WESTERN ANIMAL(300106)2019-04-18 16:00Financial Performance - The company's operating revenue for 2018 was CNY 677,811,826.82, a decrease of 2.13% compared to CNY 692,557,176.69 in 2017[18]. - The net profit attributable to shareholders was CNY 19,710,127.53, a significant turnaround from a loss of CNY 367,021,095.61 in the previous year, representing a 105.37% increase[18]. - The net cash flow from operating activities reached CNY 741,993,353.67, marking an impressive increase of 816.64% from CNY 80,946,859.88 in 2017[18]. - Basic earnings per share improved to CNY 0.09 from a loss of CNY 1.74 in 2017, reflecting a 105.17% increase[18]. - The total assets of the company decreased by 53.05% to CNY 1,137,464,935.58 from CNY 2,422,903,459.86 in 2017[18]. - The net assets attributable to shareholders increased by 3.20% to CNY 636,278,735.28 from CNY 616,568,607.75 in the previous year[18]. - The company reported a significant improvement in the fourth quarter with a net profit of CNY 64,598,266.61, compared to losses in the first three quarters[20]. - The company reported a total revenue of 677.81 million yuan in the reporting period, with dairy product revenue accounting for 66.07% at 447.86 million yuan[98]. - The company reported a net profit of CNY 12,354,779.34 for the year 2018, with an initial undistributed profit of CNY 94,037,945.86[176]. Dividend Policy - The company plans not to distribute cash dividends or issue bonus shares for the year[7]. - The total distributable profit at the end of 2018 was CNY 95,380,025.21, but no cash dividends or stock dividends were distributed[176]. - The company’s cash dividend total for 2018 was CNY 0.00, representing 0.00% of the total distributable profit[174]. - The board of directors decided not to distribute cash dividends, issue bonus shares, or increase capital from reserves for the year 2018 due to the negative retained earnings[180]. - The company’s cash dividend policy requires at least 10% of the distributable profit to be distributed in cash if there are no major investment plans or cash expenditures[171]. Market Position and Strategy - The company is focused on dairy product processing and sales, feed production, and livestock breeding, aiming to become a leading enterprise in modern animal husbandry in Xinjiang[28]. - The company aims to enhance its market presence and product diversity to meet the growing consumer demand for varied and high-quality dairy products[31]. - The company is expanding its market presence, with plans to enter three new provinces in the next quarter, aiming for a 10% market share in these regions[61]. - The company aims to achieve steady profit growth by focusing on infant formula milk powder as the flagship product, with liquid milk and yogurt as supplementary products[158]. - The company plans to enhance technology investment in meat and oil products, leveraging local raw material advantages to improve product quality and marketing capabilities[160]. Research and Development - The company has a strong technical research and development team and collaborates with various universities and institutions to enhance its technological capabilities[51]. - The company has implemented 135 R&D projects in recent years, with 63 projects at various national and local levels[67]. - The company has obtained 24 patents and has been awarded over 10 national and local awards for its technological achievements[67]. - The company aims to leverage its processing capacity of 300 tons of fresh milk daily to enhance brand promotion and market layout, focusing on infant formula as a key product[85]. - The company has established a new R&D center focused on developing plant-based dairy alternatives, targeting a growing segment of health-conscious consumers[61]. Risk Management - The company faced various risks including product quality, market competition, and environmental protection risks, which were discussed in the report[6]. - The company emphasizes the importance of internal control and risk management to ensure operational efficiency and compliance with regulations[88]. - The company is at risk of potential government policy changes affecting tax incentives and subsidies, which could impact financial performance[95]. - The company has established measures to mitigate risks associated with animal diseases that could affect fresh milk supply and product sales[96]. - The company is focused on expanding its market presence and diversifying its customer base to reduce risks from customer concentration[93]. Asset Management - The company's equity assets decreased by 54.29% compared to the beginning of the period, primarily due to the sale of equity in six dairy farming companies[47]. - Fixed assets decreased by 46.22% compared to the beginning of the period, mainly due to the government reclaiming land and buildings[47]. - The company has divested from 16 underperforming dairy and beef cattle breeding companies, with total transaction prices amounting to CNY 263 million[76]. - The company completed the transfer of 30% equity stakes in several subsidiaries, including Shihezi LQ Livestock Co., which is expected to improve financial structure and reduce financial burdens[147]. - The company’s strategic asset sales are part of a broader plan to optimize its financial performance and enhance shareholder value[200]. Industry Overview - The competitive landscape includes a first tier of major brands like Yili and Mengniu, while the company is positioned as a regional leader in the second tier[31]. - The dairy industry in China has experienced a consolidation, with over 1,100 companies reduced to 648 after regulatory scrutiny, leading to a concentration of market share among top brands[32]. - The dairy industry is characterized by high entry barriers related to policy approval, milk source control, marketing networks, and brand recognition[36]. - The dairy industry is increasingly focusing on quality control and supply chain management to ensure product safety and reliability, especially after past food safety incidents[35]. - The dairy industry in China is currently in an upward cycle, with increasing consumer demand expected as living standards rise[44].