On February 25, Zhejiang Huatong Meat Products Co.Ltd(002840) issued 11 announcements in a row, which not only revised many previous periodic reports, but also announced that the company’s performance forecast for 2021 had “changed face”: from a profit of 10 million yuan to 15 million yuan to a loss of 170 million yuan to 230 million yuan.
Source: China stock market news
In this regard, some investors lamented: it’s over! finished!
asset impairment exceeding 200 million yuan
On February 25, Zhejiang Huatong Meat Products Co.Ltd(002840) issued the revised announcement of 2021 annual performance forecast.
Zhejiang Huatong Meat Products Co.Ltd(002840) previously, it was estimated that the net profit in 2021 was 10-15 million yuan, a year-on-year decrease of 88.9% – 92.6%; Net loss of RMB 2.78 million to RMB 1.78 million, a year-on-year decrease of -2.74 million.
The latest forecast shows that the company’s net loss in 2021 is 170 million yuan – 230 million yuan, a year-on-year decrease of 225.83% – 270.25%; After deducting non-profit, the net loss was 190 million yuan to 240 million yuan, a year-on-year decrease of 526.13% – 638.28%.
Source: company announcement
In the announcement, Zhejiang Huatong Meat Products Co.Ltd(002840) said that there are two main reasons for performance correction:
1. Provision for asset impairment
Since February 2022, China’s pig market price has further declined, and the recent decline is large. The management of the company carefully evaluates the impairment risk of biological assets according to the recent pig market, and makes a supplementary provision for the impairment of biological assets for the biological assets on hand at the end of 2021.
2. Government subsidy
The company adjusted the accounting treatment of some government subsidies obtained in the early stage, and included the adjustment of some government subsidies included in the current “other income” into the “deferred income” for apportionment, resulting in a decrease in the net profit attributable to the shareholders of the listed company in 2021 compared with the previous performance forecast.
In another announcement on the provision for asset impairment, Zhejiang Huatong Meat Products Co.Ltd(002840) made a detailed explanation on the provision for asset impairment, including two main items: first, in 2021, due to the sharp decline in the market price of live pigs in China and other reasons, the company based on the principle of prudence made a provision for inventory depreciation of 150 million yuan; Second, at the end of 2021, considering the large number of productive biological assets and the uncertain expectation of China’s pig market, the impairment of productive biological assets was withdrawn by 61.8755 million yuan according to the impairment test formula of the company’s management.
Source: company announcement
Zhejiang Huatong Meat Products Co.Ltd(002840) said that the provision for impairment of various assets in 2021 was 217 million yuan, reducing the total profit of the company’s consolidated statements in 2021 by 217 million yuan.
performance of pig breeding enterprises under pressure
It can be found from the above announcement that the provision for asset impairment of Zhejiang Huatong Meat Products Co.Ltd(002840) is mainly due to the further decline of pig market price.
According to the data of China pig network, since the end of 2021, the price of live pigs (external three yuan) has fallen from more than 18 yuan / kg to 12.67 yuan / kg at present.
Source: China pig network
The price of 12.67 yuan / kg is actually far lower than the cost price of pig raising enterprises. In an investor relations record on January 4, Zhejiang Huatong Meat Products Co.Ltd(002840) said: at present, the cost of self breeding and self raising fat pigs is 17-18 yuan / kg, which is expected to be reduced to 15-16 yuan / kg in 2022.
Source: company announcement
In fact, at the beginning of 2021, the price of live pigs was once around 30 yuan / kg, but then kept falling, which directly affected the performance of pig raising enterprises. For example, Zhejiang Huatong Meat Products Co.Ltd(002840) in the first quarter of 2021, there was a profit of 77.46 million yuan, but in the third quarter, there was a direct loss of 104 million yuan.
Source: China stock market news
In this context, judging from the current performance forecast, many pig raising enterprises have suffered huge losses, of which Jiangxi Zhengbang Technology Co.Ltd(002157) , Wens Foodstuff Group Co.Ltd(300498) have suffered losses of more than 10 billion yuan.
Unit: 100 million yuan
Picture: China stock market news choice
