On March 3, due to the frequent planning of acquisitions since 2022, Beijing Dabeinong Technology Group Co.Ltd(002385) received a letter of concern from Shenzhen Stock Exchange, which was asked to explain the necessity and rationality of the acquisition of relevant objects since 2022, as well as the possible impact on the company’s operation and performance after the acquisition.
Earlier, Beijing Dabeinong Technology Group Co.Ltd(002385) announced on March 1 that in order to further improve the company’s feed industry layout in Southwest China and enhance the competitiveness of feed industry, it plans to acquire 8 subsidiaries of Jiangxi Zhengbang Technology Co.Ltd(002157) with RMB 2.5 billion to RMB 2.5 billion.
It is worth mentioning that this is not the first large-scale acquisition of Beijing Dabeinong Technology Group Co.Ltd(002385) this year. On January 11, the company disclosed that it planned to acquire 30% of the equity held by Yang Lin, a natural person shareholder of Hunan Jiuding Technology (Group) Co., Ltd. (hereinafter referred to as “Jiuding Technology”), with a transaction price of RMB 1.32 billion. At the same time, it signed a framework agreement with Yang Lin and Jiuding technology, Reach a framework agreement on the continued acquisition of the remaining 70% of the equity in the future.
the attention letter issued by Shenzhen Stock Exchange
The letter of concern points out that Beijing Dabeinong Technology Group Co.Ltd(002385) plans to acquire assets more frequently since 2022. The company is required to explain in detail the background, necessity and rationality of the acquired target assets and Jiuding technology equity, as well as the possible impact on the subsequent operation and performance of the company in combination with the current business development of each sector, the company’s strategy and the main development fields of future business, Whether the relevant transactions are in line with the company’s development strategy and long-term interests.
According to the quarterly report of Beijing Dabeinong Technology Group Co.Ltd(002385) III, by the end of the third quarter of 2021, the balance of Beijing Dabeinong Technology Group Co.Ltd(002385) monetary assets was 4.479 billion yuan, the balance of interest bearing liabilities (short-term loans, non current liabilities due within one year, long-term loans and bonds payable) was 7.945 billion yuan, and the company’s expected loss in 2021 was 230 million yuan to 450 million yuan. Shenzhen stock exchange requires to explain the capital arrangement for the company to pay the above transaction price and its possible impact on the company, and whether it may cause the deterioration of the company’s cash position.
In addition, when Beijing Dabeinong Technology Group Co.Ltd(002385) deliberated on the proposal on acquiring the equity of some holding subsidiaries of Jiangxi Zhengbang Technology Co.Ltd(002157) it was opposed by the independent directors. An independent director who abstained from voting believed that he agreed with the acquisition in terms of enterprise development, but the materials seen before and during the meeting were not complete and sufficient enough to support the decision-making of the board of directors. It is suggested to submit the supplementary materials to the board of directors.
Another independent director who directly voted against directly said that the current board of directors was an interim Board of directors, and the proposal on the acquisition of equity of some holding subsidiaries of Jiangxi Zhengbang Technology Co.Ltd(002157) company prepared by the company’s Board Secretary lacked a comprehensive and complete feasibility analysis report and due diligence report, and there were major defects in the draft of relevant equity transfer agreement, As a result, it is difficult for independent directors to effectively consider and vote on the proposal.
However, for the above two acquisitions, the company believes that although the transaction amount is large, the company’s own funds are sufficient, which will not have a significant adverse impact on the company’s financial status and operating results. Moreover, due to the large feed capacity of the acquired company, it will have a positive impact on the company’s scale effect and performance growth in the future.
In addition, the reporter of Securities Daily also noted that since 2022, Beijing Dabeinong Technology Group Co.Ltd(002385) in addition to the above acquisitions, Beijing Dabeinong Technology Group Co.Ltd(002385) has made investment and capital increase for many times: it is proposed to invest 105 million yuan to purchase 80 mu of land in Baoshan industry and Trade Park, Yunnan Province, build the phase I project of Baoshan Beijing Dabeinong Technology Group Co.Ltd(002385) pig feed science and Technology Park, and increase the investment budget of Beijing Dabeinong Technology Group Co.Ltd(002385) (Beijing) biological agriculture innovation park project by 370 million yuan. It is proposed to add 298 million yuan and 280 million yuan in cash to the two subsidiaries respectively, and then invest 100 million yuan to establish a wholly-owned subsidiary “Tianjin Beijing Dabeinong Technology Group Co.Ltd(002385) Supply Chain Management Co., Ltd. (tentative name). The above investment funds are from the company’s own funds.
Beijing Dabeinong Technology Group Co.Ltd(002385) which “chess game” did you play
According to the announcement, the profit of Beijing Dabeinong Technology Group Co.Ltd(002385) breeding business decreased significantly in 2021 mainly due to the decline in the price of live pigs, the rise in the price of main feed raw materials and the purchase of some pig seedlings. At the same time, the company initially made an impairment provision of about 400 million yuan for the current consumable biological assets and productive biological assets, resulting in a performance loss of 230 million yuan to 450 million yuan in Beijing Dabeinong Technology Group Co.Ltd(002385) 2021, A year-on-year decrease of 111.76% – 123.01%.
For the development plan in 2022, the company said that it would pay more attention to the proportion of scientific and technological products (seed industry, animal protection and vaccine) in the overall income and the proportion of front-end materials in the feed business. Especially in the feed business, the company believes that the feed industry has great potential and will focus on pig feed and become a high-end feed variety in the feed industry. To become the most competitive feed enterprise, its market share should reach 10% in the near future and 20% in the medium and long term. Its development planning is through its own development and mergers and acquisitions.
The acquisition of Jiuding technology and eight “feed” companies under Jiangxi Zhengbang Technology Co.Ltd(002157) is to respond to the strategic layout of the company’s great development, increase the market competitiveness of the feed industry, quickly improve the company’s production capacity and move closer to the leading enterprises in the feed industry through the merger and acquisition of the feed industry.
“At present, the competition in the feed industry is fierce, the industry concentration is increasing, and most leading enterprises have the goal of increasing market share.” Zou Honglin, feed analyst of Shanghai Ganglian E-Commerce Holdings Co.Ltd(300226) Shenzhen Agricultural Products Group Co.Ltd(000061) business unit, told the reporter of Securities Daily, “The scale of feed enterprises is continuously improving, and the acquisition of feed enterprises by listed companies is conducive to the rapid growth of production and sales and improve the market share. Although the feed factory, as a processing link, has a low net profit, it can still provide relatively stable cash flow most of the time.”
According to the data of feed industry association, there are 39 feed enterprise groups with an annual output of more than one million tons in 2021, with a year-on-year increase of 6; The total feed output accounted for 59.7% of the total feed output in China, an increase of 5.1% over the previous year; Among them, 6 enterprise groups have an annual output of more than 10 million tons, an increase of 3 over the previous year.
However, Zou Honglin suggested that as a link between the preceding and the following, the profit factors of feed enterprises are mainly affected by the upstream and downstream ends. From the perspective of upstream raw materials, the sharp rise in the prices of corn and soybean meal will push up the purchase cost of raw materials. Although feed enterprises can improve the sales price of feed products, the prolonged continuous price rise will affect their customer demand. On the other hand, the sharp fluctuation in the prices of raw materials will also increase the business risk of enterprises. From the perspective of downstream breeding demand, the breeding industry, such as pigs and poultry eggs, presents obvious cyclical fluctuations, which affects the profitability of the feed industry at different stages.
