The pockets of large pig farmers can be called “mountain of pressure”.
Jiangxi Zhengbang Technology Co.Ltd(002157) 4 announced on the evening of April 15 that the company received a notice from the controlling shareholder Zhengbang group on the same day that a total of 117524 million shares of Zhengbang group were applied for freezing by the people’s Court of Suzhou Industrial Park, starting on April 12. The frozen shares account for 1.57% of the shares held by Zhengbang group and 0.37% of the total share capital of the company.
For the frozen items, Jiangxi Zhengbang Technology Co.Ltd(002157) said that the controlling shareholders of the company are actively and properly solving the above judicial frozen items, and there is no risk of closing positions or being forced to transfer ownership for the time being.
It is worth noting that Zhengbang group has been facing great financial pressure since this year, and its debt to be paid in the next year is 3.96 billion yuan. The high pledge also worries the market. At present, Zhengbang group and the persons acting in concert pledge a total of 1.321 billion shares, accounting for 85.05% of its shares and 42% of the total share capital of the company.
Jiangxi Zhengbang Technology Co.Ltd(002157) shares were newly reported at 7.08 yuan / share, with a market value of 22.3 billion yuan.
capital pressure should not be underestimated
Behind the freezing of Zhengbang group’s shareholding, its capital pressure should not be underestimated. On the eve of this equity freeze, it also added a large number of equity pledges.
Jiangxi Zhengbang Technology Co.Ltd(002157) 4 disclosed on April 7 that the company received a notice from Zhengbang group, the controlling shareholder of the company, on April 2, 2022, and learned that it had handled the pledge procedures for part of its equity in the company. Zhengbang group added 28.8 million pledged shares this time, accounting for 3.84% of its shares and 0.92% of the total share capital of the company. The announcement disclosed that the pledge is used for its own financing needs.
The announcement at that time showed that Zhengbang group and its concerted actors pledged a total of 1.321 billion shares, accounting for 85.05% of its shares and 42% of the company’s total share capital. The total interest bearing liabilities of Zhengbang group are RMB 6.432 billion, of which the debt to be paid in the next six months is RMB 1.852 billion and the debt to be paid in the next year is RMB 3.96 billion.
Capital is tight, and market rumors follow. On March 1, there was a rumor in the market that “Zhengbang applied for bankruptcy and Jiangxi grain and oil took over”. According to media reports, the company is in contact with a company under state-owned assets of Jiangxi Province, but not Jiangxi grain and oil group.
Zhengbang group announced that the relevant contents about the company’s “application for bankruptcy” were false information.
The person in charge of a private placement institution that has long followed pig enterprises in Shanghai told the China Securities Journal that pig prices are expected to be low for several months this year, and even if they rise, some pig enterprises will face losses.
industry is hard to see reversal in the short term
The shares of major shareholders have been frozen, and the life of listed companies is also difficult.
According to the earlier performance forecast, Jiangxi Zhengbang Technology Co.Ltd(002157) 2021 is expected to lose 18.2-19.7 billion yuan. In early April this year, the company disclosed that it planned to postpone the repayment of the funds raised by convertible bonds with an accumulated amount of more than 3.5 billion yuan for temporary replenishment of working capital. In this regard, the Shenzhen stock exchange sent a letter asking the company to explain the specific reasons for the failure to return the raised funds on time and whether it has been misappropriated and occupied.
In the face of inquiries from regulators, Jiangxi Zhengbang Technology Co.Ltd(002157) “pouring bitter water”.
“2021 is the ‘cold winter’ of China’s pig breeding industry. After the whole industry has experienced significant performance losses, pig prices continued to decline in 2022. At present, the whole pig breeding industry has suffered deep losses for nearly a year, and is generally faced with tests such as declining income, loss of profits and tight cash flow.” Jiangxi Zhengbang Technology Co.Ltd(002157) said in the reply that in order to successfully survive the bottom of the pig cycle, the company adopted the strategy of maintaining the development of existing production capacity, strictly controlled capital expenditure, reduced cash outflow, comprehensively promoted “cost reduction and efficiency increase”, and reserved funds to survive the cold winter of the industry, so as to ensure the normal production and operation of the company under extreme circumstances.
The chief agricultural analyst of a Chinese securities firm recently said in a research report that the pig cycle is unlikely to reverse this year and the probability of reversal next year is also low. At present, the pig price continues to decline when the weight of live pigs is light (a year-on-year decrease of more than 10%) and MSY (the number of fat pigs per sow per year) is only 16-17 (reaching more than 18 in 2020 when the supply of the industry is the most tense). It reflects the serious surplus of pig supply. Considering the slaughter weight and the potential improvement ability of MSY, the stock must be reduced by at least 15% to reach the balance of supply and demand. At the end of February, the stock was 42.68 million, only 6.5% lower than the high point of last year.
“Next, the pace of capacity removal will be slower. We don’t think that when the stock removal approaches a reasonable level, farmers have the power to further remove it. This means that the industry is unlikely to have a major cycle reversal without the constraints of external factors.” The aforementioned analysts pointed out.
