Guangdong Haid Group Co., Limited
2022 Annual Report
April 2023
Section I. Important Notes, Table of Contents and Definitions
The board of directors (the "Board"), the supervisory committee, the directors,
the supervisors and the senior management of Guangdong Haid Group Co.,
Limited (the "Company") hereby warrant the truthfulness, accuracy and
completeness of the information presented in this report, guarantee that there are
no misrepresentations, misleading statements or material omissions contained in
this annual report, and are individually and collectively responsible for the
authenticity, accuracy and completeness of the information contained in this
report.
Mr. Hua Xue, head of the Company, and Mr. Shaolin Yang, head in charge of
accounting work and head of the accounting department (Accounting Officer),
declare that they warrant the truthfulness, accuracy and completeness of the
financial statements in the annual report.
All directorswere presentin person atthe Board meeting to considerandapprove
this annual report.
1. Periodical Fluctuations of Feed Industry due toAbnormal Weather Changes
The feed industry is mainly served for the downstream animal industry. The
abnormal changes including extreme high orlow temperature, storm, typhoons et
al during the breeding production, and even large-scale outbreaks of diseases
which may lead to fluctuations of the inventory of livestock or aquatic products.
For example, the continuous high temperature weather in this year was followed
by the rise of watertemperature to exceed the appropriate growth temperature of
aquatic products, leading to the decrease of dissolved oxygen saturation in the
water, and the reduced intake of aquatic animals and passively reduced feeding.
Some aquatic products cannot adapt to the rise of temperature or even die,
therefore affecting short-term feed demand and there are adverse effects on the
production and operation of feed enterprises.
Risk control methods include two aspects: (1) The company is currently fully
deploying manufacturers and local markets in major areas in Southern China,
Central China, Eastern China and Northern China and overseas markets in
SoutheastAsia.Theexpansion of regional distribution can effectivelydecrease the
risk of weather anomalies and natural disasters in local areas. (2) Continuously
improving the supports to farmers through the joint empowerment of feed,
seedlings, and animal healthcare, providing scientific breeding plans and
individual services from company’s technical personnel to enhance the risk
resistance and competitiveness of farmers and reduce the adverse effects of
abnormal weather.
2. Risks of company's production and operation due to the outbreak of epidemic
diseases
With the environmental changes and the development of large-scale breeding,
animal epidemic diseases also occur from time to time, forinstance,African swine
fever had broken out across China since August 2018 and PRRSV-mediated pig
diseases, shrimp-relevant EMS epidemic diseases and poultry-relevant “H7N9”
diseases occurred cross country in recent years. The scale of animal production
shrinks because of the outbreak of animal epidemic diseases, following the
reduced demand for feed in the short term. The prevalence of major animal
diseases can also easily affect consumers’purchase intention, and then reduce the
demand of end-consumers, leading to the downturn of the aquaculture and feed
industry, giving rise to adverse effects on the production and operation of feed
enterprises.
Risk control methods include two aspects: (1) The feed products cover the feeds
of pig, chicken, duck, goose, fish, shrimp and other livestock and aquatic feeds.
The variety of products and the well-balanced structure can effectively mitigate
theriskofsinglespeciesdiseasewithstrongcomprehensiverisk-relievecapability.
(2) The company has established the strict epidemic prevention and control
system in the production of feed products, utilizing the disease prevention and
control from the source with technological advantages and professional
capabilities.
3. Risk of Drastic Price Fluctuations of Major Ingredient Materials
The feed ingredients consist of staple agricultural products including corn and
soybeans (soybean meal) et al. In recent years, the domestic and international
markets of agricultural product have been closely connected. There were great
fluctuations in prices of agricultural products due to the change of the size in the
planting area and the harvest amount in these major grain-producing countries,
the purchasing and storage and subsidy policies, the import and export policies,
the political conflicts between countries, the international trade relations, the
fluctuationsinlogisticscapacityandconditionsofshippingandtheexchangerates,
bringing certain impact on the cost of feed and animal industry. With the
strengthening of the international trade of agricultural products, the factors
affecting the
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