Operations and Production - The company operates 34 farms with a total stock of 148,000 cows, ensuring a secure milk source[3] - The annualized milk yield per milkable cow is 5.77 tonnes, reflecting the efficiency of the breeding practices[11] - Raw milk sales increased from 10.9 million tonnes in H1 2023 to 12.1 million tonnes in H1 2024, representing a growth of 10.3%[11] - The herd structure shows a significant increase in the number of milkable cows, contributing to overall production capacity[10] - The Group operated 34 farms with a total of 148,101 cows in stock as of June 30, 2024, with a 20.7% increase in fattening cows compared to the end of the previous year[24] - The Group imported over 3,600 high-quality young Holstein cows from Australia, enhancing the quality of the milkable cow herd[24] - The average annualized yield of milkable cows reached 12.07 tonnes, a year-on-year increase of 1.13 tonnes, marking a record high for the Group[27] - Raw milk sales in the first half of 2024 amounted to 0.351 million tonnes, representing a year-on-year increase of 3.2%[28] Financial Performance - The Group's raw milk sales revenue for the six months ended June 30, 2024, was RMB1,490.7 million, a decrease of 4.7% year-on-year from RMB1,565.0 million in 2023[39] - The sales volume of raw milk increased by 3.2% year-on-year to 350,848 tonnes, compared to 340,086 tonnes in 2023[39] - The average selling price of raw milk decreased by 7.7% year-on-year to RMB4,249 per tonne, down from RMB4,602 per tonne in 2023 due to supply-demand imbalances[39] - The Group's gross profit margin for the first half of 2024 was 26.5%, nearly unchanged from 26.7% in the same period of 2023[31] - The loss from changes in fair value less costs to sell of biological assets increased to RMB 451.0 million, up from RMB 286.1 million in 2023, primarily due to a significant increase in the number of inefficient cows retired and a decline in beef market prices[46] - Other income and gains rose by 89.0% to RMB 49.9 million, compared to RMB 26.4 million in 2023, mainly driven by increased government subsidies[49] - The Group's raw milk sales revenue for the period was RMB 1,490.7 million, a year-on-year decrease of 4.7% compared to RMB 1,565.0 million in 2023, despite a sales volume increase of 3.2% to 351,000 tons[40] - The cost of sales for raw milk decreased by 4.4% to RMB 1,096.2 million, down from RMB 1,146.7 million in 2023, benefiting from improved operational efficiency and reduced feed costs[41] Debt and Financing - The proportion of long-term loans increased to 65.2% in H1 2024, up from 51.4% in 2022, indicating a shift towards more stable financing[14] - Finance costs decreased from 3.65% in 2022 to 2.43% in H1 2024, showing improved cost management[14] - The Group secured China's first naturally beneficial commercial ESG-linked loan amounting to RMB100 million for a term of 2 years at an interest rate of 2.53% per annum, supporting green projects[35] - The proportion of medium- and long-term loans increased to 65.1%, indicating an optimization of the debt structure[53] - The Group maintained a credit facility of RMB10 billion, with available and unutilized credit facilities amounting to approximately RMB9,028.1 million[60] - The Group's interest-bearing bank and other borrowings increased to RMB2,486.6 million as of June 30, 2024, up from RMB2,131.2 million at the end of 2023, representing a growth of 16.7%[60] Market and Economic Context - In the first half of 2024, China's GDP reached RMB 61,683.6 billion, representing a year-on-year growth of 5.0%[18] - The total retail sales of consumer goods in China reached RMB 23,596.9 billion, with a year-on-year growth of 3.7%[18] - National milk production in the first half of 2024 was 18.56 million tonnes, representing a year-on-year increase of 620,000 tonnes or 3.4%[21] - The average price of raw fresh milk in June 2024 was RMB 3.3/kg, a decrease of 13.7% compared to the same period last year[21] - The total amount of dairy products imported into China in the first half of 2024 was 1,308,000 tonnes, representing a year-on-year decrease of 15.6%[19] Sustainability and Corporate Governance - The company's original organic ecological desert management system was recognized by the United Nations as a best practice for sustainable production[3] - Shengmu is the first raw milk brand in Mainland China to obtain dual certifications of organic standards from both domestic and EU authorities[3] - The Group joined the World Business Council for Sustainable Development (WBCSD), marking a significant step in its commitment to global sustainable development[35] - The Group's organic products won the Gold Award at the 17th Asia International Organic Products Expo, highlighting its commitment to quality[31] - The Group is committed to integrating into global competition and contributing to societal development through its operations[15] - The Group's operations complied with all material national and local environmental protection laws in the PRC during the reporting period[76] Human Resources and Management - The Group's employee count decreased to 2,187 as of June 30, 2024, down from 2,701 employees at the end of 2023, while improving efficiency metrics[36] - The Share Award Scheme resulted in the vesting of approximately 108,942,111 award shares, with an additional 99,954,000 shares vesting due to performance targets being met[37] - The Board believes the Company has complied with the Corporate Governance Code during the reporting period[88] - The Board of Directors consists of nine members, including one executive Director and five non-executive Directors[89] - The Remuneration Committee determines policies related to human resources management and reviews the Company's remuneration policies[91] Future Outlook and Strategy - The Group aims to double the sales volume of organic raw milk by 2025 compared to 2020 levels, following national and local policy guidelines[77] - The Group will focus on cost control, efficiency improvement, herd optimization, and digital innovation to enhance operational capabilities in 2024[78] - The Group plans to continue developing a variety of functional raw milk to enrich its product combination and enhance profitability[23] - The newly built smart farm in the Ulan Buh Desert Base has commenced operations, housing approximately 3,800 high-quality young Holstein cows imported from Australia, with the first batch of raw milk expected by the end of this year[33] - The Group will enhance its digital innovation capabilities and build a highly efficient supply chain for sustainable development[78]
中国圣牧(01432) - 2024 - 中期财报