Beijing Dabeinong Technology Group Co., Ltd. (hereinafter referred to as "Dabeinong" or "the Company") recently announced that the company conducted investor exchanges with a number of institutional investors on April 30. At the event, Dabeinong revealed that its operating income in 2023 will be 33.39 billion yuan, a year-on-year increase of 3.1%. The net profit loss attributable to the parent company totaled 2.174 billion yuan, mainly affected by the loss of pig business and the impairment loss of various assets and credit impairment loss.
Screenshot of Dabeinong's announcement
Dabeinong introduced the company's overall situation in 2023 to investors. In terms of revenue and profit, the operating income in 2023 will be 33.39 billion yuan, a year-on-year increase of 3.1%. Among them, the sales revenue of feed products was 24.02 billion yuan, a year-on-year increase of 7.76%, accounting for about 72% of the revenue, the sales revenue of pigs of the holding company was 5.702 billion yuan, a year-on-year increase of 4.31%, and the revenue of seed products was 1.405 billion yuan, a year-on-year increase of 48.84%.
The net profit loss attributable to the parent company totaled 2.174 billion yuan, mainly affected by the loss of pig business and the impairment loss of various assets and credit impairment loss. The company's feed business and seed business performance is good, the feed sector has a profit of more than 1 billion yuan, the pig sector has a loss of about 1.5 billion yuan, the seed industry sector has a net profit of about 160 million yuan, and the net profit attributable to the parent is about 60 million yuan, of which the net profit of rice and corn is nearly 300 million yuan, and the net profit attributable to the parent is nearly 200 million yuan. The seed industry has profits and losses affected by equity investment, such as:
(1) Yunnan Datian achieved its performance commitments for two consecutive years due to its good operating performance, and the profit and loss of fair value changes in contingent consideration of the business combination decreased by more than 80 million yuan.
(2) Menglong Seed Industry was transformed from an associate unit to a holding unit, and the investment income increased by 69.75 million yuan due to the remeasurement of the equity held at fair value before the step-by-step transaction obtained control.
(3) It is expected to increase investment in Longjing Seed Industry (announced), and the value of the original equity held is lower than the book value calculated according to the latest fair value, and an impairment of 29.17 million yuan is required.
If the fair value change and impairment impact of investment are excluded, the operating profit of the seed industry will increase.
In terms of assets and liabilities, as of the end of 2023, the total assets were 29.784 billion yuan, the asset-liability ratio was 66.29%, and the monetary funds were 4.641 billion yuan.
Dabeinong also introduced the situation of various business sectors to investors. In terms of the feed sector, in 2023, the export of feed will be 5.85 million tons, a year-on-year increase of 10%, and the total domestic and foreign sales will be about 7.7 million tons. The sales volume of pig feed was 4.66 million tons, a year-on-year increase of 14%, and the revenue was 18.7 billion yuan, a year-on-year increase of nearly 12%, and the sales volume of pig feed accounted for about 80%. Domestic sales exceeded 1.5 million tons, with a total of 6.2 million tons of domestic and foreign sales, and about 700,000 tons of self-used materials for the Northeast pig platform of the joint-stock company.
The sales volume of ruminant was 670,400 tons, a year-on-year increase of 5.5%, the revenue was 2.5 billion yuan, a year-on-year increase of more than 5%, and the sales volume of ruminant materials accounted for 11%.
The sales volume of aquatic products was 324,200 tons, a year-on-year decrease of 24.6%, and the revenue was nearly 2 billion yuan, a year-on-year decrease of about 19%. The strategic adjustment of aquatic feed is currently focusing on high-end special aquatic feed.
In the pig breeding sector, the total number of live pigs slaughtered in 2023 will be 6.05 million (including equity participation), a year-on-year increase of 36.5%, of which the proportion of controlling pigs will be about 60%. Revenue was 9.66 billion yuan (including equity participation). Nearly 5.3 million fattening pigs were slaughtered with holding and equity participation, of which 14% were self-farrowing and self-raising, and 86% were company + farmer models.
By the end of 2023, the company has a total inventory of 3.06 million heads (including equity participation), including 216,000 base sows and 85,000 gilts. The holding pig herd accounts for about 58%.
In terms of seed industry, in 2023, the company's seed products will achieve operating income of 1.405 billion yuan, a year-on-year increase of 48.84%, and the number of seeds sold will be 61.66 million kilograms, a year-on-year increase of 47.39%. Among them, the sales revenue of corn seeds was 925 million yuan, a year-on-year increase of 63.82%, with sales of 39.95 million kilograms, and the sales revenue of rice seeds was 400 million yuan, a year-on-year increase of 12.95%, with sales of 11.79 million kilograms.
Since 2020, the company's seed industry revenue has increased year after year, from 400 million yuan in 2020 to 1.4 billion yuan in 2023, with a compound annual growth rate of more than 30%. Among them, the revenue of corn seeds increased more year-on-year, on the one hand, the integration unit increased the sales revenue of corn, and on the other hand, the original unit abundance, Chuandan, and Beinong expanded their market share.
In terms of integrated units, Golden Green Dan will be consolidated in June 2023, Menglong Seed Industry will be consolidated in July 2023, and Jilin Hongze Seed Industry will be consolidated in December 2023. Taking Yunnan Datian as an example, in 2022, the revenue and profit after integration will achieve a doubling growth, with a revenue of 135 million yuan, a net profit of 12 million yuan, more than 100 employees, and a sales volume of nearly 6 million kilograms in 2021. In 2023, Yunnan Datian will achieve revenue of 460 million yuan, a year-on-year increase of more than 90%, a net profit of more than 100 million yuan, a year-on-year increase of 100%, 247 employees, a year-on-year increase of 131%, a sales area from Yunnan-Guichuan to Wuling Mountain (Hubei, Hunan, Guizhou, Chongqing), Guangxi and other places, and a sales variety from more than 20 to more than 80, of which the million-kilogram sales variety has expanded from 1 to 5. Yunnan Datian is currently the largest corn seed production enterprise in Yunnan Province, and will be selected as the "National Crop Seed Industry Formation Enterprise" in 2022, and is the only enterprise in the five provinces and regions in southwest China that has entered the formation of the main force to make up for shortcomings, and in 2023, it will be selected as the "Key Laboratory of Corn Breeding in Southwest Mountains of the Ministry of Agriculture and Rural Affairs". In addition, the company's Chuandan 99 is the corn variety with the largest promotion area in southwest China.
The only corn variety in southwest China that has been selected by the Ministry of Agriculture for three consecutive years, and the annual promotion area of the millet variety "Jinmiao K1" operated by Menglong Seed Industry exceeds more than 2 million mu, accounting for about 15% of the millet planting area in the mainland. We hope to work together with these integrated seed enterprises for common development.
In terms of biological breeding progress, up to now, a total of 81 transgenic varieties in two batches have passed the national examination, and a total of 64 transgenic corn varieties have been approved, of which 37 varieties use Dabeinong traits, accounting for 58%, and a total of 17 transgenic soybean varieties, and Dabeinong has self-bred 6 high-oil and high-yield soybeans, accounting for 35%. There are a total of 9 approved varieties owned by Dabeinong.
Regarding the situation in the first quarter of 2024, Dabeinong revealed that in the first quarter of 2024, the operating income was 6.707 billion yuan, a year-on-year decrease of 13.8%. Among them, the sales revenue of feed products is about 4.7 billion yuan, the sales revenue of pigs of the holding company is about 1.2 billion yuan, and the income of seed products is about 200 million yuan. The net profit loss attributable to the parent company was 209 million yuan, a year-on-year decrease from the previous month, of which: the feed sector made a profit of about 160 million yuan, the pig sector lost about 130 million yuan, and the seed sector lost about 24 million yuan. The feed sales volume was 1.28 million tons, the seed sales volume was 11.54 million kilograms, and the total number of pigs slaughtered was 1.45 million (including equity participation).
As of the end of the first quarter, the total number of live pigs (including equity participation) was about 3 million, including 230,000 basic sows and about 90,000 gilts. In the first quarter of 2024, the number of pigs slaughtered (including shareholding) was basically flat year-on-year, the average sales price of fattening pigs in the first quarter of 2024 was 13.95 yuan/kg, and the overall sales price in the first quarter of 2023 was 14.49 yuan/kg, the average sales price decreased year-on-year, and the pig breeding business in the first quarter decreased by more than 50% year-on-year, and the cost decreased significantly, and the overall complete cost of pig breeding and fattening in the first quarter was about 15.1 yuan/kg, and the cost has a downward trend in the near future.
Affected by uncertain factors such as the large difference in the performance of the company's various breeding platforms and pig diseases, the company's goal of the complete cost of pig breeding and fattening is expected to reach the level of 14.5 yuan/kg by the end of 2024, and the annual holding + equity participation in 2024 is expected to be close to the level in 2023. The pig breeding business is steadily optimized and developed, not seeking scale, but seeking efficiency, and the core is to practice internal skills, reduce costs and increase efficiency.
On the whole, the company's feed business has developed strongly, the seed industry has developed rapidly, and pig breeding has made significant progress, and it is currently focusing on the seed industry and feed business.
The following are the main contents of the investor relations activities:
1. What is the current progress of the private placement project?
Answer: In August 2023, the company obtained the approval of the private placement project, and supplemented the relevant materials of the 2023 annual report and the first quarter report of 2024 as required.
2. The complete cost of pig breeding and fattening in the first quarter of the company is about 15.1 yuan/kg, can you introduce the overall situation of the pig breeding business?
Answer: The company's total pig slaughter volume (including equity participation) in the first quarter of 2024 is basically the same as last year, and the complete cost is about 15.1 yuan/kg, which is a year-on-year decrease. The cost of pig seedlings decreased by about 0.45 yuan/kg, the cost of feed decreased by about 1.5 yuan/kg, of which the decline in feed prices and formula optimization contributed about 1 yuan/kg, the ratio of feed to meat improved by about 0.15, contributing about 0.5 yuan/kg, and the cost and expense of veterinary drugs and vaccines also decreased. The company's main measures to reduce costs:
(1) Shut down the backward leased farms and self-built farms, and at the same time try to improve the capacity utilization rate in the pig farms;
(2) Optimize the cost of the period, the overall period cost is basically the same as last year, but the actual cost of the pig farm is declining, and some idle or closed pig farms have depreciation, interest, etc., which has a certain increase in the cost of the period;
(3) Breed optimization and adjustment, such as the Northeast platform in the past for biological control to do some binary backcrossing, but the actual effect is not good, binary backcross accounted for about 80%, through optimization and adjustment, restored to ternary hybridization, the recent ternary proportion of about 70%, is conducive to the improvement of feed conversion efficiency and the improvement of pig herd health;
(4) The level of biosecurity prevention and control has been improved, and the overall prevention and control effect has been very good since last winter, with less losses, especially the loss of sows has decreased a lot compared with previous years;
(5) Optimize production costs, the company advocates cost reduction and efficiency increase, stocking-based, freight and labor costs have decreased. In the future, with the increase in the proportion of ternary slaughter, the application of digital systems, the revitalization and disposal of idle assets, and the improvement of benchmarking on various platforms, there is still a lot of room for improvement in cost.
3. What is the company's outlook for breeding costs and slaughter scale in 2024?
Answer: the company's strategy in breeding is to optimize the development of stability, on the one hand, some of the existing production capacity has been put into production, one of the next key tasks is to optimize the existing idle capacity through regional integration, effective use of idle capacity; on the other hand, through regional adjustment, the company's current level of biosecurity prevention and control of sow farms is relatively high, in order to improve the utilization rate of existing sow farms, the sow herd may increase slightly in the next few months, but on the whole, the level of pig slaughter in 2024 will be basically the same as last year, at about 6 million(including equity participation).
4. Will the company's current positioning of the feed industry service-oriented platform affect the company's previous sales target of 10 million tons?
Answer: At present, the company's positioning for the feed industry is to build an intelligent manufacturing platform internally to strengthen its own procurement capabilities, technical capabilities and production capabilities, and to build a pig service platform externally to strengthen the company's service capabilities, and to transform from a feed sales concept to a professional service concept. The new positioning is conducive to boosting feed sales growth, and the previous sales target of 10 million tons has not changed.
5. What are the latest developments in the company's feed business?
Answer: In recent years, the pig industry has undergone great changes, the pig feed industry has also been affected, the traditional sales method is limited, the mainland pig service level still has a lot of room for development and value, the company has carried out the transformation of the business model of the pig business, to create a feed intelligent manufacturing platform, pig service platform. Overall, the initial results have been achieved through a year of transformation, but there is still a gap between us and our own expected goals, and there is still a lot of room for improvement.
Feed business will be large-scale, professional development in the future, feed for the company still has development opportunities and space, the company's feed sales staff is decreasing, service personnel will increase, the establishment of an independent pig service platform, independent accounting, self-financing.
6. What is the positioning of the company's ruminant material and aquatic material?
Answer: At this stage, the ruminant industry is in a low-level operation period, the company has maintained steady development, giving full play to the advantages of professional technology and market services, and the sales volume and revenue can still achieve a steady increase when the industry is in a downward trend. Aquatic materials focus on high-end special water materials, optimize general water materials, so the sales volume has declined.
7. When is the GMO-related trait charge expected to be reflected in the financial statements this year?
A: Trait licensing fees for the 2023-2024 crop year are expected to be collected in the third quarter and the financial statements are expected to be reflected in the third quarter.
8. How to plan the production of genetically modified varieties in the first quarter of 2024?
Answer: In 2024, the genetically modified corn seed production work is being carried out in an orderly manner, and the enterprise will formulate the seed production plan by itself according to the market demand of the variety in the designated seed production area, and the seed production area in 2024 is expected to increase significantly compared with 2023, mainly due to the expected increase in the market size of the 2024-2025 crop year and the further increase in the number of genetically modified varieties that have been approved. At present, there are a total of 64 corn varieties in two batches, and the performance of genetically modified corn varieties in the field in 2023 will be recognized by farmers.
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Reviewer: Wang Bei
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