Professional Documents
Culture Documents
Analysts Briefing
30 October 2009
Financial Highlights
财务摘要
1
Financial Highlights for 2QFY10
财务摘要
Revenue
75.2%
Financial performance
Profit from Ops
80.8%
Net Profit
72.8%
Raw Milk
19.2%
Product sales Bull Semen
91.6%
Cow Embryos
100%
Herd Size
牛群大小
Herd Size As at 30 Sep As at 30 Sep Change As at 30 Jun
2009 2008 2009
2
Revenue
收入
RMB’m %
21.1
720 FY 09)
to
660 Y 06
600 R (F
540 CAG 647.7 2Q
dr o
p7
480 546.8 5.2
420 %
360 442.9 324.3
300
240 165.9 152.3
180 301.0
120 41.1
60 158.4 111.2
0
FY2006 FY2007 FY2008 FY2009 1HFY09 1HFY10
Breakdown of Revenue by
Agricultural Produce
根据农产品的收入细分
Raw milk
Pedigree bull semen
23.9%
21.9%
Pedigree dairy
cow embryos
11.3%
2QFY10 2QFY09
3
Production & Sales
生产与销售数量
2QFY10 2QFY09 Change
Raw milk (tonnes)
- Produced 11,241 12,456 -9.8%
- Sold 11,241 12,456 -9.8%
Pedigree bull semen (straws)
- Produced 1,493,279 1,533,229 -2.6%
- Sold 300,000 1,535,000 -80.5%
Pedigree dairy cow embryos (straws)
- Produced 7,268 9,249 -21.4%
- Sold - 7,450 -100%
• Production of raw milk decreased due to reduced herd size from 21,626 (as at 30 Sep 2008) to 20,079
(as at 30 Sep 2009)
• Lower demand of cow embryos and bull semen from farmers who were forced to reduce herd size
due to i) higher feed costs; ii) more stringent requirements from raw milk customers post melamine
incident; and iii) stiffer pricing competition from imported milk powder
• Sluggish demand for bull semen across the board in China
• No obsolescence problem for bull semen and cow embryos as
they can be stored for future use
Total Gains
总收益
RMB’m %
0.3
Y0 9) 2
–F
06
800 ( FY
GR 2Q d
700 CA rop 5
3.1 %
600
500
362.6
400 723.3
300 626.3 250.1
514.3 184.8
200 86.7
345.5
100 177.9 171.4
0
FY06 FY07 FY08 FY09 1HFY09 1HFY10
Note: Total Gains is the summation of fair value of agriculture produce on initial recognition &
Gains arising from changes in fair value of dairy live stock
4
Net Profit
净利润
RMB’m 8.8 %
FY 09)
06 –
540 R (FY
CAG
480
420 2Q
dr o
360 p 72.
300 8 %
240 480.6 209.8
180 378.5 382.5
108.3 94.9
120 272.6
60 29.5
101.5 65.4
0
FY06 FY07 FY08 FY09 1HFY09 1HFY10
Operating Profit
营运利润应
10
5
Other Performance Benchmarks
其他业绩指标
2QFY10 2QFY09
As at 30 Sep As at 31 Mar
2009 2009
Net asset value per share (RMB)2 3.09 2.96
1 Total Gains is the summation of “Fair value of agriculture produce on initial recognition” &
“Gains arising from changes in fair value of dairy livestock”
2 EPS and NAV based on issued share capital of 738,600,000 ordinary shares
11
Key Expenses
主要费用
RMB’m 2QFY10 2QFY09 Change
Raw materials and consumables used 17.4 23.5 -26.0%
Sub-contracting expenses 19.1 3.9 394.1%
Staff costs (including directors’ remuneration and retirement 5.0 4.1 23.4%
scheme contributions)
Depreciation and amortisation expenses 11.0 6.1 81.5%
Minimum lease payments under operating leases for land 2.6 4.7 -44.7%
and buildings
Other operating expenses 8.2 10.1 -19.1%
• Raw materials and consumables used decreased due to a i) decrease in herd size from 21,626 (as at 30
Sep 2008) to 20,079 (as at 30 Sep 2009), and ii) introduction of sub-contracting expenses in mid 2QFY09
• Sub-contracting expenses comprise of cost incurred in the subcontracted farms, including cost of feeds,
overheads and labour costs. Sub-contracting expenses showed a significant increase as these costs only
started to be substantially incurred in 4QFY09.
• Increase in staff cost is in line with the commencement of milk processing factory which is currently
managed by a skeletal force
• Increase in depreciation and amortization expenses due to new facilities such as new cow sheds and milk
processing facilities, which were largely completed only in 2H FY09.
• Decrease in other operating expenses due to tightening of costs
such as travelling and entertainment expenses.
12
6
Other Financial Highlights
其它财务摘要
** ROE as at 30 Sep 2009 is based on 6MFY10 net profits divided by total shareholder’s equity as at 30 Sep 2009
13
2QFY10 2QFY09
14
7
Going Forward
企业进展
Operating Landscape
业务环境
Raw milk • Demand for raw milk to remain stable, despite selling prices
falling slightly
• Stronger competitive edge due to melamine-free track record
Pedigree bull semen and • Intense price competition by local and overseas producers of
cow embryos bull semen and cow embryos will continue to keep prices of
China Milk’s bull semen down and the demand for the Group’s
cow embryos low
• More stringent government controls on the quality of raw milk
resulting from melamine incident in China lead to higher costs
of keeping dairy cattle by local farmers.
• Imported milk powder is now selling in China at more
competitive prices => milk processors may choose to process
milk products with the imported milk powder rather than
purchase raw milk from farmers.
• Along with higher feed costs, more farmers may be forced to
reduce or stop the rate of increase in their herd size, or even
exit the industry, reducing the demand for the Group’s products
Nevertheless, the Group remains steadfast in its belief that its quality bull semen and cow
embryos of Canadian breed will continue to play an important role in cattle genetics as well as
milk yield improvement in China, given the shortage of good quality cows.
16
8
Going Forward
企业进展
Herd size expansion
• Focus on herd size expansion
• Currently sourcing for suitable land in the Heilongjiang province to expand its farms and facilities as 1st
step, before acquiring additional dairy cows
• Remain focused on raising efficiency via continuous improvement of herd structure and expansion of
herd of Canadian and Australian dairy cows via internal breeding
Cost management
• Adopting an effective cost management strategy as the Group envisions lower revenue and smaller
margins ahead, in view of the challenging business environment
- Monitoring costs closely
- Sharpening its focus on costing and expenditure budgeting
- Pursuing stronger initiatives to tighten control on non-operating costs, such as travelling and
entertainment expenses
17
T
T AC CFO
CON hoi,
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Mr M
352
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Offic- 459-8
+86
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Mob -13936 0412
+86 2-986 8
915
293
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