Nanjing Red Sun Co.Ltd(000525) , whose net profit increased by more than 10 times in the first quarter of this year, fell into the mire of loss again last year, and the boots of the company under investigation have not yet landed.
On the evening of April 7, Nanjing Red Sun Co.Ltd(000525) disclosed the performance forecast. It is estimated that the net profit attributable to the parent company will reach 286 million yuan to 318 million yuan in the first quarter of 2022, with a year-on-year increase of 119424% to 133905%, deducting 290 million yuan to 322 million yuan, with a year-on-year increase of 466464% to 519076%.
Affected by this news, on April 8, Nanjing Red Sun Co.Ltd(000525) word limit rose to 8.91 yuan / share, with a total market value of 5.175 billion yuan.
last year’s net profit and loss
With regard to the pre increase of performance in the first quarter, Nanjing Red Sun Co.Ltd(000525) pointed out that during the reporting period, the company seized the historical opportunity of stable growth of demand for green pesticides brought by ensuring food security and rigid demand. The main products continued the favorable situation of “simultaneous rise in volume and price” since the third quarter of 2021. Relying on the advantages of the “three” green pesticide industry chains, on the one hand, the company steadily improved the revenue level by actively organizing production and exploring the market outside China, And achieved the development trend of sufficient long-term product orders, stable price and sufficient goods; On the other hand, through management innovation, cost reduction and efficiency increase, the company’s efficiency can be continuously improved.
However, compared with the net profit doubled in the first quarter, the profitability of Nanjing Red Sun Co.Ltd(000525) 2021 is limited. According to the 2021 performance express released by the company on the same day, its revenue in 2021 was 4.683 billion yuan, a year-on-year increase of 16.44%, and the net profit attributable to the parent company was 3.726 billion yuan, a year-on-year decrease of 232241%.
According to the data of the third quarterly report, Nanjing Red Sun Co.Ltd(000525) 2021’s net profit in the first three quarters was 363143 million yuan. Based on the calculation of the performance express, Nanjing Red Sun Co.Ltd(000525) only the loss in the fourth quarter of 2021 was as high as 3.762 billion yuan.
Nanjing Red Sun Co.Ltd(000525) said that since the third quarter of 2021, the company’s main products have gradually “increased both in volume and price”, driving the year-on-year increase of operating revenue. However, due to the strategic operation constraints of “low in the front and high in the back” of product prices, contract orders in the front and supply in the back, the implementation of the national “dual control of energy consumption” policy leads to insufficient operating rate, which not only leads to the incomplete release of production capacity, but also leads to the rise of comprehensive operating costs, the sharp rise of raw material prices, the spread of the global epidemic and the “sharp rise of maritime logistics costs”.
From a longer perspective, Nanjing Red Sun Co.Ltd(000525) has been in a loss dilemma for consecutive years. From 2019 to 2020, the company’s net profit lost 340 million yuan and 154 million yuan respectively, and 370 million yuan and 266 million yuan respectively after deducting non profits.
Public information shows that Nanjing Red Sun Co.Ltd(000525) was founded in 1991 and landed in the capital market in 1993. It is located in Nanjing, Jiangsu Province, focusing on the scientific research and manufacturing of “three drugs” intermediates integrating green pesticides, animal nutrition and upstream and downstream.
actual controller punished
In addition to the difficult performance, there are many problems in front of Nanjing Red Sun Co.Ltd(000525) eyes.
Similarly, on the evening of April 7, Nanjing Red Sun Co.Ltd(000525) disclosed the progress of the investigation. Because the company was suspected of violating laws and regulations in information disclosure, Nanjing Red Sun Co.Ltd(000525) received the notice of investigation from the CSRC on July 6, 2020. According to relevant regulations, the CSRC decided to investigate the company. The company disclosed that at present, the investigation work of the CSRC is still in progress, and the company has not received the concluding opinions or decisions on the above investigation matters. At the same time, the company suggests that if it is subject to administrative punishment by the CSRC and the illegal act is a major illegal compulsory delisting, there may be a risk of being terminated from listing.
Looking back on previous announcements, the violations of Nanjing Red Sun Co.Ltd(000525) are basically clear. According to the disciplinary decision issued by Shenzhen Stock Exchange on August 26, 2021, in 2019 Nanjing Red Sun Co.Ltd(000525) there was a situation of repaying bank loans for the controlling shareholder Dongnan Yinong group and its related party red sun group, which constituted the occupation of non operating funds by the controlling shareholder and its related parties. The maximum daily occupation balance was RMB 2.972 billion, accounting for 64.88% of the company’s audited net assets at the end of 2018. As of December 31, 2019, the balance of the above non operating funds was 2.917 billion yuan. From January to June 2020, the company was transferred by the bank as the guarantor due to the breach of external financing of the holding stock southeast first agricultural group, resulting in the occupation of 85 million yuan of new non operating funds. During this period, the company has received 3.002 billion yuan from Nanyi agricultural group and red sun group.
All the funds returned by Nanyi agricultural group and red sun group in the early stage were used by the company to provide pledge guarantee for their external financing. However, from August to December 2020, Nanyi agricultural group and red sun group failed to repay the external financing on schedule, resulting in the funds provided by the company with pledge guarantee being deducted by the bank, which constitutes the occupation of non operating funds of the controlling shareholders and their related parties. The maximum daily occupied balance is 2.996 billion yuan, accounting for 66.76% of the audited net assets of the company at the end of 2019.
Due to the occupation of the above funds, Nanjing Red Sun Co.Ltd(000525) 2020 was issued a negative internal control audit report by the accounting firm, so other risk warnings were implemented.
On April 7, Nanjing Red Sun Co.Ltd(000525) said that during the period from April 29, 2021 to March 6, 2022, Nanyi agricultural group and its affiliates repaid the occupied funds to the company totaling 119836 million yuan. As of April 6 this year, the fund balance of the company occupied by Nanyi agricultural group and its related parties was 295 million yuan.
In addition, Nanjing Red Sun Co.Ltd(000525) there are also acts of providing external guarantees in violation of regulations and untimely correction of performance forecast. For the above-mentioned violations, the Shenzhen Stock Exchange decided that the company and relevant parties would be given disciplinary sanctions. Among them, Yang Shouhai, the actual controller of the company and the then chairman of the board of directors, was publicly recognized as unsuitable to serve as the director and supervisor of listed companies for five years.
Interestingly, according to the regulations, Yang Shouhai should resign within one month, but he didn’t ask for resignation from the board of directors until four months after the punishment was issued, on December 29, 2021. Shenzhen Stock Exchange issued a letter of concern to Nanjing Red Sun Co.Ltd(000525) about this. After two extensions, the company replied that Yang Shouhai was not removed from the post of chairman of the board of directors in accordance with the corresponding provisions in consideration of stabilizing the company’s production and sales, operation and management and project operation.
annual report data misstatement
But Nanjing Red Sun Co.Ltd(000525) made more than that. On April 6, Shenzhen Stock Exchange issued a supervision letter to the company. Jiangsu Securities Regulatory Bureau found that the accounting of some inventory falling price reserves of the company was inaccurate from 2016 to 2018, and there was a false increase in some sales in 2014 and 2018. The above matters affected the accounting of operating income, asset impairment loss, accounts receivable and other subjects, resulting in misstatement of revenue, net profit or net asset amount in the annual report of the company from 2014 to 2020.
Among them, the amount of misstatement of revenue, net profit and net assets in 2014 was 7.0991 million yuan, 6.6178 million yuan and 6.6178 million yuan respectively (positive number means virtual increase and negative number means virtual decrease, the same below); The amount of misstatement of net assets in 2015 was 6.6178 million yuan; In 2016, the amount of misstatement of net profit and net assets was 3.912 million yuan and 105298 million yuan respectively; In 2017, the amount of misstatement of net profit and net assets was -126000 yuan and 104038 million yuan respectively; In 2018, the amount of misstatement of revenue, net profit and net assets was 7.8777 million yuan, -3.3498 million yuan and 7.054 million yuan respectively; In 2019, the amount of net profit and net assets misstatement was -7.6014 million yuan and -547400 yuan respectively; In 2020, the amount of misstatement of revenue, net profit and net assets was -1380200 yuan, 113700 yuan and -433700 yuan respectively.
Paradoxically, despite years of losses and repeatedly touching the regulatory red line, Nanjing Red Sun Co.Ltd(000525) is highly sought after in the secondary market. According to the data, its share price has risen to the latest market price of 8.91 yuan / share since its low of 3.14 yuan / share in May 2021, an increase of 183.76%.
