According to initial estimate of the financial department, the net profit attributable to the shareholders of Wellhope (hereinafter referred to as the Company) in the first half of 2020 will be around RMB 580 million-610 million, increasing by 61.56%-69.91% compared with the same period of prior year.
I. Reporting period
January 1, 2020-June 30, 2020
II. Operating result estimation
According to initial estimate of the financial department, the net profit attributable to the shareholders of the Company in the first half of 2020 will be around RMB 580 million-610 million, increasing by 61.56%-69.91% compared with the same period of prior year.
The estimated operating result has not been audited by certified public accountants.
III. Performance in the same period of prior year
Net profit attributable to the shareholders of Wellhope in the first half of 2019: RMB 359 million
EPS: RMB 0.41
IV. Driven factor for performance growth
During the reporting period, under the backdrop of African swine fever, COVID-19 outbreak, the global economic downturn, the Company actively resumed production, fully implemented its business strategy for 2020, feed and feed raw materials trade, broiler integration and hog raising businesses made progresses respectively, displaying stronger risk resistance capacity and profitability.
In regard of feed and feed raw material business: Wellhope fully displayed its brand and technology strengths, made great efforts for market development, constantly heightened online and offline services, in doing so, customer stickability and market share have been significantly improved, feed business showed explosive growth, the total sales volume increased by 42% compared with the same period prior year, of which, swine feed increased by 61%, poultry feed 39% and ruminant feed 25%. Meanwhile, through in-depth reform and efficiency enhancement, the period expense ratio has been greatly reduced. Moreover, the Company fully grasped the opportunities in raw material market, the profit of raw material trade business realized large growth.
In regard of hog raising business: African swine fever is still severe this year, the Company constantly strengthened bio-safety level in the farms, whilst rapidly boosted existing businesses and expanded new projects, the deliveries of hog in the first half of 2020 increased by over 30%(Wellhope's holding and associated companies) compared with the same period prior year. Benefited from higher hog price, hog raising business turned losses into gains, contributed a big part towards Wellhope’s total profit.
In regard of integrated broiler business: During the reporting period, the depressed price of delivery broiler pressured white feather broiler industry, which affected the overall profit of the Company's integrated broiler business. Under the adverse situation, such as consumption discouraged by COVID-19, the Company centered on lean management, explored raw meat and cooked food businesses, meanwhile, constantly increased the production scale of broiler rearing and slaughtering, the number of slaughtered broilers realized a year-on-year growth rate of 18%，whilst the number of reared broilers realized 35%(Wellhope's holding and associated companies).
V. Risk Warning
There are no major uncertainties that will affect the accuracy of this estimation.
VI. Other note
Above estimated figures are preliminary calculations, accurate financial data shall be based on Wellhope 2020 Semi-annual Report. Please beware of the investment risks.
Board of Directors of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd.
July 13, 2020