New Hope Liuhe Co., Ltd.
SemiannualReport2022
2022-104
[August 31,2022]
Section1 ImportantNote,Tableof Contentsand Definitions
The board of directors, board of supervisors, directors, supervisors and
senior executives of the Company warrant that the contents of this semiannual
report are true, accurate and complete and free of any false recordings,
misleading statements or significant omissions, and that they will be jointly
and severally liable for the legal consequences.
The Company’s Chair of the board Liu Chang, chief accountant Chen
Xingyao and the person in charge of accounting organization (accountant in
charge) Su Xiaodan state that the financial report in this semiannual report is
true, accurate and complete.
All directors of the Company attended the board meeting deliberating this
report.
The Company is required to comply with d isc losure requirements set
forth in the “Self-regulatory Guideline No.3 of Shenzhen Stock Exchange for
Listed Companies—Industry Information Disclosure” with respect to
livestock, poultry and aquaculture related businesses.
I. Epidemic and naturaldisaster risks
The animal epidemic disease is the main risk faced in the development of
livestock industry. There are three kinds of risks arising out of the occurrence
of epidemic disease. First, the occurrence of epidemic disease is likely to result
in death of livestock, directly leading to reduction in yield, rising costs and
drop in prices. Second, the occurrence and prevalence of epidemic disease on a
large scale easily influence the consumer psychology, lead to shrinking
downstream market demands, and affect the feed production and operation.
Third, after the outbreak of some infectious epidemic diseases endangering the
public health and safety, the government will take lock-down and other
measures to contain the spread of epidemic disease. These epidemic
containment measures will seriously hinder the transportation of feed, animal
healthcare products and live livestock, and the workers returning to work, and
have a great impact on the production and operation of breeding industry. In
addition, the outbreak of infectious epidemic diseases will force most catering
enterprises to close business, some agricultural product markets to shut down,
and consumers to reduce outdoors activities, resulting in reduced meat
demand and consumption. For example, the African Swine Fever (ASF) has an
enormous impact on the entire industry broke out in 2018. As the ASF is
characterized by long latency and high mortality after onset of the disease, and
the effective and reliable vaccine has not yet been developed successfully,
coupled with the fact that it was also the concentrated outbreak on a large
scale in China for the first time, both the large-scale breeding enterprises and
small farmers lacked effective containment measures at the onset of epidemic,
thereby suffering losses to various degrees. ASF has gradually become normal,
especially in northern regions including Hebei, Shandong and Henan, causing
widespread impact on aquaculture enterprises and farmers in the region.
The COVID-19 outbreak at the beginning of 2020 also posed daun ting
challenges to the livestock and poultry breeding industry in China. The anti-
epidemic measures such as lockdown, delay in return to work, suspension of
live poultry trading, and shutdown of slaughter houses led to unavailability of
feed to farms and livestock farmers, newborn livestock nowhere to sell,
inability to slaughter livestock and poultry, and difficulties to conduct breeding
production activities normally. Since 2022, the outbreak of COVID-19, mainly
caused by the variant Omicron strain, has broken out in many provinces and
cities in China. In addition to obstacles to the flow of personnel and materials
related to production and operation, it is also significantly affecting daily
consumption in cities.
In terms of the natural disaster risk, the feed and slaughter are closely
related to planting and livestock breeding industry, so the natural disasters
such as temperature anomalies, drought, flood, earthquake, hail, and snow
disaster will all adverse ly affect the industry operation and development. The
natural disasters occurring on the production bases of the Company and
surrounding areas may cause substantial damages to production facilities or
equipment, and the natural disasters and extreme climate may also drive the
prices of some feed ingredients and meats up. For example, in the summer of
2021 and 2022, multiple rounds of heavy rainfall occurred in many regions in
China, resulting in flood disasters in many places. They adversely affected the
planting, breeding, farm produce logistics, pro ject implementation and meat
prices along the industry chain to varying degrees.
Risk countermeasures: in the face of animalepidemics, the livestock farms
planned and constructed by the Company’s breeding base are normalized an
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