Project Scope

Project Scope
• To have an overall understanding of Climate Control Market of Poultry Segement in China
• To better understand the key competitors, SIs, End customers
• To find market opportunity and generate relatedt strategy for future product development

Module 1 Module 2 Module 3

China Climate Control Products/Solution Market 5 Key competitors and SIs analysis Key end customer group analysis
Overview
• Market size, forecasts and trend •Sales performance •Characters of different kinds of key end customers(Multi-
• Market split by regions(North-west, North-east, Central, South-east •Business model dimension analysis by region, poultry category and customer
and South-west) •Sales: channel, strategy, sales team size)
• Market split by annual installed and retrofit •Customer segmentation and position (by •Value chain and purchasing decision flow by different kinds
• Market split by cage farming and free range farming region and poultry category) of end customers
• Market split by poultry category(layer, white-feathered and yellow- •Purchasing flow and brand decision process •Willingness to purchase climate control products separately
feathered) of key SI •Key end customer list
• Market split by large to small scale farms •Key SI study should also include brand
• For climate control products market split , the key products should distribution by control products(fan,
include fan, controller, cooling pad, and inlets controller, cooling pad, and inlet)
• IOT market overview

1
Region and Product Definition
n In terms of climate control products, in this report includes fans, product type includes fans, cooling pad, inlets, and controllers.

n In terms of geography, M2 divided China into five region in this report.

Region Province

Northeast Heilongjiang, Jilin, Liaoning

Shanxi, Henan, Hebei, Shandong, Beijing, Tianjin, Inner

North
Mongolia

East Jiangsu, Anhui, Zhejiang, Hunan, Hubei, Shanghai

South Jiangxi, Guangdong, Guangxi, Hainan, Fujian

Xinjiang, Gansu, Ningxia, Shaanxi, Tibet, Qinghai, Sichuan,

West
Chongqing, Guizhou, Yunnan

2
Market Definition

n In terms of poultry category, this report covers grandparent breeders, commercial layers, commercial white-feathered broilers, and commercial yellow-feathered
broilers.

n In terms of statistical accounting, two definition need to be made.

Ø The market demand for climate control products calculates on basis of scale farming.

Standard of Scale Farming

Layer Farm Over 50K heads of annual inventory per farm
Broiler Farm Over 500K heads of annual production per farm

Source: The Ministry of Agriculture

Ø The market demand for climate control products divided into Large Scale, Middle Scale, and Small Scale according to farm size.

Standard of Classification
Large Scale Over 500K heads of annual inventory per farm
Layer Farm Middle Scale 100K to 500K heads of annual inventory per farm
Small Scale 50K to 100K heads of annual inventory per farm
Large Scale Over 1 million heads of annual production per farm
Broiler Farm Middle Scale 500K-1 million heads of annual production per farm
Small Scale 100K-500K heads of annual production per farm

Source: The Ministry of Agriculture

3
Table of Content

Part I Project Scope & Definition

Part II Executive Summary

Part III Poultry Market Overview

Part IV Climate Control Products Market

Part V End-User Study

Part VI SI & Competitor Study

Executive Summary
n From 2014-2017, China’s market for layers and Climate Control Product Market Overview
broilers showed different developing trend.
n For layers, at present, China has become the n Demand for climate control products comes from new built projects, retrofit projects, and annual
largest egg consumption and production market. The equipment demand. New built projects are major drives for the demand of climate control
demand for egg consumption continues growing. products in China, accounting about 49.2% of the total demand, replacement and retrofit projects
Major producers shows confidence and optimism accounting for 30.1% and 20.7% respectively.
towards the market, increasing their raising inventory. n For new built projects, the majority of product demand comes from layer farms, accounting 49.5% of
M2 estimates, from 2017-2020, the inventory of the total demand.
broilers is expected to grow at 2.5%(CAGR). n For retrofit project, the majority of product demand comes from broiler farms. Currently, broiler
n For broilers, under the influence of international projects are in transition from small to large scale, free range to caged farming.
Avian Influenza, the import of white-feathered n M2 estimates, the demand for climate control products would grow at 6.3% (CAGR,2017-2020).
broilers keeps decreasing, While, the market of
yellow-feathered broilers stated in a situation of
oversupply since the consumption demand for yellow Customer Analysis
birds had been decreasing from 2014-2017. The
market had been decreasing at 1.3% (CAGR 2014- n Currently, customers mainly rely on the
2017). M2 estimates, the market would reach its experience of SI in terms of project design and
bottom in 2018. The production of broilers is Executive Summary equipment selection.
expected to decrease at 0.6% (CAGR 2017-2020).
n In terms of new built projects, with enlarging
Poultry Market Overview
farm scale, the number of EPC projects is
increasing,
n In terms of Solution Integrators(SI) and Climate Control Equipment Manufactures, the market is
diversified in terms of brand distribution. n In terms of retrofit and replacement projects,
n For Layer Projects, top 5 SI includes Huanan, Guangxing, Gig Dutchman, Facco and Hytem. Top 5 customers willingness of purchasing climate
SI accounts 18.5% of the total market. control products independently is high than it in
n For Broiler Projects, top 5 SI includes GSI, Big Hersman, Guangxing, Huanan and Nanmu. Top 5 new built projects.
SI accounts 19.5% of the total market.
n For Climate Control Products, domestic brands dominate the market for fans, cooling pad and inlets.
In terms of foreign brands, Multifan and Pericoli are main competitors of Munters for fans. Skov and
Big Dutchman are Munters’ main competitor for controllers.
5
SI and Competitors Analysis
Table of Content

Part I Project Scope & Definition

Part II Executive Summary

Part III Poultry Market Overview

Part IV Climate Control Products Market

Part V End-User Study

Part VI SI & Competitor Study

Overall Market Overview – Grandparent Inventory
Layer: Producers being optimistic about the egg market, the inventory of grandparent layers continuing its
increase Broiler: After reaching its bottom in 2017, the inventory of grandparent broiler would rebound slightly
from 2018
n Poultry inventory in China had experienced a significant drop during the
Inventory of Grandparent Generation (2014-2020E) past few years.
n For layers, China is the largest egg producer of the world, and over the
Unit: Thousand Sets
CAGR past two decade, China had establish its capacity of breeding system.
3,093 With growing urban population and higher demand for protein
2014-2017 2017-2020
2,858
consumption, layer breeding companies holds optimistic attitudes
2,701 2,748 2,770 towards market development.
630 2,617 2,645
597
0.6% 1.0%
n For white-feathered broilers, the majority of Chinese white-feathered
647 653 660
601 641 broiler breeding stock is imported from abroad and most major suppliers
have been cut off as a result of AI detections in their home country. In
1,074 January 2015, the United States, which supplied 90 percent of China’s
951
814 818 825 white bird grandparent stock in 2014, was banned from exporting
844 794 -9.6% 1.3%
breeding stock to China (and most all other poultry and poultry
products).Currently, the only large producers which are able to import
live breeding stock into China are New Zealand and Spain. In 2017,
China opened up its import policy, adding new providers for white-
1,388 1,310 1,277 1,285 feathered broilers to meet the needs of China’s poultry industry. M2
1,173 1,210 1,240 2,0%
-4.5%
estimates, inventory of white-feathered broiler would increase from
2018-2020.
n As local species, yellow-feathered broiler has a lower feed conversion
2014 2015 2016 2017 2018E 2019E 2020E
rate compared with white-feathered broilers. The industry showed a
Layer White-feathered Broiler Yellow-feathered Broiler status of oversupply since 2014, and has been decreasing its
grandparent stock since then. In 2017, the inventory of grandparent
Data Source: The Ministry of Agriculture yellow-feathered was 794.2 thousand sets, lower than the balance point.
At the beginning of 2018, the price of yellow-feathered broiler has been
Notes: A set of breeder consists of one breeder cock and multiple breeder hens. The number of sets increasing. M2 estimates the number of grandparent inventory would
represents the total number of breeder hens. increase from 2018-2020.

7
Overall Market Overview – Commercial Production
Layers: With sufficient grandparent inventory and market optimism, production is expected to increase at 2.5%
(CAGR 2017-2020). Broiler: Production of broilers is expected to decrease from 2018-2020, as the grandparent
inventory showed continues decrease from 2014-2016
Annual Average Inventory of Layers (2014-2020E) Annual Production of Broilers (2014-2020E)
Unit： Million heads Unit： Million heads

+2.5% -1.3%
+1.0% -0.6%

1,264 1,290 1,300 8,209 8,015 8,231

1,223 1,207 1,215 7,890 7,750
1,170 7,560 7,560

4,559 4,285 4,331 4,200 4,070 3,950 4,050

3,650 3,730 3,900 3,690 3,490 3,610 3,700

2014 2015 2016 2017 2018E 2019E 2020E 2014 2015 2016 2017 2018E 2019E 2020E

Layers White-feathered Broiler Yellow-feathered Broiler

Data Source: The Ministry of Agriculture Data Source: The Ministry of Agriculture

n In irrespective of molting, the grandparent inventory would influence its commercial production 56 weeks after its breeding.
n Layers: The inventory of Layers in 2017 was 1,207 million heads, showing a decease after three years of continuous growing.
n Broilers: The production of both white-feathered broilers and yellow-feathered broilers are hugely influenced by Avian Influenza and showing decrease from
2014-2017. As the consumption demand demonstrates a decrease signal, The production would continue its decrease from 2017-2020.

8
Overall Market Overview – Scale Farming
China is on the transition from backyard farming to scale farming, the percentage of scale farming would increase
rapidly over the next few years

Development of Scale Farming ( 2014-2020E)

Layer White－feathered Broiler Yellow-feathered Broiler

n China’s on its transition from back-yard farming to scale farming. Currently,
50.0% the level of scale farming stays low. With stricter environmental control and
and the level of scale farming in China is expected to grow develop rapidly
45.0% 43.5%
over the next few years.
40.9%
40.0%
36.6%
35.0% 32.6% n For layers, scale farming of layers is at its beginning stage. In 2017, the
28.6% 29.5% percentage of scale farming is 20.2%, the number is expected to grow to
27.1% 29.5% in 2020.
30.0% 26.1% 26.3%
25.0% 21.3% 24.1%
25.4% 26.0% n White-feathered broiler has the highest scale farming rate among three types
20.0% 24.2%
20.9% 21.1% of poultry farming. In 2017, about 21.3% of white-feathered broilers are
20.2%
15.0% 18.2% raised in scaled farms, the percentage is expected to raise to 43.5% in 2020.

10.0% 13.0% 13.1%

10.4% n As local species, yellow-feathered broiler has lower scale farming rate in
5.0% China. In 2017, about 10.4% of yellow-feathered broilers are raised in broiler
farms. With the transition from free range to cage breeding, the number is
0.0%
2014 2015 2016 2017 2018E 2019E 2020E expected to grow to 26% in 2020.

Data Source: The Ministry of Agriculture

9
Overall Market Overview – Production of Scale Farming
With China’s rapid development of scale farming, the inventory of scale farm raised layers is expected to grow at
9.5% from 2017-2020, while the production of broilers are expected to grow at 10.1% from 2017 to 2020

Layers : Annual Average Scale Faming Inventory (2014-2020E) Broilers : Annual Scale Farming Production (2014-2020E)
Unit： Million heads Unit： Million heads

+9.5%
383 +10.1%
350
+7.2% 320
291 962
266 +14.8% 918
255 844
236
672
510
484
379
1,617 1,762
1,369 1,489
1,119 1,237
971

2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020
Layer White-feathered Broiler Yellow-feathered Broiler

n In 2017, about 291 million heads of layers are raised in scaled farms. The number is expected to increase to 383 million heads in 2020, showing a growth rate of
9.5% (CAGR 2017-2020)
n For Broilers, the number of scale farmed broilers are expected to grow at 10.1% ( CAGR 2014-2017).
n The increase of inventory and production is mainly influenced by two factors.
First, the growing capacity of established farms. With market being optimistic, farms are going to be operated in its full capacity situation.
Second, the increasing number of new built scaled farms contributes to the enlarging penetration of scale farming.

Data Source: M2 Consulting

10
Main Producer and Regional Distribution of Commercial Egg Layer
The majority of layer companies are located in the north
The market share of top 10 layer companies doubled, developing towards a concentrated market
n In terms of geography, traditionally, egg layer companies are located in the north. However recent years, the industry has been witnessing a transformation from the
north to the south.
n In terms of leading companies, DQY Ecological and Charoen Pokphand Group represent the top the industry. Top 10 egg production companies accounts over 30%
of the total production.

Inventory Inventory
Company 2014 2017
1.7% (Million) (Million)
2000 400 0.3%
CP Group 10 0.9% 20 1.7%
DQY 5 0.4% 10 0.8%
0.8% 300 0.2%
1000 Shanxi
3 0.3% 8 0.7%
Jinlong

0.7% 180 0.1% Sundaily 4 0.3% 7 0.6%

800
Guangdong
2 0.2% 5 0.4%
0.2%
Yi Hao
300 Jilin Jinyi 1.8 0.2% 4 0.3%
700 0.6%
Dalian
2 0.2% 3 0.2%
Hanwei

Layer Inventory 500 0.4% Liujiang 1 0.1% 3 0.2%

Million Heads Yang's 1 0.1% 2.2 0.2%
<5
220 0.2% Daqing 1 0.1% 1.8 0.1%
6 - 10
11 - 20 Sub-total 30.8 2.6% 64 5.3%
21 - 50
Others 1,139.2 97.4% 1,143 94.7%
51 - 100
>101 Total 1,170 100.0% 1,207 100.0%
11 Data Source: The Ministry of Agriculture, M2 Consulting
Main Producer and Regional Distribution of Commercial White-feathered Broiler
White-feathered broiler companies concentrated in the North
The market share of top 8 white-feathered broiler companies increased 14.3% from 2014-2017
n In terms of geography, white-feathered broilers concentrated its production in the North. Shandong Province is by far the largest poultry producing province, producing
over 15 percent of China’s total broiler production. in terms of growth among the major producing regions, Sichuan, Fujian, Liaoning, and Anhui Provinces have
experienced strong growth, driven in large part by the consolidation of the industry.
n In terms of major companies, Sunner is the largest white-feathered broiler company in China, accounts for 9.9% of the total production.

275 6.5% Production Production

Company 2014 2017
(Million) (Million)
5.0%
212 Sunner 360 7.9% 420 10.0%

150 3.6% Wellhope 190 4.2% 275 6.5%

Xinsheng 160 3.5% 212 5.0%

3.3%
140
New
120 2.6% 185 4.4%
2.9%
Hope
120 185 4.4%
Daxiang 80 1.8% 150 3.6%
120 2.9%
CP
80 1.8% 140 3.3%
Group
Jiuliang 60 1.3% 120 2.9%
White- Broiler Production
Million Heads Fengxian
60 1.3% 120 2.9%
g
<100
101 - 200 420 10.0%
Subtotal 1,110 24.3% 1,622 38.6%
201 - 400
401 – 600 Others 3,450 75.7% 2,578 61.4%
601 - 800
Total 4,560 100.0% 4,200 100.0%
>800
Data Source: The Ministry of Agriculture, M2 Consulting
12
Main Producer and Regional Distribution of Commercial Yellow-feathered Broiler
Yellow-feathered broiler companies concentrated in the South
The market share of top 10 yellow-feathered broilers increased 0.23% from 2014-2017, market stays stable
n In terms of geography, yellow birds are generally produced in the South.
n Wens is the largest production company, accounting 20% of the total market production in 2017.

Production Production
Company 2014 2017
(Million) (Million)
Wens 820 22.50% 790 20.00%

790
20.0% Lihua 180 4.90% 230 5.80%

2.0% Shenhuang 50 1.40% 80 2.00%

80
Chunmao 50 1.40% 80 2.00%
2.0%
80 Wuxing 50 1.40% 50 1.30%

0.7% Dafa 20 0.50% 30 0.80%

5.8% 28
230
Fengxiang 20 0.50% 28 0.70%
0.6%
1.3% 23
50 Jinling 20 0.50% 23 0.60%
0.5%
30
0.8% 20 Yueqin 20 0.50% 20 0.50%
Yellow- Broiler Production
Million Heads 0.5% xiangjia 10 0.30% 20 0.50%
20
<100
Subtotal 1,240 33.97% 1,351 34.20%
101 - 200
201 - 400 Others 2,410 66.03% 2,599 65.80%
401 – 600
601 - 800 Total 3,650 100.00% 3,950 100.00%
>800

13 Data Source: The Ministry of Agriculture, M2 Consulting

Table of Content

Part I Project Scope & Definition

Part II Executive Summary

Part III Poultry Market Overview

Part IV Climate Control Products Market

Part V End-User Study

Part VI SI & Competitor Study

Model

蛋鸡舍笼养设备需求模型
总通风量 养殖规模 风速 房舍结构 笼架 风机 湿帘 小窗 负压
3.5m-
1100000 10万只 100m 14m 7.5m 12°斜角 8层5列 35 210 101 65pa
4m/s
587000 5万只 3m/s 100m 14m 3.5m 12°斜角 4层5列 16 96 54 55pa
457000 3.5万 3m/s 75m 12m 3.5m 12°斜角 4层4列 13 78 42 45pa

白羽鸡舍笼养设备需求模型
养殖规
总通风量 风速 房舍结构 笼架 风机 湿帘 小窗 负压
模
733750 5万只 3m/s 100m 14m 3.5m 12°斜角 4层5列 20 120 67 55pa
571250 3.5万 3m/s 75m 12m 3.5m 12°斜角 4层4列 16 96 52 45pa

黄羽鸡舍笼养设备需求模型
养殖规
总通风量 风速 房舍结构 笼架 风机 湿帘 小窗 负压
模
557650 5万只 3m/s 100m 14m 3.5m 12°斜角 4层5列 15 90 51 55pa
434150 3.5万 3m/s 75m 12m 3.5m 12°斜角 4层4列 12 72 40 45pa

15
Demand for Climate Control Products
Influenced by the increase of poultry consumption and rapid development of scale farming, the demand for climate
control products is expected to grow at 6.3% 2017-2020 (CAGR)
Demand for Climate Control Products of Poultry Industry
+6.3%
172,305 Major Drivers
+7.3% 162,555
153,308 187,764
143,680 179,232
138,382 137,421 170,025
161,518 310,560 n The demand for climate control products is mainly
161,470 159,720 290,192
117,941 271,223 influenced by the number of new built farms and the
124,900 243,049 237,022
251,038 development of large scale farming.
205,830
n Influenced by China’s increase of large scale farming and
1,002,620 population growth, rising income and urbanization rate, the
892,148 945,970
796,422 792,306 835,210 climate control product market would demonstrate a growth
679,136
rate of 6.3%(CAGR 2017-2020)

2014 2015 2016 2017 2018E 2019E 2020E

Controller Fan Inlets 2000 Inlets 3830 Wet Curtain（square metres）
Unit 2014 2015 2016 2017 2018E 2019E 2020E Major Restraints
Controll
set 6,325 7,892 7,732 8,039 8,594 9,140 9,702 n Constraints to poultry sector development in China are
er
likely to include high feed prices, particularly maize and
Fan set 117,941 138,382 137,421 143,680 153,308 162,555 172,305
soybean.
Inlets n Avian influenza and other diseases will have a major effect
set 124,900 161,470 159,720 161,518 170,025 179,232 187,764
2000
on the development of the sector, and may further promote
Inlets
205,830 243,049 237,022 251,038 271,223 290,192 310,560
intensification.
set
3830
cooling Square
679,136 796,422 792,306 835,210 892,148 945,970 1,002,620
pad meters

16
Data Source: The Ministry of Agriculture, M2 Consulting
Demand for Climate Control Products - Fans
The demand for fans would show a 6.2% growth rate from 2017-2020

Demand for Extraction Fans of Poultry Industry

Unit: Set
Present
+6.2%
172,305 n In 2017, the poultry industry’s demand for extraction
+6.8% 162,555 fans is around 143,680 unit (size 50).
153,308 38,727
143,680 n In terms of annually installed, replacement and retrofit,
138,382 137,421 35,555 (22.5%)
32,538 the consumption of annually installed accounts the
29,762
117,941 24,431 27,064 majority of fan demand.
(20.7%)
22,220 50,193
(18.8%) 47,810 (29.1%)
39,706 43,203 45,540
41,147 (30.1%)
38,226
(32.4%)
Trend
83,385
74,245 70,715 75,230 79,190 n From 2017-2020, the demand for extraction fan is
57,495 69,210 (48.4%)
(49.2%) expected to reach 172,305 in 2020, growing at 6.2%
(48.7%)
(CAGR 2017-2020)

Y14 Y15 Y16 Y17 Y18E Y19E Y20E n The majority of fans’ demand still comes from new built
Annually Installed Replacement Retrofit projects, while replacement and retrofit projects
enlarging its market share in total demand.
Unit 2014 2015 2016 2017 2018E 2019E 2020E
Annually
Set 57,495 74,245 69,210 70,715 75,230 79,190 83,385
Installed
Replacement Set 38,226 39,706 41,147 43,203 45,540 47,810 50,193
Retrofit Set 22,220 24,431 27,064 29,762 32,538 35,555 38,727

Data Source: The Ministry of Agriculture, M2 Consulting

17
Market Breakdown of Annually Installed – Fans
The total demand of fans in annually installed projects is 70,715 sets in 2017

Market Breakdown by Poultry Type Market Breakdown by Customer Type Market Breakdown by Breeding System

Unit: Set Unit: Set Unit: Set

12,225 10,825
(17.3%) (15.3%) 16,750
22,900 (23.7%)
(32.4%)
34,990
70,715 (49.5%) 70,715 70,715
23,500
(33.2%) 53,965
36,990 (76.3%)
(52.3%)

Layers White-feathered Yellow-feathered High End Medium End Low End Cage Farming Free Range Farming

n Dividing the demand of annually installed fans from three categories, poultry type, customer type and breeding system,
Layer farms has the highest demand for fan installation in terms of poultry types, accounting 49.5% of the total market demand;
Medium End Customer has the highest demand for fan installation in terms of customer type, accounting 52.3% of the total market demand;
Cage Farming has the higher demand for fan installation in terms of breeding system, accounting 76.3% of the total market.
Data Source: The Ministry of Agriculture, M2 Consulting

18
Demand for Climate Control Products – cooling pad
The demand for fans would show a 6.3% growth rate from 2017-2020

Demand for cooling pad in Poultry Industry

Unit: Square Meters +6.3%
Present
1,002,620
+7.1% 945,970
892,148 n In 2017, the poultry industry’s demand for cooling pad is
835,210 232,362 around 835,210 square meters.
796,422 792,306 213,330
195,228 n In terms of annually installed, replacement and retrofit, the
679,136 142,986 158,544 178,572
consumption of annually installed accounts the majority of
130,200 286,860
301,158 fan demand.
238,236 273,240
246,882 259,218
229,356

415,200 423,680 445,780 469,100

386,880 397,420
319,580

Y14 Y15 Y16 Y17 Y18E Y19E Y20E Trend

Annually Installed Replacement Retrofit
n From 2017-2020, the demand for cooling pad fan is
expected to reach 1,002,620 square meters in 2020,
Unit 2014 2015 2016 2017 2018E 2019E 2020E growing at 6.3% (CAGR 2017-2020)
Annually Square
Installed meters 319,580 415,200 386,880 397,420 423,680 445,780 469,100
Replace Square
ment meters 229,356 238,236 246,882 259,218 273,240 286,860 301,158
Square
Retrofit
meters 130,200 142,986 158,544 178,572 195,228 213,330 232,362

Data Source: The Ministry of Agriculture, M2 Consulting

19
Market Breakdown of Annually Installed – cooling pad
The total demand of cooling pad in annually installed projects is 397,420 square meters in 2017

Market Breakdown by Poultry Type Market Breakdown by Customer Type Market Breakdown by Breeding System
Unit: Square Meters Unit: Square Meters Unit: Square Meters

51,280
72,100
(12.9%) 100,500
(18.1%)
137,400 (25.3%)
(34.6%)

397,420 209,940 397,420 397,420

(52.8%)
115,380
(29.0%) 296,920
208,740
(52.5%) (74.7%)

Layers White-feathered Yellow-feathered High End Medium End Low End Cage Farming Free Range Farming

n Dividing the demand of annually installed cooling pad from three categories, poultry type, customer type and breeding system,
Layer farms has the highest demand for cooling pad installation in terms of poultry types, accounting 52.8% of the total market demand;
Medium End Customer has the highest demand for cooling pad installation in terms of customer type, accounting 52.5% of the total market demand;
Cage Farming has the higher demand for cooling pad installation in terms of breeding system, accounting 74.7% of the total market.

Data Source: The Ministry of Agriculture, M2 Consulting

20
Brand Distribution of cooling pad
In terms of brand distribution, domestic brands dominate the fan market, foreign brands accounts only 3.9%

Distribution of Foreign Brands and Domestic Brands Distribution of Foreign Brands

Unit: Square Meters Unit: Square Meters

24,000 32,270
(2.9%) (3.9%)
8,270
(25.6%)

24,000
(74.4%)
811,210 802,940
(97.1%) (96.1%)

Munter Others Munters Others

Foreign Domestic

n Domestic Brands dominates the market of cooling pad in China’s poultry industry, accounting 96.1% of the total market.
n Munters is the leading brand of cooling pad products. In 2017, Munters cooling pad accounts for 74.4% of the total foreign brand in China’s poultry
industry.

Data Source: M2 Consulting

21
Demand for Climate Control Products – Inlets
The demand for 3830 Inlets would show a 7.3% growth rate from 2017-2020, while 2000 Inlets show a 5.1% growth
Inlets 3830
Unit: Set
+7.3%
310,560
+6.8% 290,192 Present
271,223
243,049 251,038
237,022 107,245 n In 2017, the poultry industry’s demand for inlet 3830 is
98,412
205,830
67,444 82,708
90,123 around 251,038 sets and the demand for inlet 2000 is
75,597 around 161,518 sets.
64,410
n In terms of annually installed, replacement and retrofit, the
consumption of annually installed accounts the majority of
191,780 203,315
175,605 161,425 168,330 181,100 inlet demand.
141,420

Y14 Y15 Y16 Y17 Y18E Y19E Y20E

Trend
Annually Installed Retrofit

+5.1%
n From 2017-2020, the demand for inlet 3830 is expected to
Inlets 2000 reach 310,560 unites in 2020, growing at 7.3% (CAGR
Unit: Set +8.9% 187,764 2017-2020)
179,232 n From 2017-2020, the demand for inlet 2000 is expected to
170,025
161,470 159,720 161,518
reach 187,764 sets in 2020, growing at 5.1% (CAGR 2017-
73,522 79,134 2020).
124,900 52,990 56,700 61,998 67,815
n The growth rate of inlet 3830 is higher than inlet 2000. This
49,850 also demonstrates a development from free-range farming
to cage farming in China, since inlet 3830 is employed in
108,630
caged farms.
108,480 103,020 99,520 102,210 105,710
75,050
Data Source: The Ministry of Agriculture, M2 Consulting

Y14 Y15 Y16 Y17 Y18E Y19E Y20E

Annually Installed Retrofit

22 Notes: Inlets 3830 are used in cage farming; Inlets 2000 are used in free-range farming
Market Breakdown of Annually Installed – Inlets
Market Breakdown by Poultry Type Market Breakdown by Customer Type Market Breakdown by Breeding System
Unit: Set Unit: Set Unit: Set
0.0%
26,375 33,270
Inlets
(15.7%) 57,960 (19.8%)
3830
29,705 (34.4%)
(17.6%) 112,250
168,330
(66.7%) 168,330
77,100 168,330
(45.8%) 168,330
(100.0%)

Layers White-feathered Yellow-feathered High End Medium End Low End Cage Farming Free Range Farming

Market Breakdown by Poultry Type Market Breakdown by Customer Type Market Breakdown by Breeding System
Unit: Set 0.0% Unit: Set 0.0% Unit: Set 0.0%
24,900 29,500
Inlets (25.0%) (29.6%)
2000
99,520 99,520 99,520
74,620 70,020
(75.0%) (70.4%)
99,520
(100.0%)

Layers White-feathered Yellow-feathered High End Medium End Low End Cage Farming Free Range Farming

Data Source: The Ministry of Agriculture, M2 Consulting

23
Demand for Climate Control Products – Controllers
The demand for controllers would show a 6.5% growth rate from 2017-2020

Demand for Controllers in Poultry Industry

Unit: Set
+6.5%

+8.3% 9,702 Present

9,140
8,594
7,892 7,732 8,039 n In 2017, the poultry industry’s demand for controller is
3,297
3,030 around 8,039 units.
2,774
6,325 2,087 2,302 2,534 n In terms of annually installed and retrofit, the consumption
1,890 of annually installed accounts the majority of fan demand.

5,805 5,820 6,110 6,405

5,430 5,505
4,435

Y14 Y15 Y16 Y17 Y18E Y19E Y20E Trend

Annually Installed Retrofit n From 2017-2020, the demand for controllers is expected to
reach 9,702 units in 2020, growing at 6.5% (CAGR 2017-
2020).
Unit 2014 2015 2016 2017 2018E 2019E 2020E

Annually Set 4,435 5,805 5,430 5,505 5,820 6,110 6,405

Installed

Set 1,890 2,087 2,302 2,534 2,774 3,030 3,297 Data Source: The Ministry of Agriculture, M2 Consulting
Retrofit

24
Market Breakdown of Annually Installed – Controllers
The total demand of controllers in annually installed projects is 5,505 sets in 2017

Market Breakdown by Poultry Type Market Breakdown by Customer Type Market Breakdown by Breeding System

Unit: Set Unit: Set

Unit: Set

735
1,125 (13.4%)
(20.4%) 1,690
2,000 (30.7%)
2,410 (36.3%)
(43.8%)
5,505 5,505 5,505

3,815
1,970 2,770 (69.3%)
(35.8%) (50.3%)

Layers White-feathered Yellow-feathered High End Medium End Low End Cage Farming Free Range Farming

n Dividing the demand of annually installed controllers from three categories, poultry type, customer type and breeding system,
Layer farms has the highest demand for controllers installation in terms of poultry types, accounting 43.8% of the total market demand;
Medium End Customer has the highest demand for controller installation in terms of customer type, accounting 50.3% of the total market demand;
Cage Farming has a higher demand for controller installation in terms of breeding system, accounting 69.3% of the total market.

Data Source: The Ministry of Agriculture, M2 Consulting

25
Brand Distribution of Controllers
In terms of brand distribution, foreign brand accounts 47.3% of the total market

Distribution of Foreign Brands and Domestic Brands Distribution of Foreign Brands

Unit: Set
Unit: Set

1,200
(14.9%)
1,000
(27.8%) 1,200
(33.3%)
3,800
4,239 (47.3%)
(52.7%)
200
(5.6%)
6,839 400
(85.1%) (11.1%) 800
(22.2%)

Rotem Others Foreign Domestic

Rotem Skov Hotraco Argo Logic Others

n Foreign Brands accounts 47.3% of the controller market in China’s poultry industry.

n Among foreign brands, Rotem is the leading brand of controllers. In 2017, Rotem accounts for 31.6% of the total foreign brand controllers in China’s poultry
industry.

Data Source: M2 Consulting

26
Table of Content

Part I Project Scope & Definition

Part II Executive Summary

Part III Poultry Market Overview

Part IV Climate Control Products Market

Part V End-User Study

Part VI SI & Competitor Study

 Charoen Pokphand Group - Basic Information
Charoen Pokphand Group is the leading egg production company in China, its layer stock shows a
growth rate of 33.3% (CAGR 2014-2020)

The Inventory of Layers of Chia Tai, Project Scale of Charoen Pokphand

2017-2020 Group(2017)
Million Head
56 20.0%
+33.3%

20.0% 60.0% Charoen Pokphand Group

20
10

Headquarter Beijing, China

Three Million One Million Others
2014 2017 2020E

Company Dynamics, 2017-2018

Website http://www.cpgroup.cn

1. In 2017, the layer stock of Charoen Pokphand Group achieved 20 million in total. The number is expected to achieve
32 million in 2020. Compared with its layer stock of 10 million in 2014, Charoen Pokphand Group is expected to grow
at 33.3% (CAGR). Established 1921

2. In 2012, Charoen Pokphand Group completed its first 3-million stock layer farm in Pinggu. After years of successful
operation, the company decided to further expend its raising scale, and it plans to build 20 poultry farm with 3 million Employee (China) 80,000
layer stock by the end of 2022.

3.Currently, Charoen Pokphand Group operates about 20 layers farm, among which layer farm with one million stock
accounts 55% of the total. Poultry Type Layer

haroen Pokphand Group raises both Layers and Broilers, layers accounts for 80% of its poultry revenue. In this report, statistic about Charoen Pokphand Grouponly demonstrates its layer
industry.
Data Source: M2 Consulting

28
Charoen Pokphand Group - Customer Needs for Climate Control Products
The demand for climate control products mostly comes from its new built projects
The mainstream project scale of Charoen Pokphand Groupis layer farm with 3 million heads’ layer stock

Charoen Pokphand GroupCompany’s Demand By ProjectTypical Configuration in The Settled Breeding Size, 2017
Type, 2018
Equipment Demand for 125K/house
New Built Project Retrofit Project
Fan cooling pad Inlet Controller
400 -
1,000 6,000 43 258m2 120 1
Jiangyin, Big Dutchman，
Multifan,
Munters, Other Domestic OEM Hotraco, Skov,
Munters, Others
Domestic Brands Rotem, Others
260
4,000 1 million stock layer farm usually consists of 8 houses with 125k layers per house.
3,200 19,200 Equipment Demand for 160K/house ( Developing Trend)
56 336m2 160 1
Jiangyin, Munters, Big Dutchman，
Multifan, Munters,
Other Domestic Domestic OEM Skov, Rotem,
Others
Brands Others
Fan Wet Curtain Inlet(3830) Controller
3 million stock layer farm usually consists of 18 houses with 160K layers per house.
Source:M2 Consulting

1.Chia Tai’s projects could be categorized into 3 types, farms with 3 million stock, 1 million stock and below 1 million stock. Farms with 3 million layer stock would be the mainstream
project type. According to customer’s interviews, Charoen Pokphand Groupwould build 20 more layer farms with 3 million stock by 2022.
2. In terms of choices of climate control products, for new built projects, Charoen Pokphand Groupcooperates with leading solution integrators, and it SI decides the equipment
brand for each project. For annually replacement, brands are selected among it vendor list, Chia Tai\s procurement department could choose equipment brands in its vendor list.
3. In interview\s opinion, Munters could consider cooperating with cage manufacturers to achieve SI capability. For retrofit programs which company would purchase climate control
solution indecently, Munters need to provide ventilation knowledge in prior, increasing customers awareness of product differences. At the same time, Munters needs to provide
products which are more competitive.

Data Source: M2 Consulting

29
Charoen Pokphand Group - Procurement Pattern
Charoen Pokphand Grouphas a vendor list for climate control products, SI and Individuals are demanded to select
brands from the list

Chia Tai’s Procurement Pattern for New Built Projects Chia Tai’s Procurement Pattern for Retrofit Projects

New Built Projects Retrofit Projects

80% 20% 80% 20%

Group Invested Non-Group Invested Group Invested Non-Group Invested

80% 20% 50% 10%

SI 30% 10%
SI

Climate Control Equipment Manufacture Climate Control Equipment Manufacture

1.For new built projects and retrofit projects, Charoen Pokphand Groupadopted different procurement pattern of choosing climate control equipment.
2.In terms of new built projects, Charoen Pokphand Groupadopted package procurement pattern, purchasing complete equipment, including climate control equipment from solution
integrators. Among all new built projects, 80% are group invested, in which foreign leading SI are preferred, such as Big Dutchman. Non-group invested projects accounts about
20% of total projects, domestic leading Sis，such as Guangxing are preferred considering projects' investment scale.
3.In terms of retrofit projects, for group invested projects, the company could purchase climate control products from SI, or choosing manufactures which are listed in its vendor list.
For non-group invested projects, customer could purchase the equipment directly from manufactures on the market, or purchase the products from SI.
4.M2 suggestion: Since Munter could not provide complete equipment such as cage, Munters could mot become a package contractor for Chia Tai. Thus, in terms of new built
projects, Munters needs to cooperate with SI. In terms of retrofit projects, Munters could provide individual products or provide climate control solution integrator.

Data Source: M2 Consulting

30
Charoen Pokphand Group - Equipment Purchasing Flow and Key Brand Decision Factors
（Group Invested Project）

Climate Control Climate Control

Project Design &
Feasibility Study Equipment Equipment
SI Bidding Phase
Procurement Retrofit
Quality
10
Chai Tai
8
Environment ①SI Bid Inviting
Investment Assessment & 6
④ 40% SI Purchasing from
Dept. Feasibility Equipment Vendor List 4
Study Lead time Service
2
0
③ Equipment
Project Purchasing
SI Equipment
Design and
Bidding Vendor List

Brand
Price
Recognition
Equipment Climate
Chai Tai HQ Vendor List Control
Management Equipment Data Source: M2 Consulting
Retrofit

② Bidding Evaluation
Chai Tai n Valuing customers'’ need for climate control
Technical products from five perspectives, quality, service,
Dept. Technical price, brand recognition and lead time accordingly,
Evaluation
Charoen Pokphand Group values service the most,
④ 60% Directly Purchasing from then quality, brand recognition and price.
Chai Tai Equipment Vendor List
Purchasing Commercial n In terms of service, Chia Thai requires SI to provide
Dept. Evaluation through after-sales service.
n In terms of product quality, Charoen Pokphand
Group values stability the most, demanding fans
1.5~2 Years providing stable air flow after installation.
31
DQY Ecological - Basic Information
DQY is one of the raspiest developing companies in China
The layer stock of DQY is expected to reach 60 million heads by it finished its Golden Pheasant Program

De Qing Yuan’s Production Growth, 2017- Project Scale of De Qing Yuan(2017)

2020
Million Head 20.0% 20.0%
60
+51.3%
20.0%
DQY Ecological
40.0%
10
5
3.2 Million 1.8 Million
Headquarter Beijing, China
2.4 Million Others
2014 2017 2020E

Company Dynamics, 2017-2018

Website http://www.dqy.com.cn
1.In 2017, the layer stock of DQY Ecological achieved 10 million in total. The number is expected to achieve 60 million
in 2020. Compared with its layer stock of 5 million in 2014, DQY Ecological is expected to grow at 51.3% (CAGR).

2. At the beginning of 2017, DQY announced its “Golden Pheasant” poverty alleviation plan, in which DQY would built
24 layer’s farm nationally. The total investment for the plan is expected to be 1 billion RMB. The total layer stock of Established 2000
DQY is expected to reach 60 million by the time the plan completes.

3.Considering project scale, DQY’s project is on its transition to large scale faming.
Poultry Type Layer

Data Source: M2 Consulting

32
DQY Ecological- Customer Needs for Climate Control Products
The demand for climate control products mostly comes from its new built projects
The mainstream project scale of DQY is layer farm with 1.8 million heads’ layer stock

DQY’s Demand By Project Type, 2018 Typical Configuration in The Settled Breeding Size
Equipment Demand for 140K/house ( Mainstream)
New Built Project Retrofit Project
Fan cooling pad Inlet Controller
50 300 140 1
556 -
1,390 8,340 Guangxing, Big
Big Herdsman, Jiangyin,
Domestic OEM Hersman,
Pericoli, Others Munters, Others
Rotem, Others

361 1.8 million stock layer farm usually consists of 13 houses with 140K layers per house.
5,560 Equipment Demand for 100K/house
4,448 26,688
34 204 128 1
Guangxing, Big
Big Herdsman, Jiangyin,
Domestic OEM Hersman,
Pericoli, Others Munters, Others
Rotem, Others
Fan Wet Curtain Inlet(3830) Controller
1.8 million stock layer farm consists of 18 houses with 100K layers per house.

1.In terms of choices of climate control products, for new built projects, DQY cooperates with leading solution integrators, and the selection of climate control products are proposed
by SI. DQY usually product scope in terms of foreign or domestic. For annually replacement, brands were selected by individual farms.

2. In terms of project size, the majority of DQY’s projects are layer farms with 1.8 million stock, consisting of 13 houses with 140K layers per house.

3.In terms of SI, DQY prefers to cooperate with Guangxing.

Data Source: M2 Consulting

33
DQY Ecological - Procurement Pattern
DQY relies on its SI for climate control products providing

DQY’s Procurement Pattern for New Built Projects DQY ‘s Procurement Pattern for Retrofit Projects

New Built Projects Retrofit Projects

60% 40%

SI 100% SI

Climate Control Equipment Manufacture Climate Control Equipment Manufacture

1.DQY employs integrated operation system, which projects are 100% managed by the company itself.

2.In terms of new built projects, DQY adopted package procurement pattern, purchasing complete equipment, including climate control equipment from solution integrators.

3.In terms of retrofit projects, DQY purchases the equipment directly from manufactures on the market, or purchase the products from SI.

Data Source: M2 Consulting

34
DQY Ecological- Equipment Purchasing Flow and Key Brand Decision Factors （Group
Invested Project）

Climate Control Climate Control

Project Design &
Feasibility Study Equipment Equipment
SI Bidding Phase
Procurement Retrofit
Quality
10
DQY
8
Environment ① SI Bid Inviting
Investment Assessment & 6
④ 60% equipment purchasing
Dept. Feasibility from SI 4
Study Lead time Service
2
0
③ Equipment
Project Design Purchasing
SI
and Bidding

Brand
① Climate Control Equipment Price
Appoint Climate Manufactures Recognition
Control Equipment
Brand Level
Data Source: M2 Consulting

② Bidding Evaluation n Valuing customers'’ need for climate control

DQY
Technical products from five perspectives, quality, service,
Dept. Technical price, brand recognition and lead time accordingly,
Evaluation
DQY values price the most, then service and
④ 40% Directly Purchasing from
quality.
DQY
Commercial
Equipment Manufacture n DQY usually invites familiar SI for new program
Purchasing
Dept. Evaluation bidding, comparing price and service.

1.5~2 Years
35
Well-hope Agri-tech - Basic Information
Well-hope is one of the largest white-feathered broiler company in China
The total stock of Well-hope reached 275 million heads in 2017

Well-hope Agri-tech’s Production Growth, Project Scale of Well-hope Agri-tech (2017)

2017-2020
Million Head
+10.7% 20.0%
350
275
190 Well-hope Agri-tech
80.0%

3 million Others Headquarter Liaoning, China

2014 2017 2020E

Company Dynamics, 2017-2018

Website http://www.wellhope-ag.com/
1. Well-hope started broiler integrated business in 2007. At present, its has 10 business units composed of nearly 30
companies which are primarily located in Liaoning, Hebei, Henan, Jilin and Shandong provinces, etc. Its business
scope covers feed processing, parent stock, hatching, commercial broiler rearing, animal medicine, slaughtering and
meat processing.
Established 2003
2.In 2017, the production of Well-hope reached 275 million heads in total in total. The number is expected to achieve
350 million in 2020. Compared with its production of 190 million in 2014, Well-hope s expected to grow at 10.7%
(CAGR).
Poultry Type White-feathered

Data Source: M2 Consulting

36
Well-hope - Customer Needs for Climate Control Products
The demand for climate control products mostly comes from its new built projects
The mainstream project scale of Well-hope is white-feathered broiler farm with 3 million heads’ stock

Well-hope’s Demand By Project Type, 2017 Typical Configuration in The Settled Breeding Size

New Built Project Retrofit Project

Equipment Demand for 50K/house
-
918 5,508
Fan cooling pad Inlet Controller

20 120 67 1

4450 5562 133 Big Herdsman, Rotem.

Big Herdsman, Others Domestic Big Herdsman, Others
Others
2650 15960

3 million production broiler farm usually consists of 10 houses with 50k layers per house.
Fan Wet Inlet(3830) Inlet(2000) Controller
Curtain

1.In terms of choices of climate control products, for new built projects, Well-hope cooperates with leading solution integrators, and the selection of climate control products are
proposed by SI.

2.In terms of project size, the majority of Well-hope s projects white-broiler farms with 3 million annual production, consisting of 10 houses with 50K layers per house.

Data Source: M2 Consulting

37
Well-hope - Procurement Pattern
Well-hope adopts “Company + Farmers” business model
Choices for climate control products varies in terms of non-group construction side

Well-hope’s Procurement Pattern for New Built Projects Well-hope’s Procurement Pattern for Retrofit Projects

New Built Projects Retrofit Projects

20% 80% 20% 80%

Group Invested Farmers Group Invested Farmers

20% 50% 30% 10% 30%

SI 10% 50%
SI

Climate Control Equipment Manufacture Climate Control Equipment Manufacture

Source:M2 Consulting
1.In terms of business model, Well-hope adopts the model of “Company + Farmers”. In 2017, the production of white-broiler reached 275 million in total, in which 59 million was
raised directly by the company, 216 million were raised by cooperated farmers.

2.The company mainly provides baby chick, vaccine, and breeding techniques to the farmers. The farmers has to provide farms which satisfy Well-hope’s standard.

3.In terms of project construction, both the company and adopt package procurement pattern, purchasing complete equipment, including climate control equipment from solution
integrators. As for the farmers, 30% of farm owners would purchase climate control products directly from manufactures.

Data Source: M2 Consulting

38
Well-hope - Equipment Purchasing Flow and Key Brand Decision Factors （Group Invested
Project）

Climate Control Climate Control

Project Design &
Feasibility Study Equipment Equipment
SI Bidding Phase
Procurement Retrofit
Quality
10
Well-hope
8
Environment ①SI Bid Inviting
Investment Assessment & 6
④ 70% Purchasing from SI
Dept. Feasibility
4
Study Lead time Service
2
0
③ Equipment
Project Purchasing
SI Design and
Bidding

Climate Control Equipment Brand

Price
Retrofit Recognition

Data Source: M2 Consulting

② Bidding Evaluation
Well-hope n Valuing customers'’ need for climate control
Technical products from five perspectives, quality, service,
Dept. Technical price, brand recognition and lead time accordingly,
Evaluation
Well-hope values quality and brand recognition the
④ 30% Directly Purchasing from most.
Equipment Manufactures
Well-hope
Purchasing Commercial n Since the broiler farmers built needs to be
Dept. Evaluation recognized by Well-hope, farmers care more about
brand recognition during construction process.

1.5~2 Years
39
Wens - Basic Information
Wens is the largest yellow-feathered broiler company in China, accounting 20% of the total market
The total stock of Wens reached 790million heads in 2017

Wens’ Production Growth, 2017-2020 Project Scale of Wens(2017)

Million Head +2.7%

790 810
690 20.0%

Wens
80.0%

2014 2017 2020 3 million Others

Headquarter Guangdong, China

Company Dynamics, 2017-2018

Website http://www.wens.com.cn/
1.Wens is the biggest broiler raising company in China, in 2017, its total production of yellow-feathered broilers
reached 790 million heads, accounting 20% of the total market.

2.Considering business model, Wen’s adopts “ Company + Farmers”, expanding its business scale by cooperating
with individual farmers. Established 1983

3.In 2017, the production of Wens reached 790 million heads in total in total. The number is expected to achieve 810
million in 2020. Compared with its production of 650 million in 2014, Wens s expected to grow at 2.7% (CAGR).
Poultry Type Yellow-feathered

Data Source: M2 Consulting

40
Wens - Customer Needs for Climate Control Products
The demand for climate control products mostly comes from its retrofit projects
Under the pressure of environment regulation, Wens is on its transition from free-range raising to caged raising

Wen’s Demand By Project Type, 2018 Typical Configuration in The Settled Breeding Size

Equipment Demand for 50K/house

Retrofit Project New Built Project
Fan cooling pad Inlet Controller

1483 44
15 15 90m2 51 1
883 5320
1854 90m2 Fanstech Big
Jiangyin, Nanmu, Rotem,
Herdsman, Domestic OEM
51 Multifan ，
Munters, others Others

1Equipment Demand for 35K/house 3 million production broiler farm usually consists of 10 houses with 50k house.
4193 120
1762 10572
2246 layers per 12 72m2 40 1
Fanstech Big
Jiangyin, Nanmu, Rotem,
Herdsman, Domestic OEM
Munters, others Others
Fan Wet Inlet(3830) Inlet(2000) Controller Multifan ，
Curtain 1 million production broiler farm usually consists of 8 houses with 35k house.

1.In terms of choices of climate control products, for new built projects, Wens cooperates with leading solution integrators, and the selection of climate control products are proposed
by SI.

2.In terms of project size, the majority of Wens’ s projects are yellow-feathered broiler farms with 3 million annual production, consisting of 10 houses with 50K layers per house.

3.Under the influence of environmental control, Wen’s farms are on its transition from free range raising to caged raising.

Data Source: M2 Consulting

41
Wens - Procurement Pattern
Wens adopts “Company + Farmers” business model
Choices for climate control products varies in terms of non-group construction side

Wens’ Procurement Pattern for New Built Projects Wen’s Procurement Pattern for Retrofit Projects
Retrofit Projects

New Built Projects Retrofit Projects

40% 20%

30% 70% Group Invested

30% Non-Group 70%
Invested

Group Invested Farmers Group Invested Farmers

60%
30% 70%
30% 20%
EPC (Nanmu) SI Nanmu SI 50%

Climate Control Equipment Manufacture

Climate Control Equipment Manufacture Climate Control Equipment Manufacture

Source:M2 Consulting

1.In terms of business model, Wens adopts the model of “Company + Farmers”. The company mainly provides baby chick, vaccine, and breeding techniques to the farmers. The
farmers has to provide farms which satisfy Wen’s standard.

2.In terms of project construction, Wens’ projects are constructed by Nanmu, its subsidiary cooperation. Nanmu is responsible for the project from building construction to equipment
installation.

3.As for farmers’ projects, for new built projects, farmers would adopt package procurement pattern, purchasing complete equipment, including climate control equipment from
solution integrators.

Data Source: M2 Consulting

42
Wens - Equipment Purchasing Flow and Key Brand Decision Factors（Group Invested
Project）

Climate Control Climate Control

Project Design &
Feasibility Study Equipment Equipment
SI Bidding Phase
Procurement Retrofit
Quality
10
Wens
8
Environment ①
EPC by Nanmu
Investment Assessment & 6
Dept. Feasibility
4
Study Lead time Service
2
③ Retrofit Equipment purchasing
0

Brand
Price
Recognition
② Equipment
EPC-Nanmu Purchasing Climate Control Equipment Data Source: M2 Consulting
Project Design and
（A Equipment
Manufactures
subsidiary of Purchasing
Wens ）
n Nanmu is responsible for the construction of group
invested projects of Wens.

n For non-group invested projects, SI bidding is a

common way for new built projects.

n Valuing customers'’ need for climate control

products from five perspectives, quality, service,
price, brand recognition and lead time accordingly,
1.5~2 Years Wens values quality and price the most.
43
End-User Study – Information Aggregation

Equipment Purchasing Behavior

Planned Scale
Company Poultry Type Current Scale Brand Preference Vendor
(2020) Present Trend
Appointment

Foreign
Layer 8 million 20 million 40.0% SI SI ×
60.0%
Domestic

Domestic
40.0%
Layer 7 million 20 million 60.0%
SI EPC ×
Foreign

Domestic
45.0%55.0%
Layer 3 million 10 million SI SI ×
Foreign

Domestic
380 thousand 20.0%
-
Breeder sets 80.0% SI SI √
( grandparent)
Foreign
Domestic
60 thousand
100 thousand sets 20.0%
Breeder sets 80.0% SI SI √
( grandparent)
( grandparent)
Foreign
Domestic
White-
20.0%
feathered 420 million 750 million 80.0%
SI EPC ×
Broiler
Foreign

44
End-User Study – Customer Preference for Climate Control Products - Fans

Airflow Munters：
capacity
10.0
10.0
8.0
6.0
10.0
Energy 4.0 Pressure
consumption stability
6.0 2.0
0.0 Key Competitor：

8.0
9.0
Maintainace Durability
Data Source: M2 Consulting

n M2 concludes the valuation standard of end-users into five perspectives, airflow capacity, pressure stability, durability, easiness of maintenance and energy
consumption.
n Since poultry farms are developing to larger scale, poultry houses is becoming larger and longer, which demands fans to provide sufficient and stable air flow. Thus,
end-users value airflow capacity and pressure stability the most.
n In terms of durability, it refers to both the time fans could be used in farms, and the stability of airflow capacity during its serving years. Commonly, foreign brand
fans could be used for 5-7years, while domestic brands could be used for 3-5 years.
n In terms of maintenance, considering replacement cost, end-users prefer to replace individual parts, such as fan blades.

45
Table of Content

Part I Project Scope & Definition

Part II Executive Summary

Part III Poultry Market Overview

Part IV Climate Control Products Market

Part V End-User Study

Part VI SI & Competitor Study

Market Share of Solution Integrator
The concentration of SI for Poultry industry remains low in China

SI Market Breakdown by Key SI – Layers, 2017 SI Market Breakdown by Key SI – Broilers, 2017

Guangzhou Huanan GSI

Guangzhou Guangxing Big Herdsman
5.0% Big Dutchman 5.0%
Guangzhou Guangxing
4.1% 4.5%
4.0% Facco 4.0% Guangzhou Huanan
3.1% HYTEM 3.0% Guangdong Nanmu
2.3% Henan Jinfeng 3.0%
2.1% Big Herdsman
2.0% 1.7% Chengdu Little Giant

75.6%
80.5%
Others
Others

1. The market concentration of SI in Chinese poultry industry remains low, compared with the industry development of US and Europe.
2. In terms of Layers, Huanan performs the best in the market of 2017, accounting 5% of the total market.
3. In terms of Broilers, GSI performs the best in the market of 2017, accounting 5% of the total market.
4. With the development of technology, the market share of Chinese SI is increasing, for the reason that Chinese SI usually provide a more competitive price.

Data Source: M2 Consulting

47
SI Study – Big Dutchman

Sales Revenue (million RMB) Brand Distribution n In terms of equipment

production, Big Dutchman
+5.4%
+2.8% developed its controller and find
390 Fan Multifan, Domestic OEM OEMs for manufacturing.
360 370
Munters, Jiangyin n The headquarter of Big
cooling pad
290 Shuncheng Dutchman is in charge of its
260 280
international supplier audit.
Inlet Domestic OEM
n Big Dutchman build
100 90 100 Controller Big Dutchman, SKOV international equipment transfer
Headquarter Netherlands
2016 2017 2018
center for its equipment
Layers Broilers supplying.

https://www.bigdutchman.co
Website
m Climate Control Demand Forecast
n The demand of Big Dutchman
21,000 Annual Installed Repalcement for climate control products
2,100 mainly comes from new built
Established 1938 (10.0%)
projects.
7,000
3,500 700 3,100
n Basing on its sales revenue
350 (10.0%) 310 and project scope, Big
(10.0%) (10.0%) dutchman would consume
Big Dutchman has planned
18,900 6,300 3,500 fans annually, 21,000
and realised feeding systems 3,150 2,790 30
(90.0%) (90.0%) 290
and housing equipment for (90.0%) (90.0%) 260 (10.3%)
square meters cooling pad, and
Introduction
modern pig and poultry (89.7%) 290 controller.
production already since
Fan Wet Curtain Inlet (3830) Inlet (2000) Controller
1938.
（square
meters）

Data Source: M2 Consulting

48
Competitor Study - Multifan

Sales Revenue of Multifan, China Sales Unit of Multifan, China n In 2017, Multifan generated
Unit: Million RMB Unit: Set 30 million yuan’s revenue
+20.0% from fans in China. Its sales
+30.4% 11,740
performance showed about
+20.0% 30% YoY growth compared
9,780
+30.4% with 2016. It estimates that
36 7,500
30
Multifan could achieve
23 another 20% YoY growth in
2018.
Headquarter Netherlands

http://ventilation.vostermans.
Website
com 2016 2017 2018 2016 2017 2018

Established 1952
n Currently, Multifan has two
Sales Member 2 (China) Sales Distribution by End-User Sales Distribution by Sales Channel sales person in China,
Unit: Set Unit: Set responsible for sales activities
Vostermans Ventilation is of Multifan in China.
based in the Netherlands, Direct Sales
n In 2017, Multifan sold 3500
and has locations in China, 850
Malaysia and the United
Poultry fans into poultry industry, in
3,500 (24.3%)
States. Vostermans (35.8%) which only 850 units are sole
Introduction through direct sales.
Ventilation develops,
manufactures and distributes 6,280
(64.2%) 2,650 n The headquarter is responsible
axial fans for the agricultural Pig (75.7%) for Multifan’s distributor
and industrial market
worldwide. Distributor management

Data Source: M2 Consulting

49