WESTERN ANIMAL(300106)2021-04-26 16:00Financial Performance - The company's operating revenue for 2020 was CNY 820,327,472.41, representing a 26.40% increase compared to CNY 649,011,242.00 in 2019[16]. - The net profit attributable to shareholders for 2020 was CNY 11,945,396.84, a significant turnaround from a loss of CNY 57,168,011.36 in 2019, marking a 120.90% improvement[16]. - The net profit after deducting non-recurring gains and losses was CNY 5,099,505.44, compared to a loss of CNY 56,006,772.06 in the previous year, reflecting a 109.11% increase[16]. - The net cash flow from operating activities reached CNY 155,385,601.50, a remarkable increase of 615.56% from CNY 21,715,132.16 in 2019[16]. - Basic earnings per share improved to CNY 0.06 from a loss of CNY 0.27 in 2019, representing a 122.22% increase[16]. - Total assets at the end of 2020 were CNY 1,071,526,903.21, a 2.11% increase from CNY 1,049,370,989.69 at the end of 2019[16]. - The net assets attributable to shareholders increased to CNY 578,135,097.21, up 2.11% from CNY 566,189,700.37 in 2019[16]. - The weighted average return on net assets was 1.81%, a significant recovery from -9.61% in 2019[16]. - The operating profit for 2020 was CNY 32.30 million, up 171.83% compared to the previous year[71]. - The sales revenue from dairy products was CNY 600.24 million, representing a year-on-year growth of 29.86%[71]. - The company's revenue from feed reached 190,054,283.80 CNY, which is 23.17% of total revenue, reflecting a year-on-year increase of 21.61%[87]. Market and Industry Insights - The dairy industry in China is expected to grow due to increasing per capita income and changing dietary structures, with significant market demand for dairy products[28]. - The competitive landscape of the dairy industry in China has stabilized, with increasing market concentration and brand awareness among consumers[29]. - The total sales revenue of China's dairy industry reached CNY 357.7 billion in 2019, with a compound annual growth rate of 54.51% from 2011 to 2019[31]. - The dairy industry in China has seen a concentration of market share towards larger, well-known brands due to recent policy support aimed at optimizing the industry structure[31]. - The average annual per capita consumption of dairy products is a key indicator of living standards, reflecting the growing importance of dairy in the Chinese diet[35]. - The dairy industry is increasingly focusing on quality control and the establishment of stable milk sources to ensure product reliability and safety[33]. - The company plays a crucial role in stabilizing the supply of basic dairy products in Xinjiang and promoting social employment[28]. Product Development and R&D - The company has established a strong research and development capability through partnerships with universities and research institutions, enhancing its technological strength in the dairy sector[49]. - The company holds 15 infant formula product registration certificates, making it the only dairy processing enterprise in Xinjiang with two infant formula production facilities[49]. - The company has implemented 135 R&D projects in recent years, with 63 projects at various governmental levels and 73 internal key projects[63]. - The company reported a significant focus on R&D, with several patents related to IoT-based feeding machines and yogurt mixing devices[57]. - The company is expanding its product line to include a variety of dairy and non-dairy beverages, such as almond milk and fruit juices[58]. Risk Management - The company faces various risks including product quality, market competition, and environmental protection, which are detailed in the report[4]. - The company is addressing the risk of animal diseases that could impact fresh milk supply and consumer confidence in dairy products[129]. - The company has established an environmental management system to reduce pollution and ensure compliance with environmental regulations[126]. Corporate Governance and Shareholder Relations - The company has established a clear cash dividend policy that prioritizes investor returns and requires a minimum of 10% of distributable profits to be distributed in cash when conditions are met[135][136]. - The company’s profit distribution policy emphasizes the need for continuous and stable returns to shareholders while considering long-term sustainability[135]. - The company has not engaged in any investor communication activities during the reporting period[131]. - The company’s board of directors has decided against any capital reserve conversion to increase share capital for the year 2020[144]. - The company’s financial performance has shown a trend of negative retained earnings over the past three years, impacting its ability to distribute profits[145]. Environmental and Social Responsibility - The company donated over 800,000 CNY to support frontline epidemic prevention efforts in various cities and communities[177]. - The wastewater from the company's processing plants meets the secondary discharge standards and does not exceed the approved discharge limits[179]. - The company has implemented a comprehensive emergency management system for environmental incidents, including various emergency response plans[181]. Strategic Initiatives - The company plans to acquire 100% equity of Tianshan Guanghe Animal Husbandry Co., Ltd. for a transaction price of 870 million CNY[183]. - The company intends to raise up to 500 million CNY through a share issuance to no more than 35 specific investors[183]. - The company is accelerating the merger and restructuring of Tian Shan Guang He Company to integrate the entire industry chain from feed production to dairy processing[119]. - The company aims to strengthen its market position in the western region through the acquisition, leveraging synergies across its operations[72].