Core Viewpoint - Zhejiang Huatong Meat Products Co., Ltd. plans to engage in hedging activities to mitigate potential risks from raw material price fluctuations [1][2]. Group 1: Business Details - The company is involved in feed processing, livestock farming, slaughtering, and deep processing of meat products [2]. - The purpose of the hedging activities is to utilize futures and options to effectively manage adverse impacts from raw material price volatility, thereby enhancing operational efficiency and ensuring sustainable business operations [2]. - The hedging will focus on products and raw materials related to its operations, including soybeans, soybean meal, palm oil, corn, starch, and various livestock products [2]. - The total amount for hedging activities will not exceed RMB 20 million, using the company's own funds without involving raised funds or bank credit [2]. Group 2: Approval Process - The proposal for hedging activities was approved during the 22nd meeting of the fifth board of directors on August 25, 2025, and does not require shareholder approval [3]. Group 3: Risk Management Measures - The company has established several risk control measures, including aligning hedging activities with operational needs, strict funding controls, and monitoring futures trading to avoid liquidity risks [4]. - A dedicated team will monitor contracts, set stop-loss targets, and manage customer credit to mitigate risks [4]. - The appointed sponsor, China Merchants Securities Co., Ltd., has confirmed that the company has followed necessary legal procedures and has established relevant internal controls and risk management systems [4].

Group 1: Company Performance Overview - In 2024, Yike Food achieved a sales revenue of 20.8 billion CNY, remaining stable compared to 2023, while net profit reached 100 million CNY, a year-on-year increase of approximately 160% [2] - In Q1 2025, revenue was around 4.1 billion CNY, with a loss of 71 million CNY, primarily due to low prices of duck products and ducklings [2][3] Group 2: Future Goals and Strategies - The company aims to achieve a closed-loop supply chain in the meat duck sector within 2-3 years, maintaining its leading position in the industry [3] - In the meat chicken sector, the goal is to enter the top tier of the industry in terms of slaughter volume, focusing on enhancing breeding capabilities [3] - The new factory in Pizhou is expected to increase production capacity and expand into high-growth channels like Chinese fast-food chains [3] Group 3: Profit Trends and Market Conditions - In Q1 2025, the meat duck segment faced losses in both slaughter and duckling stages, while the meat chicken segment showed slight profitability in slaughter but losses in chick production [3] - Anticipated improvements in Q2 due to the exit of small-scale producers and a recovery in consumer demand, with significant price recovery expected in Q3 [3] - The duck by-products market is currently challenged by consumer downgrade and competition, leading to lower prices; the company plans to enhance product quality and differentiate its brand [3][4] Group 4: Capital Expenditure and R&D Focus - The company’s capital expenditure will primarily focus on technological upgrades, particularly in automation for chicken slaughter efficiency [4] - R&D investments will increase to enhance food product development and explore new breeding models to improve efficiency [4] - The company is also looking to incubate or invest in market operation companies to enhance e-commerce and chain channel collaborations [4] Group 5: Industry Outlook - The white feather chicken industry is experiencing overcapacity, with a continued state of supply exceeding demand, leading to low profitability [4] - Future profitability will depend on the quality of breeding stock and the optimization of breeding indicators such as survival rates and feed conversion ratios [4]