It’s nothing new for A-share companies to buy financial management with idle funds, but it’s still very rare to sell 20 billion. You know, more than 80% of A-share companies have a market value of less than 20 billion.
On the evening of May 17, Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) announced that it plans to use idle self owned funds of no more than 20 billion yuan to purchase structured deposits. Within the above limit, the funds can be used on a rolling basis Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) financial report shows that the company’s “trading financial assets” rose from 6 billion yuan at the end of 2021 to 14.4 billion yuan at the end of the first quarter of this year, mainly structural deposits.
Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) cash flow is very abundant. The net operating cash flow in the 2021 annual report is 7.645 billion yuan, compared with 3.539 billion yuan in the first quarter of this year. The company does not have any bank loans, but has a large amount of advance payment. As of the end of last year, the company’s “contract liabilities” were 7.3 billion yuan and 3.8 billion yuan by the end of the first quarter of this year.
buy wealth management scale is second only to China Telecom Corporation Limited(601728)
According to the announcement, on the premise of ensuring the normal operation and effective risk control of the company, in order to improve the efficiency of capital use and increase interest income, Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) plans to use idle self owned funds to buy structural deposits with high safety, good liquidity and low risk, so as to seek more return on investment for the shareholders of the company. Within 12 months after the approval of the shareholders’ meeting, the valid period of the company’s investment amount shall not exceed RMB 20 billion.
The board of directors of the company authorizes the chief accountant of the company to exercise the investment decision-making power and sign relevant contract documents within the above quota and period. The specific matters shall be organized and implemented by the financial management department of the company. The company said that the structural deposits purchased belong to low-risk products with short-term Principal Guaranteed floating income, but the floating income depends on the price change of the linked subject, and there is still the risk of uncertain income due to the influence of various market factors. The company will purchase in a timely and appropriate amount according to the economic situation and changes in the financial market, but it does not rule out that the investment will still be affected by market fluctuations.
The company said it would strictly evaluate and screen structured deposits based on the principle of strict risk control, and purchase products with high security, good liquidity, controllable risk and meeting the requirements of the company’s internal fund management.
According to the statistics of the reporter of China Fund News, there are not a few companies that buy financial products with a shares. Only since this year, there have been nearly 2000 relevant announcements, involving hundreds of companies. However, it is very rare for companies that can spend 20 billion and still have their own funds to buy financial products. Before Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , China Telecom Corporation Limited(601728) announced in November last year that it planned to spend 28.5 billion yuan for cash management, but the funds came from the temporarily idle IPO funds. China Telecom Corporation Limited(601728) was listed on A-Shares in August last year.
For Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) a shot is 20 billion, and many netizens are also surprised, “really rich”, “money is capricious”. Some netizens said why the company didn’t buy back its own shares, “cash flow is too sufficient to buy back” and “why don’t you buy your own shares”.
“payment before goods” has abundant cash flow
In the eyes of many value investors, Baijiu can be regarded as one of the few industries with “invincible” business models unique to China, especially the brand Baijiu, which is basically “cash first and then goods”. The typical representative is Kweichow Moutai Co.Ltd(600519) . As the leader of fragrant Baijiu, the industry characteristic of “first payment then goods” is also reflected in Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) .
According to the financial report, Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) in the first quarter of this year, the revenue was 10.53 billion yuan, a year-on-year increase of 43.62%, and the net profit increased by about 70% to 3.71 billion yuan. Last year, the company’s revenue approached the 20 billion mark for the first time, reaching 19.971 billion yuan, a year-on-year increase of 42.75%, and the net profit attributable to the parent was 5.314 billion yuan, a year-on-year increase of 72.56%. The year-on-year growth rate of net profit hit a new high in recent ten years.
From the annual report of 2021 and the balance sheet of the first quarter report of 2022, the company has no bank borrowings, whether current liabilities or non current liabilities. The “contract liabilities” and “notes payable and accounts payable” account for the majority of the liabilities. Contract liabilities are “the obligation to transfer goods to customers for the consideration received or receivable from customers”, that is, the payment for goods received in advance. As of the end of last year, the Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) contract liabilities were 7.3 billion yuan, compared with 3.881 billion yuan at the end of the first quarter of this year, while the two financial reports of accounts payable and notes payable remained at about 2.8 billion yuan.
The company received a large amount of payment in advance from the downstream, but less advance payment from the upstream. The two financial reports were only 163 million yuan and 234 million yuan respectively. Therefore, cash assets account for the majority of assets, of which monetary funds are 6.1 billion yuan and 1.285 billion yuan respectively, while “trading financial assets” are 6 billion yuan and 14.4 billion yuan respectively. The trading financial assets of the company are mainly bank structured deposits. From the two financial report data, the company should have purchased more than 8 billion new bank financial products in the first quarter.
According to the cash flow statement, the “net cash flow from operating activities” in the two financial reports were 7.6 billion yuan and 3.5 billion yuan respectively, with abundant cash inflow.
