On April 16, Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) released the performance report for 2021, saying that last year, the revenue was 1.444 billion yuan, an increase of 7.60% year-on-year; The net profit loss attributable to shareholders of listed companies was 491 million yuan.
Since the sale of pharmaceutical assets at the end of 2020, Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) ushered in the new controlling shareholder Hainan Jinsui in May 2021 and began a new journey of transformation from pesticide to new materials. However, affected by the policies of environmental protection, pressure and energy consumption control, the company’s main pesticide business has stopped production for many times, and the new material business has not generated revenue. Less than a year after taking off the hat in June 2021, the company fell into the dilemma of performance loss again.
experienced two transformations in six years
In recent years, the Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) pesticide sector has stopped production for rectification for many times due to environmental protection and rectification factors, and the profit has also decreased year by year. From 2016 to 2020, the gross profit margin of the company’s agrochemical business was 22.35%, 19.76%, 16.76%, 16.43% and 10.28% respectively. Until 2021, the gross profit of the company’s agrochemical business directly fell to – 0.33%, showing a state of loss.
In this regard, Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) explained: “affected by the sharp rise in the cost of upstream raw materials and the unstable supply of raw materials caused by the repeated epidemic, the overall production cost of the company increased rapidly and the capacity utilization rate was seriously insufficient, resulting in a negative gross profit margin of the company during the reporting period.”
In view of the dilemma faced by the company’s main pesticide industry, Jiang Han, a senior researcher of Pangu think tank, said in an interview with the reporter of Securities Daily: “using phosgene as raw material to make pesticides has certain risks and toxicity. At present, under the increasing pressure of environmental protection, Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) need to find ways to improve their environmental adaptability and meet the requirements of environmental protection, so as to be able to achieve certain competitiveness in the market.”
It is a difficult problem for the main pesticide industry to recover. On the other hand, the transformation road of the company in recent years is also quite bumpy.
In 2014 and 2015, affected by environmental protection policies, Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) suffered net profit loss for two consecutive years. As the pesticide industry entered the bottom of the cycle, the company began to develop into the business field of light assets and low pollution emission.
In December 2015, Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) acquired 100% equity of Fangzhou pharmaceutical, and the transaction was valued at 1.18 billion yuan. After the consolidation of Fangzhou pharmaceutical, the company formed a dual main industry development pattern of agrochemical + health medicine. In 2016, the net profit also successfully reversed the loss and exceeded 100 million yuan, and both sectors ushered in growth.
However, the good times did not last long. Affected by the black swan incident such as the illegal occupation of funds by Wang Yu, the former chairman of Fangzhou pharmaceutical, and the pressure on environmental protection, the agrochemical and pharmaceutical sectors of Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) company suffered heavy losses, with net profits of 875 million yuan and 517 million yuan in 2018 and 2019 respectively. The company’s shares were also subject to delisting risk warning on April 27, 2020.
At the end of 2020, the company transferred 100% equity of Fangzhou pharmaceutical to Jikang Ruisheng, stripped off the pharmaceutical business, and the current net profit became positive without delisting.
Subsequently, the company started the second transformation by means of M & A. In May 2021, Hainan Jinsui took over Suhua group and officially became the controlling shareholder of Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) through equity transfer + voting entrustment. The company began to develop in the field of agricultural science and technology and new materials.
It is worth mentioning that the new owner Hainan Jinsui was not born out of nowhere, and its controlling shareholder “Jinsui Yuheng” was one of the shareholders of “Jikang Ruisheng”, the successor of Fangzhou pharmaceutical.
(image data source: tianyancha)
new material business prospect is unpredictable
After the new shareholder Hainan Jinsui joined the board, the transformation of new materials of Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) was not smooth.
In December 2021, the old and new owners disagreed over a 300 million yuan cross-border acquisition of the empty nylon fiber company “Jiangxi deship”, and it was revealed that Hainan Jinsui owed the balance payment of Suhua group’s equity, and Jikang Ruisheng also failed to pay the balance payment of the third phase of Fangzhou pharmaceutical on schedule.
The two sides with intensified contradictions did not “go to court” as expected. On January 7 this year, Suhua group and green investment signed a memorandum with Hainan Jinsui to reach an understanding on the existing differences. The company also agreed with Jikang Ruisheng to delay the payment of the stock transfer balance of Fangzhou pharmaceutical.
However, the handshake between the old and new owners did not solve the current transformation dilemma of the company. Jiangxi deship Pu nylon fiber industry to be acquired by the company has no actual operation, and the production equipment still needs to be purchased from “Zhejiang deship Pu” company. However, Zhejiang deship’s equipment is mortgaged, and a series of links such as installation and commissioning are required after the relocation of second-hand equipment. There is still uncertainty in the process of obtaining ownership and officially putting into operation. How to ensure the performance of Jiangxi deship in the future is still a mystery.
Talking about the prospect of Jiangsu Lanfeng Bio-Chemical Co.Ltd(002513) new materials business, CO director of digital economy and financial innovation research center of International United Business School of Zhejiang University Researcher pan Helin said in an interview with the reporter of Securities Daily: “The company has not yet formed production capacity in the field of new materials, and there are problems in the production line, so it is too early to talk about the prospect at this time. If from the perspective of the prospect of nylon fiber, the current energy and petrochemical products are rising, and the nylon industry is highly dependent on petrochemical, it may encounter the impact of high cost in the short term, but if stable production capacity is formed in the long term, there is still hope to make a profit.”
In Pan Helin’s view: “cross industry M & A needs to form synergy with the main industry, otherwise it depends on whether M & A is necessary. If it is only to form a concept for the capital market, M & A will be out of shape, and may even be deceived and acquire shell companies.”
