Australia and Asia Group (02425) issued an announcement. The Group expects to achieve consolidation for the year ending December 31, 2023...
According to the Zhitong Finance App, Australia and Asia Group (02425) announced that the Group expects to have a comprehensive net loss of approximately RMB 450 million (same unit) to RMB 500 million for the year ended December 31, 2023, while net profit for the year ended December 31, 2022 is approximately RMB 158 million (US$23.4 million).
The expected loss is mainly due to loss (revaluation loss) from the fair value of biological assets minus changes in the cost of sale. In the year, revaluation losses are expected to range from approximately $640 million to $700 million, compared to $158 million ($23.4 million) in 2022. The revaluation loss was mainly due to a decrease in the price of raw milk and an increase in feed costs over the past 12 months. Provision for shareholders' loans and related interest receivables is approximately RMB 89.8 million. Shareholders' loans are provided to ood Union AustAsia Holdings Pte. Ltd. is consolidated into long-term accounts receivable. Management assessed the credit risk associated with the shareholder loan and concluded that the loan and accrued interest were irrecoverable; and that demand for raw milk and beef cattle in China was weaker than expected and sales prices were lower. In the same year, the average sales prices of the Group's raw milk and beef cattle decreased by about 8.2% and 7.6%, respectively, compared to 2022, leading to a decline in gross margin.
Faced with an extremely challenging economic environment and weak consumer demand, the Group continues to take effective actions to improve operating efficiency and reduce feed costs. In the second half of 2023, the Group achieved a significant improvement in gross margin compared to the first half of the year by implementing cost saving measures. Furthermore, during the year, the Group continued to increase milk production and began feed processing through its in-house feed factory.
Mainly due to the revaluation losses described in paragraph above, the Group expects to achieve a consolidated net loss of approximately $450 million to $500 million in the year.