,024,473.92 in the previous year[25] - The net profit attributable to shareholders after deducting non-recurring gains and losses was CNY 542,459,604.74, which is a 39.23% increase compared to CNY 389,607,877.28 in 2017[25] - The net cash flow from operating activities was CNY 501,404,915.59, a decrease of 17.99% from CNY 611,390,370.75 in the previous year[25] - As of the end of 2018, the net assets attributable to shareholders of the listed company were CNY 3,851,915,758.64, reflecting a 13.62% increase from CNY 3,390,304,242.88 at the end of 2017[25] - The total assets of the company at the end of 2018 were CNY 6,930,694,562.43, which is a 15.78% increase from CNY 5,985,861,995.54 in 2017[25] - Basic earnings per share for 2018 was CNY 0.66, an increase of 15.79% compared to CNY 0.57 in 2017[27] - The diluted earnings per share for 2018 was also CNY 0.66, reflecting the same percentage increase of 15.79% from the previous year[27] - The compound annual growth rate (CAGR) for total revenue and net profit from 2013 to 2018 was 13% and 26%, respectively, both reaching historical highs[88] Dividend and Shareholder Returns - The company plans to distribute a cash dividend of CNY 1.80 per 10 shares, totaling CNY 166,014,791.28[9] Risk Management and Compliance - The company has not reported any non-operating fund occupation by controlling shareholders or related parties[11] - The company has detailed potential risks in the report, which investors should review[11] - The audit report for the company was issued by Jiangsu Suya Jincheng Accounting Firm, confirming the accuracy of the financial statements[8] Operational Highlights - The company operates in five major animal feed categories, including pig, poultry, ruminant, aquaculture, and fur animals, with a focus on continuous product development[36] - The company has established feed factories in Nepal, Indonesia, and the Philippines, expanding its market presence beyond China[36] - The integrated operation model in the poultry industry includes over 30 subsidiaries, ensuring food safety through standardized management and process control[37] - The average weight of the company's broiler chickens at market release exceeds 2.8 kg, achieving a European efficiency index of over 380[40] - The company operates 15 controlled and affiliated slaughter enterprises with an annual slaughter capacity of 550 million birds, utilizing advanced automation production lines and a comprehensive quality assurance system[41] - The deep processing segment has over 100 chicken products, with a focus on expanding cooked food exports to Japan and South Korea amid growing consumer demand[41] - The company has established pig farming operations in multiple provinces, with a completed phase one project in Liaoning capable of raising 500,000 pigs, officially starting operations in April 2019[42] - The pig farming business employs a "company + family farm" model, ensuring unified management across various aspects of production, including pig housing and feed supply[42] - The company aims to enhance biosecurity and ecological farming practices, with the Liaoning pig project designed by renowned experts to be a modern breeding facility[43] Market Trends and Industry Insights - China's feed industry has become the largest globally, with a production volume accounting for approximately 17% of the world's total in 2018[47] - The feed industry is experiencing consolidation, with smaller enterprises exiting the market, leading to increased industry concentration and larger average production capacities[48] - The white feather broiler industry is characterized by cyclical price fluctuations, with demand peaking around major holidays, followed by price declines[49] - The white feather broiler industry has undergone significant changes, transitioning from export-driven demand to domestic fast food consumption, with a strong recovery observed since 2018 due to supply constraints and rising demand[53] - The white feather broiler chicken industry in China is experiencing a strong growth cycle, driven by high breeding efficiency and low production costs, with chicken meat being the cheapest protein source[54] - The pig farming industry exhibits significant cyclical characteristics, with supply adjustments lagging behind market changes due to the lengthy production cycle of approximately 18 months[59] - The African swine fever outbreak in 2018 led to a substantial reduction in pig production capacity, creating a significant supply gap and driving pork prices to potentially historic highs[63] - The government has implemented policies to regulate pig transport and processing, leading to a transformation in the slaughtering and logistics systems within the industry[63] Competitive Advantage and Management - The company’s core competitiveness lies in its experienced management team, stable corporate culture, and a focus on sustainable and innovative operational practices[64] - The management team has an average of over 20 years of experience in the livestock feed industry, contributing to the company's strategic planning and risk management[65] - The company emphasizes rational planning and steady development, ensuring a reasonable and safe industrial structure while avoiding impulsive investments[69] - The company has established a competitive and risk-resistant industrial chain in raw material trading, feed, breeding, slaughtering, and food processing[70] - The company plans to achieve a dual-driven complementary operating model between poultry and pig breeding within 5-8 years, enhancing its risk resistance[70] - The company aims to strengthen its core business while actively developing emerging strategic businesses and nurturing potential incubation businesses over the next three years[71] - The company has developed a comprehensive industrial chain covering breeding, feed production, breeding monitoring, slaughtering, and meat processing, ensuring full control over the entire process[72] Research and Development - In 2018, the company launched over 10 new products and technologies annually, with 40 existing patents and 17 patents submitted or authorized in that year alone[79] - The company’s broiler breeding technology has reached a live weight of over 5.6 pounds and a survival rate of 95%, with slaughtering metrics also at industry-leading levels[80] - The company has developed high-immune nutritional feed products in response to African swine fever, showcasing its rapid innovation capabilities[77] - The company is recognized as a national technology center and has received multiple awards for its research and development efforts, including two National Science and Technology Progress Awards[76] - The company conducted nearly 100 R&D verification projects in 2018, focusing on various animal feed products and achieving significant advancements in product safety and quality[133] - The company participated in the formulation of two national standards for feed, which took effect on November 1, 2018, significantly impacting the industry[134] - The company received 17 invention patents in 2018, including innovations in feed formulations and processing methods[134] Environmental and Regulatory Compliance - The company is responding to stricter environmental standards and regulations, such as the Environmental Protection Tax Law, which came into effect on January 1, 2018, impacting large-scale livestock farms[153] - The company is committed to reducing the use of veterinary antibiotics in feed, aiming for a "zero growth" in antibiotic usage over the next three years[152] - The company has a management team with a high level of education, with 70% of management personnel holding at least a bachelor's degree, contributing to its competitive advantage[158] Operational Licenses and Compliance - The company holds valid grain purchase licenses and feed production licenses with no changes reported during the reporting period[185] - The company has undergone license renewals that reflect its commitment to regulatory compliance and operational excellence[195] - The company has successfully renewed its feed production licenses for several subsidiaries, ensuring uninterrupted production capabilities[198] - The company has maintained its operational licenses without changes for several subsidiaries, indicating stability in its regulatory standing[198] Technological Innovation - The company focuses on technological innovation through self-research and collaboration with academic and industrial projects, leveraging advanced technologies from partners like Royal De Heus[199] - The low-protein diet technology aims to reduce crude protein in feed, saving resources and minimizing environmental impact while meeting the amino acid needs of livestock[199] - The company is transitioning from antibiotic to post-antibiotic era by ensuring balanced nutrition and health in feed products through raw material selection and functional additives[200] - The functional dietary fiber diet technology for sows enhances fiber content and electrolyte balance, promoting gastrointestinal health and stimulating intestinal motility[200]