大成食品(03999) - 2023 - 中期业绩

Financial Highlights Key Financial Data For H1 2023, the Group saw operating revenue rise 12.4% to RMB3.14 billion and profit attributable to equity holders increase 20.6% to RMB40.76 million Key Financial Data | Metric | 2023 (RMB '000) | 2022 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 3,142,785 | 2,796,884 | 12.4 | | Gross Profit | 338,920 | 306,405 | 10.6 | | Gross Profit Margin | 10.8 | 11.0 | - | | Profit Attributable to Equity Holders of the Company | 40,757 | 33,802 | 20.6 | | Basic Earnings Per Share (RMB) | 0.040 | 0.033 | - | Consolidated Financial Statements Consolidated Statement of Profit or Loss For H1 2023, the Group reported RMB3.14 billion in operating revenue, RMB338.92 million gross profit, and RMB40.76 million profit attributable to equity holders Consolidated Statement of Profit or Loss | Metric | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Operating Revenue | 3,142,785 | 2,796,884 | | Cost of Sales | (2,803,865) | (2,490,479) | | Gross Profit | 338,920 | 306,405 | | Other Operating Income | 10,735 | 19,192 | | Other Net Gains/(Losses) | 141 | (1,559) | | Distribution Costs | (163,933) | (143,795) | | Administrative Expenses | (115,502) | (118,246) | | Operating Profit | 70,361 | 61,997 | | Finance Costs | (7,103) | (4,300) | | Share of Profits/(Losses) of Associates Accounted for Using the Equity Method | 66 | (1,077) | | Profit Before Tax | 63,324 | 56,620 | | Income Tax Expense | (7,088) | (7,857) | | Profit for the Period | 56,236 | 48,763 | | Profit Attributable to Equity Holders of the Company | 40,757 | 33,802 | | Non-controlling Interests | 15,479 | 14,961 | | Basic and Diluted Earnings Per Share (RMB) | 0.040 | 0.033 | Consolidated Statement of Comprehensive Income For H1 2023, the Group's profit for the period was RMB56.24 million, leading to total comprehensive income of RMB50.20 million after exchange differences Consolidated Statement of Comprehensive Income | Metric | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Profit for the Period | 56,236 | 48,763 | | Exchange Differences on Translation of Financial Statements of Overseas Subsidiaries | (6,035) | (9,726) | | Total Comprehensive Income for the Period | 50,201 | 39,037 | | Attributable to Equity Holders of the Company | 34,012 | 23,370 | | Non-controlling Interests | 16,189 | 15,667 | Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets less current liabilities were RMB2.74 billion, with total equity at RMB2.37 billion Consolidated Statement of Financial Position | Metric | 2023 June 30 (RMB '000) | 2022 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, Plant and Equipment | 1,445,571 | 1,240,947 | | Land Use Rights | 123,333 | 125,499 | | Investment Properties | 52,585 | 53,889 | | Interests in Associates Accounted for Using the Equity Method | 68,852 | 68,786 | | Other Financial Assets | 1,948 | 1,948 | | Deferred Tax Assets | 5,831 | 6,071 | | Long-term Recoverable Taxes | 112,497 | 112,497 | | Other Non-current Assets | 49,444 | 59,598 | | Current Assets | | | | Inventories | 528,779 | 671,019 | | Biological Assets | 150,634 | 149,077 | | Trade Receivables | 269,049 | 239,110 | | Other Receivables and Prepayments | 285,071 | 310,562 | | Cash and Cash Equivalents | 529,677 | 532,274 | | Current Liabilities | | | | Trade Payables | 385,264 | 472,025 | | Other Payables | 310,281 | 328,568 | | Contract Liabilities | 24,574 | 20,756 | | Interest-bearing Borrowings | 147,248 | 107,448 | | Lease Liabilities | 2,001 | 2,001 | | Income Tax Payable | 9,449 | 9,928 | | Non-current Liabilities | | | | Interest-bearing Borrowings | 341,777 | 269,792 | | Lease Liabilities | 27,765 | 29,716 | | Deferred Tax Liabilities | 8,490 | 7,936 | | Equity | | | | Share Capital | 97,920 | 97,920 | | Reserves | 938,677 | 944,706 | | Retained Profits | 1,068,811 | 1,028,770 | | Total Equity Attributable to Equity Holders of the Company | 2,105,408 | 2,071,396 | | Non-controlling Interests | 261,014 | 251,711 | | Total Equity | 2,366,422 | 2,323,107 | Notes to the Financial Statements Basis of Presentation This interim financial report is prepared under IAS 34, applying consistent accounting policies with the 2022 annual financial statements - This interim financial report is prepared in accordance with IAS 34 and was authorized for issue on August 7, 2023[111] - The preparation of the interim financial report involves management's judgments, estimates, and assumptions, and actual results may differ from these estimates[9] Changes in Accounting Policies The Group adopted revised IAS 8, IFRS 17, and IAS 12 amendments, which had no material impact on financial results - The Group has applied IAS 8 (Revised), Definition of Accounting Estimates, which has no material impact on the Group's current or prior period results and financial position[10] - The Group has applied IFRS 17 (Insurance Contracts) and IAS 12 (Revised) (Income Taxes: Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction)[112] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[45] Operating Revenue and Segment Reporting The Group manages its business across processed food, livestock feed, and meat products segments, reporting total operating revenue of RMB3.14 billion for H1 2023 - The Group manages its business through three reporting segments: processed food, livestock feed, and meat products[46] Operating Revenue and Segment Gross Profit | Segment | 2023 Operating Revenue (RMB '000) | 2022 Operating Revenue (RMB '000) | 2023 Segment Gross Profit (RMB '000) | 2022 Segment Gross Profit (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Processed Food | 1,123,488 | 1,003,973 | 224,891 | 197,280 | | Livestock Feed | 1,114,113 | 1,032,902 | 67,595 | 65,124 | | Meat Products | 905,184 | 760,009 | 46,434 | 44,001 | | Total | 3,142,785 | 2,796,884 | 338,920 | 306,405 | Description of Segment Operations The Group's segments include processed food production, livestock feed manufacturing, and meat product processing and trading - Processed Food Segment: Production and distribution of processed or ready-to-eat (partially cooked/fully cooked) meat products, primarily chicken[25] - Livestock Feed Segment: Production and distribution of complete feed, base mix feed, and premix feed for pigs, laying hens, broilers, ducks, and breeding poultry under the 'Dr. Buck', 'DaChan', and 'Green Knight' brands[25] - Meat Products Segment: Engaged in broiler breeding, hatching of broiler eggs, contract farming, and processing and trading of chilled and frozen chicken meat sold under the 'DaChan' and 'Sister's Kitchen' brands[25] Other Operating Income and Other Net Gains For H1 2023, the Group recorded RMB10.74 million in other operating income and RMB0.14 million in other net gains Other Operating Income Items | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Interest Income | 4,615 | 4,890 | | Government Grants | 3,229 | 10,442 | | Rental Income | 2,891 | 3,860 | | Total | 10,735 | 19,192 | Other Net Gains/(Losses) Items | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Foreign Exchange (Losses)/Gains | (261) | 165 | | Net (Losses)/Gains on Disposal of Property, Plant and Equipment | (1,383) | (476) | | Others | 1,784 | (1,248) | | Total | 141 | (1,559) | Profit Before Tax Profit before tax is determined after accounting for items like interest on bank borrowings, amortization, and depreciation Profit Before Tax Items | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Interest on Bank Borrowings Repayable in Full Within Five Years | (7,103) | (4,300) | | Amortization of Prepaid Lease Payments | (2,160) | (2,172) | | Depreciation of Property, Plant and Equipment | (55,842) | (59,258) | | Net Reversal/(Provision) for Impairment of Trade Receivables | 716 | (1,056) | | Net Write-down/(Reversal) of Inventories | (676) | 3,469 | Income Tax Expense For H1 2023, total income tax expense was RMB(7.09) million, with varying corporate income tax rates for Mainland China entities Income Tax Expense by Type | Tax Type | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Current Tax | (6,294) | (5,241) | | Deferred Tax | (794) | (2,616) | | Total | (7,088) | (7,857) | - The Group is not subject to any income tax in the Cayman Islands and the British Virgin Islands[52] - Companies in Mainland China generally pay enterprise income tax at a rate of 25%, with Northeast Agriculture and Animal Husbandry (Changchun) Co Ltd enjoying a preferential rate of 15% due to its high-tech enterprise status. DaChan Agriculture and Animal Husbandry (Heilongjiang) Co Ltd and DaChan Agriculture and Animal Husbandry (Yingkou) Co Ltd reverted to a 25% tax rate as their high-tech enterprise qualifications expired[53] Earnings Per Share Basic earnings per share for H1 2023 was RMB0.040, with no dilution effect due to the absence of potential dilutive shares - Basic earnings per share is calculated based on profit attributable to ordinary equity holders of the Company of RMB40,757 thousand and the weighted average number of ordinary shares outstanding of 1,016,189,000 shares[55] - The Group has no potential dilutive ordinary shares outstanding, thus there is no difference between diluted and basic earnings per share[32] Property, Plant and Equipment In H1 2023, the Group invested RMB263.53 million in property, plant and equipment, incurring a RMB1.38 million loss on disposals Property, Plant and Equipment Transactions | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Cost of Purchasing Property, Plant and Equipment | 263,525 | 73,466 | | Net Book Value of Property, Plant and Equipment Disposed | 2,258 | 5,643 | | Loss on Disposal | 1,383 | 476 | Trade Receivables As of June 30, 2023, total trade receivables were RMB269.05 million, with a standard credit period of 30-60 days Trade Receivables Aging Analysis | Aging | 2023 June 30 (RMB '000) | 2022 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Current | 257,423 | 228,312 | | Overdue 1 to 180 Days | 12,443 | 11,767 | | Overdue 181 to 365 Days | 1,304 | 2,841 | | Overdue Over 365 Days | 6,463 | 5,582 | | Total Overdue Amount | 20,210 | 20,190 | | Less: Provision for Doubtful Debts | (8,584) | (9,392) | | Total | 269,049 | 239,110 | - The Group generally allows its customers a credit period of 30-60 days[54] Other Receivables and Prepayments As of June 30, 2023, net other receivables and prepayments totaled RMB285.07 million, primarily comprising recoverable VAT and deposits Other Receivables and Prepayments Breakdown | Item | 2023 June 30 (RMB '000) | 2022 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Recoverable VAT | 253,479 | 269,948 | | Deposits and Prepayments | 132,953 | 140,830 | | Advances to Employees | 3,831 | 5,327 | | Others | 7,305 | 6,954 | | Total | 397,568 | 423,059 | | Less: Non-current Recoverable VAT | 112,497 | 112,497 | | Net Amount | 285,071 | 310,562 | Trade Payables As of June 30, 2023, total trade payables were RMB385.26 million, showing a decrease from year-end 2022 Trade Payables Aging Analysis | Aging | 2023 June 30 (RMB '000) | 2022 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Current | 189,924 | 275,325 | | Overdue Less Than 30 Days | 135,449 | 146,867 | | Overdue 31 to 60 Days | 36,187 | 28,525 | | Overdue 61 to 90 Days | 9,643 | 8,700 | | Overdue Over 90 Days | 14,061 | 12,608 | | Total Overdue Amount | 195,340 | 196,700 | | Total | 385,264 | 472,025 | Other Payables As of June 30, 2023, total other payables were RMB310.28 million, including sales rebates, employee benefits, and accrued expenses Other Payables Breakdown | Item | 2023 June 30 (RMB '000) | 2022 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Sales Rebates | 53,076 | 23,353 | | Salaries, Wages, Bonuses and Other Welfare Payables | 50,395 | 108,912 | | Accrued Expenses | 70,945 | 61,174 | | Performance Deposits | 78,629 | 53,110 | | Payables for Purchase of Property, Plant and Equipment | 7,536 | 14,535 | | Amounts Due to Related Parties | 43,500 | 43,500 | | Others | 6,200 | 23,984 | | Total | 310,281 | 328,568 | Dividends The Company will not pay an interim dividend for the six months ended June 30, 2023, consistent with the prior year - The Company will not pay an interim dividend for the six months ended June 30, 2023 (2022: nil)[36] Management Discussion and Analysis Macroeconomic Environment Global economic uncertainties and domestic pressures of weak demand and supply shocks continue to impact the operating environment - Since 2023, global systemic risks have intensified due to the impact of global economic policy uncertainties, energy crises, and inflation[38] - The Chinese economy continues to face the triple pressures of weak demand, supply shocks, and weakening expectations[38] - Domestic catering revenue grew by 21.4% year-on-year in the first half, but the year-on-year growth in June's catering revenue declined from 43.8% in April to 16.1%, indicating an unstable foundation for current demand recovery[38] Performance Review In H1 2023, the Group achieved 12.4% revenue growth and 20.6% profit growth, driven by the food business and strategic initiatives - In the first half of 2023, the Group's operating revenue was RMB3,142,785 thousand, a 12.4% increase year-on-year, and profit attributable to equity holders was RMB40,757 thousand, a 20.6% increase year-on-year[62] - The primary reason for the year-on-year profit growth is the Group's effective strategy of leveraging the food business as a leader to drive overall integrated development, with the food business achieving double-digit growth in both revenue and gross profit[62] - The Group's newly constructed food, slaughtering, and feed plants in Bengbu, Anhui Province, are progressing smoothly and are expected to commence operations sequentially in the third quarter, which will help consolidate and expand its market position in the Yangtze River Delta region[63] Proportion of Group's Total Operating Revenue and Gross Profit by Business Segment in H1 2023 | Business Segment | Proportion of Total Operating Revenue (%) | Proportion of Total Gross Profit (%) | | :--- | :--- | :--- | | Food Business | 35.8 | 66.4 | | Feed Business | 35.4 | 19.9 | | Meat Products Business | 28.8 | 13.7 | Processed Food Segment The processed food business saw revenue and gross profit grow by 11.9% and 14.0% respectively in H1 2023, driven by domestic sales and export optimization Processed Food Segment Performance | Metric | 2023 (RMB '000) | 2022 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue - Mainland China | 985,955 | 873,914 | 12.8 | | Operating Revenue - Export | 137,533 | 130,059 | 5.7 | | Total Operating Revenue | 1,123,488 | 1,003,973 | 11.9 | | Gross Profit - Mainland China | 199,861 | 177,042 | 12.9 | | Gross Profit - Export | 25,030 | 20,238 | 23.7 | | Total Gross Profit | 224,891 | 197,280 | 14.0 | | Gross Profit Margin - Mainland China | 20.3 | 20.3 | - | | Gross Profit Margin - Export | 18.2 | 15.6 | - | | Total Gross Profit Margin | 20.0 | 19.6 | - | - Export business benefited from continuous R&D innovation, product structure optimization, improved production efficiency, and RMB depreciation, with export gross profit increasing by 23.7% year-on-year[43] - The domestic food sales team increased resource allocation to direct clients, collaborated closely with strategic customers, and focused resources on promoting family-sized products in C-end retail channels, improving channel establishment and regional layout[66] Livestock Feed Segment The livestock feed business achieved 7.9% revenue growth and 3.8% gross profit growth in H1 2023, focusing on large-scale farms and product diversification Livestock Feed Segment Performance | Metric | 2023 (RMB '000) | 2022 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,114,113 | 1,032,902 | 7.9 | | Gross Profit | 67,595 | 65,124 | 3.8 | | Gross Profit Margin | 6.1 | 6.3 | - | - In the first half of 2023, domestic hog slaughter increased by 2.6% year-on-year, with overall market supply exceeding demand, leading to losses for small and medium-sized farms while large-scale farming enterprises expanded against the trend[67] - The feed business strengthened cooperation with large and medium-sized farms, secured market share through OEM models, and intensified R&D and market development for poultry and ruminant feed to diversify market risks[86] Meat Products Segment The meat products business reported 19.1% revenue growth in H1 2023, but gross profit was impacted by chicken prices lagging behind costs Meat Products Segment Performance | Metric | 2023 (RMB '000) | 2022 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 905,184 | 760,009 | 19.1 | | Gross Profit | 46,434 | 44,001 | 5.5 | | Gross Profit Margin | 5.1 | 5.8 | - | - In the first half of 2023, the import of white feather broiler grandparent stock resumed, and prices for chicks, broilers, and chicken meat, after rising at the beginning of the year, entered a downward trend from early April, falling back to year-start levels by the end of June[69] - The meat products business is accelerating its business model transformation, restructuring its supply chain, improving contract feed performance, reducing farming risks, and focusing on differentiated product development and key account sales to enhance the meat-to-feed price spread[89] Financial Review The Group maintained a stable liquidity position in H1 2023, with increased interest-bearing borrowings and capital expenditure Liquidity and Capital Structure | Metric | 2023 June 30 (RMB '000) | 2022 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Cash and Bank Balances | 529,677 | 532,274 | | Interest-bearing Borrowings | 489,025 | 377,240 | | Interest-bearing Borrowings to Equity Ratio (%) | 20.7 | 16.2 | | Current Ratio (times) | 2.01 | 2.02 | - The Group spent RMB263,525 thousand on purchasing property, plant and equipment in the first six months of 2023, primarily funded by long-term bank loans[72] - Interest expense was RMB7,103 thousand, a 65.2% increase from the same period in 2022, mainly due to rising USD borrowing rates[74] - The 3.61% depreciation of RMB against the USD had no significant impact on the Group's operations[73] Pledged Assets As of June 30, 2023, the Group had no assets pledged as collateral for bank credit - As of June 30, 2023, the Group had no assets pledged as collateral for bank credit[94] Capital Commitments The Group has capital commitments for contracted but unprovided amounts and authorized but uncontracted projects Capital Commitments | Type of Capital Commitment | Amount (RMB '000) | | :--- | :--- | | Contracted but not Provided for in the Financial Statements | 390,799 | | Authorized but not Contracted for | 59,591 | Employee Remuneration and Training The Group employs 7,896 individuals, providing competitive compensation and extensive training programs - As of June 30, 2023, the Group had 7,896 employees (December 31, 2022: 7,936 employees)[95] - The Group regularly reviews its remuneration and benefits policies based on industry standards, financial performance, and individual employee performance, providing fair and competitive compensation, along with additional benefits such as insurance, medical benefits, and provident funds[76] - The Group provides various training programs for management and other employees to continuously enhance their work skills and industry knowledge[95] Other Information Corporate Governance Code The Company complies with the Corporate Governance Code, with the combined Chairman and CEO role deemed beneficial for strategy and efficiency - The Company has complied with the Corporate Governance Code set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, although the roles of Chairman and Chief Executive Officer are combined in Mr. Wei Junxian[77][97] - The Board believes this structure does not impair the balance of power and authority between the Board and the Company's management, and it facilitates the execution of the Group's business strategies and enhances operational efficiency[97] Standard Code for Securities Transactions by Directors The Company has adopted and all directors complied with a code for securities transactions during H1 2023 - The Company has adopted a code no less exacting than the standard set out in Appendix 10 of the Listing Rules to govern directors' securities transactions[99] - Following specific enquiries by the Company to all Directors, all Directors confirmed their compliance with the Standard Code and the Company's code of conduct regarding directors' securities transactions for the six months ended June 30, 2023[99] Purchase, Redemption or Sale of the Company's Listed Securities Neither the Company nor its subsidiaries engaged in purchasing, redeeming, or selling listed securities in H1 2023 - During the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities[100] Audit Committee The Audit Committee, composed of independent non-executive directors, reviewed interim results and found no accounting discrepancies - The Audit Committee members include Mr. Ding Yushan (Chairman), Mr. Hsia Lii-Yan, Ms. Tsai Yu-Ling, and Mr. Kao Kung-Lien, all of whom are independent non-executive directors of the Company[80] - The Audit Committee has reviewed the Company's interim results and has no disagreement with the accounting treatments adopted by the Company[100] Board of Directors The Board comprises executive, non-executive, and independent non-executive directors, including the Chairman - The Company's executive directors are Mr. Wei Junxian (Chairman) and Mr. Han Jiayin; non-executive directors are Mr. Han Jiayu, Mr. Han Jiachen, Mr. Han Jiahuan, Mr. Zhao Tianxing, and Mr. Yu Anning; independent non-executive directors are Mr. Ding Yushan, Mr. Hsia Lii-Yan, Ms. Tsai Yu-Ling, and Mr. Kao Kung-Lien[81]