New Hope Liuhe has launched a CNY 85 million (USD 11.7 million) ESOP targeting overseas core employees, aiming for a 10% growth in international revenue by 2025. The plan includes an 18-month lock-in period and performance-based unlocking, focusing on strengthening operations in key markets like Southeast Asia. This initiative reflects lessons learned from a previous ESOP in 2022 and emphasizes aligning employee incentives with measurable business growth.
New Hope Liuhe has unveiled a CNY 85 million (about USD 11.7 million) Employee Stock Ownership Plan (ESOP) to strengthen its overseas business operations. The plan targets 180 core employees in global units, underlining the company’s focus on international revenue growth.
Strategic Objectives Behind the New ESOP
On December 2, Chinese livestock giant New Hope Liuhe launched its 2024 ESOP, valued at CNY 85 million (USD 11.7 million). The initiative seeks to reward and retain top-performing employees across the company’s overseas business units. With a discounted share price of CNY 4.81 (USD 0.66)—half the average trading price over the past 120 days—the ESOP offers participants substantial value.
The plan’s lock-in period spans 18 months, with unlocking contingent on achieving key performance goals. Central to the initiative is an ambitious target: a minimum 10% growth in overseas revenue between 2024 and 2025.
Global Operations in Focus
New Hope’s international strategy has increasingly become a cornerstone of its growth. In 2023, overseas revenue soared to nearly CNY 20.1 billion (USD 2.75 billion), a 15.67% year-on-year increase. Overseas business contributed over 14% of the company’s total revenue, and by mid-2024, its share had climbed to 20.18%.
However, challenges persist. Growth slowed to 5.37% in the first half of 2024, reflecting a tougher market environment. Nevertheless, overseas gross profit margins remain robust at 9%, contrasting sharply with domestic margins, which dipped below 1% during the same period.
Key markets in Southeast Asia, including Indonesia, Vietnam, and the Philippines, exemplify New Hope’s international priorities. In these regions, the company ranks among the top four feed producers, highlighting its strong foothold in the feed industry.
Learning from the Past
This isn’t New Hope’s first ESOP initiative. The 2022 plan, which targeted over 2,300 employees, was prematurely terminated due to missed performance targets.
While the program achieved a 46% increase in hog sales in 2022, it fell short on cumulative feed sales and profitability goals. Challenges included:
- A marginal 1% annual growth in cumulative feed sales over two years.
- A net profit of CNY 250 million (USD 34.4 million) in 2023, far below the CNY 4 billion (USD 550 million) target.
- A volatile industry environment undermines aggressive growth strategies.
The new ESOP adopts a more targeted approach by addressing these setbacks, linking rewards directly to international business outcomes.
A Calibrated Vision for Growth
New Hope Liuhe’s latest ESOP underscores a recalibrated strategy, marrying employee incentives with measurable international growth. With its sights set firmly on Southeast Asia and beyond, the company aims to leverage its expertise in feed production to drive sustainable global expansion.
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