Last year, the price of live pigs was “halved” year-on-year, and pig enterprises lost more and more when they sold pigs. Should Jiangxi Zhengbang Technology Co.Ltd(002157) with an estimated loss of 18.2-19.7 billion yuan in 2021 “fill the hole” by selling assets?
Pig raising is not easy to earn. Pig enterprises not only sell feed, but also sell feed companies.
On February 28, Jiangxi Zhengbang Technology Co.Ltd(002157) issued an announcement to sell part of the equity of the feed company to Beijing Dabeinong Technology Group Co.Ltd(002385) Jiangxi Zhengbang Technology Co.Ltd(002157) .
The target of this transaction is 8 feed companies under Jiangxi Zhengbang Technology Co.Ltd(002157) with a total transaction amount of about 2-2.5 billion yuan. Jiangxi Zhengbang Technology Co.Ltd(002157) is expected to obtain an investment income of 1.1-1.9 billion yuan from this transaction. According to the estimation of times finance, the annual net profit of the above eight feed companies in 2021 is about 267 million yuan.
In this regard, some investors said, ” Jiangxi Zhengbang Technology Co.Ltd(002157) can’t even afford pig feed?”
Last year, the price of live pigs was “halved” year-on-year, and pig enterprises lost more and more when they sold pigs. Should Jiangxi Zhengbang Technology Co.Ltd(002157) with an estimated loss of 18.2-19.7 billion yuan in 2021 “fill the hole” by selling assets?
As of press time finance has contacted Jiangxi Zhengbang Technology Co.Ltd(002157) , but no reply has been received. However, in recent days, rumors of “Zheng Bang applied for bankruptcy and Jiangxi grain and oil acceptance” were released in the market. In March 1st, Jiangxi Zhengbang Technology Co.Ltd(002157) group, the controlling shareholder, issued a clarification on its official account “the state boundary”, indicating that the above content is false information.
Zhu zengyong, chief analyst of monitoring and early warning of the whole pork industry chain of the Ministry of agriculture and rural areas, said in an interview with times finance that from the perspective of industrial development trend, the strategic cooperation between breeding and slaughtering leaders in the future is one of the industrial directions. Through the establishment of medium and long-term cooperation and the establishment of industrial benefit and risk sharing mechanism, it is not only conducive to slowing down the impact of pig price fluctuations on the upstream and downstream of the industry, It is also conducive to ensuring stable supply and improving the quality of raw materials.
In the secondary market, affected by the favorable news such as national collection and storage, the wind pig industry and feed concept rose by 5.37% and 4.73% respectively on March 1.
On the same day, the share price of Jiangxi Zhengbang Technology Co.Ltd(002157) ( Jiangxi Zhengbang Technology Co.Ltd(002157) . SZ) rose by 6.82% and closed at 7.36 yuan / share. Similarly, the other party’s Beijing Dabeinong Technology Group Co.Ltd(002385) ( Beijing Dabeinong Technology Group Co.Ltd(002385) . SZ) also rose slightly by 2.17% to close at 8.46 yuan / share.
Feed company is a good deal?
The subject matter involved in this transaction includes 8 Jiangxi Zhengbang Technology Co.Ltd(002157) holding subsidiaries (hereinafter referred to as the “subject company”) including Deyang Zhengbang agriculture and animal husbandry technology Co., Ltd., Danling Zhengbang Feed Co., Ltd. and Yunnan Guanglian livestock and poultry Co., Ltd Jiangxi Zhengbang Technology Co.Ltd(002157) expects to obtain 1.1-1.9 billion yuan of investment income from this transaction, accounting for 19.15% – 33.08% of the audited net profit of the latest fiscal year.
Previously, Jiangxi Zhengbang Technology Co.Ltd(002157) announced a loss forecast of 18.2-19.7 billion yuan in 2021, a decrease of 416.84% – 442.96% over the same period in 2020. As of the third quarter of last year, Jiangxi Zhengbang Technology Co.Ltd(002157) assets totaled 59.536 billion yuan, liabilities totaled 44.789 billion yuan, and the asset liability ratio was 75.23%.
Combining the two, it is easy to trigger the speculation that Jiangxi Zhengbang Technology Co.Ltd(002157) is eager to recover the funds by selling assets. Therefore, there is a rumor that “Zhengbang applies for bankruptcy and Jiangxi grain and oil accepts it” in the market recently.
In March 1st, Jiangxi Zhengbang Technology Co.Ltd(002157) group, the controlling shareholder, issued a clarification statement on its official account, “the state horizon”, indicating that the above content is false information.
On the same day, times finance contacted Jiangxi Zhengbang Technology Co.Ltd(002157) . No reply was received as of press time. However, in the announcement, Jiangxi Zhengbang Technology Co.Ltd(002157) said that it planned to form an industrial synergy with complementary advantages through this cooperation, so as to create greater commercial value and economic benefits for both sides. In the future, it will continue to cultivate pig breeding and strengthen pig breeding, fattening technology and process control.
According to the announcement, the net profit of the target company in the first three quarters was 200 million yuan. Therefore, times finance estimated that its annual net profit in 2021 was 267 million yuan. At the same time, since three of the target companies sell 100% equity and five sell 51% equity, the profit of the target company sold in 2021 is about 185 million yuan.
The announcement also shows that after the equity transfer is completed, the above eight target companies will no longer be included in the scope of Jiangxi Zhengbang Technology Co.Ltd(002157) consolidated statements and will become the subordinate holding subsidiaries of Beijing Dabeinong Technology Group Co.Ltd(002385) of . The assets and liabilities of other subsidiaries of the target company and branches not engaged in feed business are not included in the scope of this cooperation and will be stripped off by Jiangxi Zhengbang Technology Co.Ltd(002157) the target company.
Obviously, Beijing Dabeinong Technology Group Co.Ltd(002385) only takes over the “feed” business.
Specific to the target companies, times finance found that as of the third quarter of 2021, the asset liability ratio of 3 of the 8 target companies was higher than 80%. Moreover, Beijing Dabeinong Technology Group Co.Ltd(002385) as of the third quarter of 2021, the monetary capital was 4.479 billion yuan, which means that nearly half of the current cash needs to be spent to acquire the target company.
Perhaps due to the defect of acquired assets and large-scale outflow of working capital, the proposal was not passed by all votes in the Beijing Dabeinong Technology Group Co.Ltd(002385) board of directors, with 1 abstention and 1 opposition.
For Beijing Dabeinong Technology Group Co.Ltd(002385) , is it a good deal to buy feed assets with RMB 2-2.5 billion?
On March 1, the representative of Beijing Dabeinong Technology Group Co.Ltd(002385) Securities Department told times finance that Beijing Dabeinong Technology Group Co.Ltd(002385) did this M & A to expand the market share, seize the market in Southwest China and want to expand the feed scale. “The company’s profit mainly depends on feed, so the pre loss of the company’s performance in 2021 is less in the industry, because the profit of feed business is OK.”
The above-mentioned representative of Beijing Dabeinong Technology Group Co.Ltd(002385) securities department also said that the company was clear about the assets of the target company, and the agreement promised that the total net assets of the target company would not be less than 800 million yuan. “We are more concerned about the net assets, and the transfer price of the transaction target equity of 2-2.5 billion yuan is also estimated according to 800 million yuan.”
As mentioned above, the agreement between the two parties also stipulates that the total net assets of the subject company as of December 31, 2021 shall not be less than RMB 800 million. Otherwise, Jiangxi Zhengbang Technology Co.Ltd(002157) and its guarantee direction Beijing Dabeinong Technology Group Co.Ltd(002385) or the transferee company designated by Beijing Dabeinong Technology Group Co.Ltd(002385) shall be liable for the difference.
According to the announcement, as of the first three quarters of 2021, the net assets of the target company totaled 720 million yuan, not much from the 800 million yuan stipulated in the agreement.
Pig enterprises unite to keep warm?
In 2021, none of the A-share pig enterprises can avoid the impact of the decline in pig prices on their performance.
According to the statistics of times finance and economics, as of March 1, 20 pig enterprises had released the performance forecast for 2021. Only six pig enterprises Muyuan Foods Co.Ltd(002714) , Guangdong Guanghong Holdings Co.Ltd(000529) , Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) , Beijing Shunxin Agriculture Co.Ltd(000860) , Shandong Delisi Food Co.Ltd(002330) and Shandong Yisheng Livestock & Poultry Breeding Co.Ltd(002458) made money, accounting for only one third. Moreover, among the six pig enterprises, only Guangdong Guanghong Holdings Co.Ltd(000529) , Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) and Shandong Delisi Food Co.Ltd(002330) net profits increased year-on-year. “Zhumao” Muyuan Foods Co.Ltd(002714) 2021, although it is expected to achieve a net profit of 6.5-8 billion yuan, it decreased by 76.32% ~ 70.86% year-on-year.
The two sides of the transaction, Jiangxi Zhengbang Technology Co.Ltd(002157) is the enterprise with the most losses, with an advance loss of 18.2-19.7 billion yuan, a year-on-year decrease of 442.96% ~ 416.84% Jiangxi Zhengbang Technology Co.Ltd(002157) also said in the announcement that due to the company’s single industry, the profit contribution is mainly pig breeding business, which is more affected by the pig cycle than diversified companies Beijing Dabeinong Technology Group Co.Ltd(002385) was a loss of 230450 million yuan in advance, a year-on-year decrease of 123.01% ~ 111.76%.
Pig enterprises can’t wait to die, they have to stop their losses in time.
Times finance found that in addition to the equity delivery of feed business assets with Beijing Dabeinong Technology Group Co.Ltd(002385) on January 14, Jiangxi Zhengbang Technology Co.Ltd(002157) also signed the “Shuanghui Zhengbang strategic cooperation framework agreement” with Henan Shuanghui Investment & Development Co.Ltd(000895) on January 14, to carry out point-to-point direct supply of pigs, establish a supply chain cooperation mechanism and strengthen pig purchase and marketing cooperation for a period of three years.
Jiangxi Zhengbang Technology Co.Ltd(002157) said in the announcement that the cooperation is to give full play to the industrial advantages of both sides, improve their market competitiveness, achieve win-win cooperation and common development, meet the actual development needs of the company and will have a positive impact on the future operation and development of the company,
Earlier, on January 1, Henan Shuanghui Investment & Development Co.Ltd(000895) and Muyuan Foods Co.Ltd(002714) also signed the “Shuanghui muyuan strategic cooperation framework agreement”, which deepened the two sides in terms of point-to-point direct supply of pigs and the establishment of supply chain cooperation mechanism for a period of three years.
Do pig enterprises start to keep warm?
Zhu zengyong, chief analyst of monitoring and early warning of the whole pork industry chain of the Ministry of agriculture and rural areas, said in an interview with times finance that from the perspective of industrial development trend, the strategic cooperation between breeding and slaughtering leaders in the future is one of the industrial directions. Through the establishment of medium and long-term cooperation and the establishment of industrial benefit and risk sharing mechanism, it is not only conducive to slowing down the impact of pig price fluctuations on the upstream and downstream of the industry, It is also conducive to ensuring stable supply and improving the quality of raw materials.
Zhu zengyong predicts that the pig price will fall to about 10 yuan / kg in March and April, and the pig price will gradually rebound after April and may.
