2023-04-27-港交所-中国圣牧_年度报告2022_239页_5mb

Annual Report Summary 2022

Core Content

China Shengmu Organic Milk Limited is an integrated "Forage Grass Planting, Cows Breeding" desert eco-organic circular raw milk enterprise, operating across the entire dairy industry value chain. The company is dedicated to providing the highest quality desert organic milk globally and has established a comprehensive system of organic production and sustainable practices.

Main Points

• Company Overview:

  • The Group has 33 farms with 136,344 cows, including 92,000 organic cows.
  • Daily production capacity of fresh milk is approximately 1,777 tonnes, with 1,295 tonnes of organic milk produced daily.
  • The Group has 20 certified organic farms and 3 DHA milk farms.

• Strategic Achievements:

  • The Group's unique organic eco-sand treatment system was recognized by the United Nations Global Compact as the best integrated practice for "Sustainable Production and Consumption".
  • China Shengmu is the first company in Mainland China to obtain dual organic certification (domestic and EU).
  • The Group won awards for digital transformation and ESG practices, including the "Industry Chain Emerging Enterprise of the Year Award" and the "Innovation in Climate Action Award".

• Financial Performance:

  • Total revenue for 2022 was RMB3,176.3 million, representing a year-on-year increase of 6.4%.
  • Net profit was RMB450.1 million, maintaining a high net profit margin.
  • Organic raw milk sales accounted for 72.0% of total raw milk sales, up by 4.5 percentage points from the previous year.
  • Total raw milk sales reached 635,451 tonnes, an increase of 8.7% year-on-year.

• Industry Trends:

  • The dairy industry faced challenges due to falling milk prices and rising feed costs, with the national average raw milk price decreasing by 4.3%.
  • Feed costs, particularly corn and soybean meal, increased significantly, with the latter rising by 37.4%.
  • Despite these challenges, the Group managed to improve its milk yield per cow and maintain profitability.

• Operational Highlights:

  • The Group continued to enhance internal management and digital transformation, implementing a unified digital intelligence platform using SAP-ERP.
  • The Group focused on lean operations and expanded its organic production capacity by converting one ordinary farm into an organic one.
  • The Group actively promoted the development of new product categories, including organic A2 milk.

Key Information

• Strategic Committees:

  • Audit Committee: Mr. WANG Liyan (Chairman), Mr. ZHANG Ping, Mr. WU Liang.
  • Remuneration Committee: Mr. SUN Yansheng (Chairman), Mr. ZHANG Ping, Mr. WU Liang.
  • Nomination Committee: Mr. LU Minfang (Chairman), Mr. WANG Liyan, Mr. WU Liang.
  • Strategic and Sustainability Committee: Mr. LU Minfang (Chairman), Mr. ZHANG Jiawang, Mr. ZHAO Jiejun, Mr. SUN Qian.

• Corporate Governance:

  • The Group is incorporated in the Cayman Islands and has its principal place of business in Hong Kong and Inner Mongolia, China.
  • The company's shares are listed on the Hong Kong Stock Exchange Main Board under the stock code 1432.
  • The Group's registered office is at P.O.Box 309, Ugland House, Grand Cayman.
  • The main share registrar and transfer office is Maples Fund Services (Cayman) Limited.

• Key Partners and Services:

  • Principal bankers include Bank of China Limited, Bank of Communications Co., Ltd., and others.
  • Legal advisors: Linklaters for Hong Kong law and Maples and Calder for Cayman Islands law.
  • Company secretary: Mr. LI Kwok Fat (CPA, ACG, HKACG).
  • Authorised representatives: Mr. ZHANG Jiawang and Mr. LI Kwok Fat.

Conclusion

China Shengmu has demonstrated resilience and innovation in the face of global and domestic economic challenges in 2022. By focusing on organic production, digital transformation, and ESG initiatives, the company has not only strengthened its market position but also contributed significantly to the sustainable development of the dairy industry in China. The Group remains committed to its mission of providing premium organic milk and is well-positioned for continued growth and development in 2023.