According to the Zhitong Finance App, Huisheng International (01340) announced that the group expects a significant decrease in profit for the year ending December 31, 2017 compared to last year, mainly due to a decrease in earnings and average gross margin.

The decrease was due to a decrease in slaughter volume and a drop in selling prices. The reduction in slaughter is due to intense competition for imported pork products and changes in eating habits. The decline in selling prices was due to oversupply, which led to lower unit prices compared to last year.

Since the selling price of pork products is more flexible than the cost of pigs, the average selling price of pork products falls faster than the average cost of pigs.

Also, less slaughter means lower utilization, so each product may incur higher fixed costs.

Second, the company granted a share option to an executive director, employee and advisor on April 10, 2017, to confirm the share payment expenses of approximately RMB 7.6 million.

Furthermore, the company confirmed losses due to changes in the fair value of biological assets, while earnings in 2016 were approximately RMB 16.3 million. This is mainly due to the decline in pig prices, which may also lead to a decline in the value of breeding pigs.