Stock abbreviation: Jiangsu Lihua Animal Husbandry Co.Ltd(300761) Stock Code: 300761 Jiangsu Lihua Animal Husbandry Co.Ltd(300761)
(address: No. 500, Hexi village, Luxi village, Niutang Town, Wujin District, Jiangsu Province)
In 2021, the gem issued a prospectus to specific objects
(Registration draft)
Sponsor (lead underwriter)
(No. 86, Jingqi Road, Shizhong District, Jinan)
January 2022
Tips on major issues
The issuer specially reminds investors to pay attention to the following risk summary tips. For detailed understanding, please carefully read "section VI risk factors related to this offering" in this prospectus.
1、 Operating performance fluctuation risk
From 2018 to January September 2021, the company realized net profits of 1299693000 yuan, 1964251400 yuan, 254075700 yuan and -604634500 yuan respectively. The operating performance of the company fluctuates greatly, which is consistent with the trend of Listed Companies in the same industry. It is mainly affected by factors such as price fluctuation risk of livestock and poultry products, inventory impairment risk and animal disease risk, as follows:
1. Risk of product price fluctuation
During the reporting period, the company's external sales products were mainly yellow feather chickens, live chickens, live pigs and live geese, of which yellow feather chickens, live chickens and live pigs accounted for more than 95% of the company's operating revenue. The market price of yellow feather chicken, live chicken, live pig and other products will fluctuate due to the influence of market supply and demand and other factors, which will affect the profitability of the company, resulting in the possible fluctuation or sharp decline of the company's operating performance, and even the risk of loss. In 2020, affected by covid-19 epidemic control and its inhibition on consumption, the circulation and consumption of yellow feather chickens were also greatly adversely affected. In addition, due to the high industrial production capacity, the annual average sales price of the company's commercial broilers was 11.54 yuan / kg, a decrease of 20.74% compared with 2019. From January to September 2021, with the promotion of the normalized management of covid-19 pneumonia epidemic prevention and control in China, the impact of covid-19 pneumonia epidemic on production and life gradually weakened, and the consumption demand side of yellow feather broilers warmed up. Affected by the seasonal fluctuations of the industry and the relationship between supply and demand, the average sales price of commercial broilers of the company increased first and then decreased from January to September 2021. If the import of overseas epidemic leads to a large recurrence of covid-19 pneumonia in China, or further control measures are taken in some parts of China according to the epidemic situation, the circulation, consumption and market price of yellow feather chickens may be adversely affected, and the operating performance of the company may also be adversely affected.
2. Inventory impairment risk
The inventories of the company are mainly raw materials and consumable biological assets. The company's consumable biological assets are mainly raising commercial chickens and commercial pigs, and their market prices fluctuate periodically. There is a risk of withdrawing large inventory falling price reserves due to the sharp decline in prices. For example, at the end of June 2020, affected by the decline of commodity chicken price, the company accrued 143983300 yuan of inventory falling price reserves at the end of June 2020; At the end of September 2021, affected by the rise of raw material procurement costs, the decline of commodity pig market and other comprehensive factors, the balance of inventory falling price reserves withdrawn by the company at the end of September 2021 was 336.9304 million yuan. In the future, the company will also comprehensively calculate the consumptive biological assets according to the market conditions and breeding costs of various consumptive biological assets, and fully and reasonably withdraw the provision for impairment. If the breeding industry enters a trough period in the future due to the influence of policies, animal diseases, industry supply and demand and other factors, and the market price of yellow feather chicken and live pig falls sharply, resulting in the book value of inventory on the balance sheet date being higher than the net realizable value, the company is faced with the risk of inventory impairment, which may further affect the current operating performance of the company and even cause losses.
3. Animal disease risk
Animal disease is one of the main risks faced by animal husbandry enterprises in production and operation. The diseases faced by the company's yellow feather chicken breeding business are mainly highly pathogenic avian influenza, Newcastle disease, chicken Salmonella disease and infectious laryngotracheitis. The main diseases faced by the pig breeding business are blue ear disease, classical swine fever, infectious gastroenteritis, etc.
The negative impact of animal disease on the company's production and operation mainly includes three aspects: (1) the disease will lead to the decline or even death of chicken and pig breeding efficiency, directly lead to the decline of the company's production capacity and affect the company's business performance; (2) In order to control the development of the epidemic after the spread of the epidemic, the company needs to increase the investment in epidemic prevention, including the expenditure or loss caused by the government's requirements for compulsory vaccination, isolation and even culling in the epidemic area and surrounding specified areas; (3) The occurrence and prevalence of the epidemic disease will affect consumers' consumption psychology, lead to the contraction of market demand, the decline of the company's product sales price or even unsalable, and finally lead to the decline of the company's income or even loss.
If there is a serious animal epidemic around the company or across the country in the future, the company will face the risk of decline in output and sales price, increase in production cost and even loss caused by the spread of the epidemic. At the same time, with the continuous expansion of the company's yellow feather chicken and pig breeding scale, if the number of deaths of productive biological assets such as breeding chickens and pigs due to stress response, disease and other reasons increases, the disposal loss of non current assets will increase, which will affect the company's current operating performance.
2、 Business model risk
1. Cooperative farmer management risk
The company's commercial chickens adopt the cooperative breeding mode of "company + cooperative + farmers". The company entrusts cooperative farmers to breed commercial chickens. The company uniformly provides farmers with chicken seedlings, feed, epidemic prevention, drugs and breeding technical support. Farmers receive feed supply, epidemic prevention and technical guidance according to the company's breeding requirements, which will be recycled by the company for unified sales, And calculate farmers' breeding income according to the company's settlement and subsidy policies. The company has established relatively perfect internal control system and cooperative farmer management system, but with the continuous growth of the company's business and the expansion of breeding scale, the company's personnel scale and the number of cooperative farmers will further increase, and the company will face greater challenges in cooperative farmer management. If the company cannot continuously and effectively improve its management ability, As a result, the company's management system cannot fully adapt to the rapid expansion of business scale and the continuous growth of cooperative farmers, which will have an adverse impact on the company's future business performance and product quality control.
2. Risks of Co Construction of breeding shed funds and farmers' borrowing
In order to encourage cooperative farmers to expand the scale of raising chickens, improve the construction standards and automation level of chicken houses, alleviate the financial pressure of farmers, and encourage farmers to cooperate with the company for a long time, the company provides cooperative farmers with shed construction subsidies and farmers' loans. Among them, according to the cooperative years of farmers and the construction standards of breeding sheds, the subsidy for shed construction will be given to cooperative farmers in a certain proportion at one time; Farmers' loans are medium and short-term loans in a certain proportion according to the construction standards of farmers' breeding sheds.
With the expansion of the company's breeding scale and the increase of cooperative farmers, the co construction breeding shed funds, amortization amount and farmers' loan amount gradually increase.
With the increase of cooperative farmers, the co construction of breeding sheds and the amortization amount of each year will gradually increase, which may affect the current operating performance of the company. At the same time, in order to prevent farmers from terminating cooperation in advance and not returning subsidies or farmers' loans, the issuer has taken risk control measures such as signing mortgage agreements and guarantee agreements with cooperative farmers, but there is still the possibility of unilateral breach of contract by cooperative farmers and causing economic losses to the company.
3. Business model change risk
The company plans to invest part of the funds raised in this issuance in slaughtering projects. In the future, with the gradual release of the company's broiler slaughtering capacity, the company will gradually realize the transformation from live chicken sales to chilled chicken product sales, and more food processing plants, chain restaurants, shopping malls and supermarkets will be added to the downstream customers or sales scenes of the slaughtering business, which is different from the existing sales channels of live chickens dominated by natural person wholesalers. If the company fails to timely and effectively promote the development and maintenance of slaughtering business customers and channels according to the gradual completion and operation of slaughtering projects in raised investment, it may lead to operational risks such as failure to achieve the expected income of slaughtering projects in raised investment.
3、 Implementation risks of investment projects with raised funds
1. Risks that cannot be digested by new capacity of raised investment projects
The company has conducted necessary feasibility demonstration on the investment project with raised funds. The investment project with raised funds has good market prospects and economic benefits, but the actual economic benefits, market acceptance, sales price and production cost of the investment project with raised funds may be different from the company's prediction, The profitability of the project is uncertain. If the construction of the project is not completed as planned or the fund-raising management system is not improved, or the project cannot be put into operation as scheduled, or if the project is not implemented as planned, the fund-raising management system may not be improved, or the project may not be implemented as planned, or the market prevention and control effect may not be affected. Macroeconomic fluctuations, changes in consumers' income and consumption level, changes in consumer psychology, consumers' acceptance of slaughtered and processed broiler products, regional market competition, etc. may affect the market demand and digestion of new production capacity of raised capital investment projects, and bring risks to raised capital investment projects.
In addition, after the project invested with raised funds is put into operation, the supply of local yellow feather chicken live chicken or slaughtered and processed broiler products will be improved, and there may be a risk that the sales cannot be fully realized due to changes in market supply and demand or the new production capacity cannot be fully utilized; Or the expansion of supply leads to the decline of prices. Although the company can make full use of production capacity and fully realize sales according to the market, the lower price may lead to the decline of profits or even losses of the company.
2. Risk of depreciation and amortization of new assets of raised investment projects
After the implementation of the project invested by the raised funds, the scale of the company's slaughtering projects, chicken raising projects, headquarters base projects and other related fixed assets will increase, which will lead to the increase of relevant depreciation and amortization. It will take some time to release the production capacity and improve the economic benefits of the projects invested with raised funds. In the early stage of the completion and operation of the project, or in the event that the new production capacity cannot be fully utilized, or the economic benefits of the project do not meet the expectations, the depreciation of new fixed assets may have an adverse impact on the operating performance of the company.
3. Risks of operating qualification of raised investment projects
This raised investment project involves slaughtering projects, chicken raising projects and other production projects, which need to obtain a new qualification license after being completed and put into operation. As of the end of the reporting period, the relevant raised investment projects are in the construction period or have not been started, and do not have the conditions for handling the relevant qualification permit. The company will handle the relevant qualification permit in time according to the construction and production progress. Although in combination with relevant laws and regulations, as well as the actual business development and business qualification of the company, there are no obstacles to the acquisition of the business qualification required by the company's raised investment projects; However, in the future, there is still a risk that the project will not be put into operation on schedule due to the failure to obtain relevant business qualifications as planned.
4. Risks of leasing land for raised investment projects
Affected by the characteristics of the industry and the scarcity of land resources, the company needs to rent land and other operating assets on a large scale to carry out breeding business. Although the company has fulfilled the necessary leasing procedures and relevant facility land filing procedures in accordance with relevant laws and regulations, and obtained the compliance certificate of leased land for raised investment projects issued by relevant competent departments, there is still a risk that the company cannot continue to lease relevant land and other operating assets due to the expiration of the lease or the change of the lessor's lease intention.
5. Risk that self raised funds of raised investment projects cannot be in place in time
The total investment of this raised investment project is 2714.2957 million yuan, of which 160 million yuan is proposed to be raised. Before the raised funds are in place, the invested funds and other fund gaps need to be raised by the company with its own funds or by itself. Although the company can solve the self raised funds required for the above-mentioned raised investment projects through the accumulation of daily operating income, the realization of highly liquid financial assets and bank credit loans, there are still internal and external factors such as cyclical fluctuations in the livestock and poultry industry, changes in bank credit policies and untimely fund allocation of the company, which lead to the failure of self raised funds for raised investment projects in time, The risk that the raised investment project cannot be put into operation as planned.
4、 Risks related to this issuance
The issues related to the issuance of shares to specific objects have been deliberated and approved at the fourth meeting of the third board of directors held on October 19, 2021, and at the third extraordinary general meeting of shareholders held on November 4, 2021. The issuance scheme has been examined and approved by Shenzhen Stock Exchange, The final issuance plan shall be subject to the plan approved by the CSRC for registration.
Whether the issuance of shares to specific objects can be approved for registration is uncertain. In addition, the registration approval document for this issuance has a validity period, and there is uncertainty whether the company can complete the issuance related work within the validity period of the registration approval document.
Although the company has signed the share subscription agreement with effective conditions with the subscription object of this offering and agreed on the liability for breach of contract in the agreement, there is still a risk that the subscription object fails to pay the subscription price as agreed in the agreement in case of the decline of the company's share price, major adverse changes in the market environment, or changes in the financial situation of the subscription object itself. To sum up, there is a risk of issuance failure or insufficient funds raised in this issuance. Investment returns and risks coexist in the stock market. The stock price is not only affected by the company's profitability and the company's future development prospects, but also by many factors, such as investor psychology, stock supply and demand, the development and integration of the company's industry, national macroeconomic conditions, political, economic and financial policies. At the same time, the company still needs to perform a number of approval procedures for this issuance, which will take a certain time to complete. During this period, the market price of the company's shares may fluctuate, causing losses to investors directly or indirectly.
Issuer statement
The company and all directors, supervisors and senior managers promise that there are no false records, misleading statements or major omissions in the prospectus, and ensure that the information disclosed is true, accurate and complete.
The person in charge of the company, the person in charge of accounting and the person in charge of the accounting organization (Accounting Supervisor) shall ensure that the financial and accounting reports in the prospectus are true and complete.
Any decision or opinion made by China Securities Regulatory Commission and Shenzhen Stock Exchange on this issuance does not indicate that they guarantee the authenticity, accuracy and integrity of the application documents and the information disclosed, nor that they make substantive judgment or guarantee on the profitability, investment value of the issuer or the income of investors. Any statement to the contrary is a false statement.
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