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Lihua LLC focusing on feeding yellow broilers passed the listing application

China Agriculture Report By CnAgri2018-11-29 15:11:19China Agriculture Report Print Jiangsu Lihua Muye LLC passed the listing application on November 20, 2018, and plans to be listed on the GEM of the Shenzhen Stock Exchange. It plans to issue no more than 50 million RMB ordinary shares to raise 1.15 billion yuan. So, what are the characteristics of Lihua LLC?
(1) Lihua LLC focuses on feeding yellow broilers. Founded in June, 1997, Lihua LLC is an comprehensive agricultural company integrating scientific research, production, and trade, with the feeding of high quality local chickens as main business. The company sold 255 million high quality broilers in 2017, accounting for 6.9% of China’s total slaughterings of yellow broilers, ranking second only to Wens. In addition, Lihua LLC is involved in pig farming, goose feeding, and food processing sector with pig production of 385,000 heads and goose production of 1.44 million birds in 2017. Its sales revenue reached 5.9 billion yuan in 2017.
(2) Lihua LLC adopts company + farmer model. The company practices a close-type cooperative feeding model of “company+ cooperative + farmer” for yellow broiler business and a cooperative farming model of “company + base + farmer” for hog raising business. From January to September, 2017, the numbers of cooperative farmers of yellow broiler business and hog business reached 4930 and 127 respectively, and the average incomes of yellow broiler farmers and pig farmers were roughly 85700 yuan and 78700 yuan.
(3) Lihuas benefit of feeding broilers is higher than that of Wens. As Lihua’s costs for feed ingredients and farmers’ raising fee of commercial birds are lower than that of Wens, its profit margins of commercial broilers were 0.44%, 2.23%, and 4.50% higher than those of Wens in 2014, 2015, and 2016 respectively. From the perspective of raw materials, Lihua is located in East China which is close to North China and Central China, the producing areas of feed ingredients, the haul distance is shorter, so Lihua has advantages in purchasing costs of feed ingredients. As for the feeding scales of farmers, the average scale of Lihua’s cooperative farmers is 45,000 birds, which is higher than the average of 22,000 birds of Wens, so Lihua’s cost for entrusting farmers to feed each broiler is lower than that of Wens.
As China’s second large yellow broiler enterprise, Lihua has advantages in feeding cost and benefit. At the same time, the operating revenue of yellow broiler business accounts for more than 95% of the company’s total revenue. For the business is relatively single, Lihua faces greater risks of poultry diseases and industrial cyclical fluctuation. 

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