On the afternoon of May 18, Muyuan Foods Co.Ltd(002714) , known as “Zhumao”, received an inquiry letter from the annual report of Shenzhen Stock Exchange, asking the company to analyze and explain the impact of pig price trend on operating performance and whether the company has liquidity risk.
The Shenzhen stock exchange requires the company to explain six major issues, including whether there is liquidity risk, the reasons for the sharp increase of business income such as trade and slaughter, the rationality of large amount related procurement, the reasons and rationality for the sharp decline of pig price but no provision for inventory depreciation, and the reasons and rationality for the non provision for impairment of fixed assets. For some of the above issues, Shenzhen stock exchange requires the audit institution zhongxinghua Certified Public Accountants (special general partnership) to express clear opinions.
Due to the sharp decline in pig prices, four of the top five pig companies in A-share in 2021 suffered losses ranging from billions to nearly 20 billion, with asset impairment losses ranging from hundreds of millions to billions. Only Muyuan Foods Co.Ltd(002714) adverse market profit of 6.9 billion yuan, and there was no asset impairment loss on the account .
On May 19, Muyuan Foods Co.Ltd(002714) shares fell, closing at 48.58 yuan, down 2.72%, with a total market value of 258.5 billion yuan.
monetary capital 12.2 billion, interest bearing liabilities over 50 billion
is there liquidity risk
Muyuan Foods Co.Ltd(002714) annual report shows that in 2021, the industry’s production capacity basically recovered, the market supply rebounded significantly, and the pig price showed a downward trend. The company sold 40.263 million pigs in 2021 and is expected to sell 50 million to 56 million pigs in 2022. Public information shows that as of May 6, 2022, the average price of pigs in 22 provinces and cities in China is 14.99 yuan / kg.
Shenzhen stock exchange requires the company to analyze and explain the impact of pig price trend on the company’s business performance in combination with the development status and trend of the industry, its own business status and planning, pig breeding cost and changes and other factors. In addition, it is also required to explain the specific considerations of increasing the number of pigs in the case of low pig prices, and analyze the impact.
the balance of monetary funds held by the company at the end of the reporting period was RMB 12.198 billion , a year-on-year decrease of 16.42%, of which the balance of restricted funds was RMB 3.79 billion, a year-on-year increase of 453.64% held interest bearing liabilities (short-term loans, non current liabilities due within one year, long-term loans, bonds payable) amounted to 52.59 billion yuan , an increase of 67.94% year-on-year; The asset liability ratio was 61.30%, with a year-on-year increase of 15.21 percentage points. The EBITDA total debt ratio, interest cover ratio, cash interest cover ratio and EBITDA interest cover ratio decreased by 70.25%, 86.88%, 70.66% and 77.61% respectively year-on-year.
The interest expense incurred by the company during the reporting period was 2.219 billion yuan, with a year-on-year increase of 140.47%; During the reporting period, the net cash flow from operating activities decreased by 29.72% year-on-year, the net cash flow from financing activities decreased by 45.76% year-on-year, and the net cash flow from investment activities was -35.968 billion yuan.
Shenzhen stock exchange requires Muyuan Foods Co.Ltd(002714) to analyze and explain whether there is liquidity risk 23456 in combination with the company’s working capital demand, monetary capital held, bank credit utilization, operating cash flow, debt repayment period and arrangement and other factors. If so, timely and fully give risk prompt.
assets without provision for impairment
is the “only share” of listed pig enterprises
Muyuan Foods Co.Ltd(002714) was “alone” when peers in the industry suffered asset impairment losses to varying degrees. Another major concern of the Shenzhen stock exchange is whether it is reasonable for the company to make no provision for falling price of many assets.
The annual report shows that the closing book balance of Muyuan Foods Co.Ltd(002714) inventory was 34.476 billion yuan, an increase of 62.78% year-on-year. Including 7.065 billion yuan of raw materials, 286 million yuan of goods in stock and 27.125 billion yuan of expendable biological assets, with a year-on-year increase of 93.78% during the reporting period, the company did not withdraw depreciation reserves for the above inventories .
Shenzhen stock exchange requires the company to combine the industry development, pig price trend and other factors during the reporting period, the specific contents of the company’s raw materials, inventory goods and consumable biological assets, and the comparison between the net realizable value and cost of relevant inventories, explain the reasons and rationality for the company’s failure to make provision for falling price of relevant inventories in this period, and whether it is in line with the actual situation of the company and the development of the industry, Whether it complies with the relevant provisions of the accounting standards for business enterprises .
In addition, the Shenzhen stock exchange requires the company to explain the counting of relevant inventories, including but not limited to counting procedures, counting methods, counting time, counting quantity, results and accuracy, whether the relevant counting is limited and whether there are abnormalities . And require the annual audit accountant to check the above problems and give clear opinions, and explain the audit procedures, audit evidence and conclusions obtained for the authenticity of the company’s ending inventory balance .
In addition to inventory, Shenzhen Stock Exchange raised similar questions about the company’s fixed assets, productive biological assets, a number of long-term equity investments and other assets for which no provision for impairment has been made, and asked the annual audit accountant to give opinions .
According to China Fund News, there are 10 pig breeding companies in Shenwan’s tertiary industry. Except for Muyuan Foods Co.Ltd(002714) , the other 9 companies suffered asset impairment losses to varying degrees in 2021. For example, the impairment loss of New Hope Liuhe Co.Ltd(000876) with large volume reached 2.9 billion yuan, that of Wens Foodstuff Group Co.Ltd(300498) also reached 2.2 billion yuan, and that of Leshan Giantstar Farming&Husbandry Corporation Limited(603477) with small volume was at least more than 2.6 million yuan. As the first in the industry, Muyuan Foods Co.Ltd(002714) did not have any impairment loss, which is really eye-catchingP align = “center” source: China Fund News
related purchase amount up to 17.7 billion
Muyuan Foods Co.Ltd(002714) another major problem criticized by the market is that there have been a large number of related purchases in recent years, and 2021 is no exception.
According to the annual report, the total purchase amount of the company from the top five suppliers during the reporting period was 33.486 billion yuan, accounting for 31.47% of the total annual purchase amount, while the purchase from related parties accounted for 16.68% (equivalent to about 17.7 billion yuan) . In 2019 and 2020, the total purchase amount from the top five suppliers accounted for 26.08% and 34.87% of the total annual purchase amount respectively, and the purchase amount from related parties accounted for 19.25% and 23.04% respectively.
Shenzhen stock exchange requires company to explain the reasons for the high supplier concentration of the company in recent three years and whether there is a significant difference between the procurement concentration and comparable companies in the same industry in combination with the industry characteristics, business model and other factors. On this basis, it is required to explain whether there is a significant dependence on individual suppliers . In addition, state the names of the top five suppliers, the specific products or services purchased, the purchase amount and year-on-year changes in 2021, the duration of continuous cooperation, etc., and state whether the company’s main suppliers have changed significantly in recent three years .
Shenzhen Stock Exchange also asked the company to explain the pricing basis and fairness of related party procurement in combination with the related party procurement in recent three years, and the reason and rationality of purchasing from related parties . Finally, it is required to check and explain whether the top five suppliers have related relationships with the company, directors, supervisors, senior managers, more than 5% shareholders and actual controllers or other relationships that may tilt interests .
In addition, in 2021, Muyuan Foods Co.Ltd(002714) trading business, slaughtering, meat business and other businesses achieved operating revenues of 4.048 billion yuan, 5.418 billion yuan and 119 million yuan respectively, with year-on-year increases of 205.72%, 771.95% and 523.57% respectively.
The Shenzhen stock exchange requires the company to explain the reasons for the substantial year-on-year increase in the income of slaughtering and meat business .
has been questioned by investors for many times
also downgraded outlook
According to China first finance, in December last year, a screenshot of wechat group chat came out from the market. An account manager of China Merchants Securities Co.Ltd(600999) said in the communication group that investing in Muyuan Foods Co.Ltd(002714) was risky. Since then, the account manager has clarified within the group.
In this regard, Muyuan Foods Co.Ltd(002714) said on the interactive platform that the company recently noticed that China Merchants Securities Co.Ltd(600999) staff member Yang made false statements related to the company in the stock exchange group. The production, operation and liquidity of the company are normal, and there is no major information that should be disclosed but not disclosed. The company strongly condemns such acts and reserves the right to investigate the legal responsibility of the parties.
Earlier, in the first quarter of last year, the network big V “chivalrous shadow of heaven and earth” published “is the original animal husbandry thunder?” One article, questioning a number of financial data of Muyuan Foods Co.Ltd(002714) has also triggered heated discussions in the market.
According to the cover news, a few days later, Muyuan Foods Co.Ltd(002714) replied on 33 pages, giving a more detailed response to the significantly higher gross profit margin than peers, the low roe of minority shareholders, the necessity of related party transactions with controlling shareholders, and the heavy asset model.
Despite the financial problems, on December 2 last year, muyuan fell into the event of “continuous overdue business tickets of 31 companies”. In the list of commercial bills continuously overdue as of November 30, 2021 disclosed by Shanghai Stock Exchange, the commercial bills accepted by 31 companies directly or indirectly controlled by Muyuan Foods Co.Ltd(002714) continued to be overdue, with a cumulative overdue amount of about 212573 million yuan and an overdue balance of 166688 million yuan.
Afterwards, Muyuan Foods Co.Ltd(002714) although it gave an explanation for failing to prompt payment in time or incorrect operation, it still failed to calm public opinion.
On December 15 last year, according to Muyuan Foods Co.Ltd(002714) disclosure, China integrity International released the rating announcement “announcement on adjusting Muyuan Foods Co.Ltd(002714) rating outlook to negative”, which said that the rating outlook of Muyuan Foods Co.Ltd(002714) was adjusted from stable to negative. The main reason for the Muyuan Foods Co.Ltd(002714) rating downgraded by China integrity international is that the price of pigs has remained low since 2021, and the rebound range of prices in the short term is limited; The company suffered an operating loss in the third quarter of 2021, and its profitability and cash earning ability were weakened; In the past two years, the company’s investment scale is large and its debt continues to rise; The company’s recent business ticket overdue events and other factors.
In this regard, Muyuan Foods Co.Ltd(002714) responded that “due to the downward cycle, the financial indicators of the pig breeding industry have generally deteriorated, and the rating has been downgraded and concerned by rating agencies. The main reason for the downgrade of muyuan’s rating outlook this time is also the industry cycle factor, and the fact that the rating has not been downgraded indicates that Muyuan Foods Co.Ltd(002714) financial fundamentals have not deteriorated.”
Loss in the first quarter RMB 23456 million
securities companies: cost control remains at the leading level in the industry
Previously, Muyuan Foods Co.Ltd(002714) released the first quarterly report. In the first quarter of 2022, the company achieved an operating revenue of 18.278 billion yuan, a year-on-year decrease of 9.3%; The net loss in the first quarter was 5.18 billion yuan, a year-on-year decrease of 174.40%.
In addition, the financial report showed that other receivables decreased by 39.50% at the end of the period compared with the beginning of the period, mainly due to the decrease of margin receivable in the current period. Operating costs increased by 106.19% over the same period last year, mainly due to the increase in sales in the current period. Contract liabilities at the end of the period increased by 80.26% compared with the beginning of the period, mainly due to the increase of advance payment in the current period.
According to Orient Securities Company Limited(600958) Research Report, we estimate that the full cost of commercial pig breeding in the first quarter of 2022 is about 16 yuan / kg, a slight increase over the fourth quarter of last year, still maintains the leading level in the industry . The increase in cost is mainly due to the continuous rise in the price of feed raw materials since 2021, which is reflected in the batch released in the first quarter; The seasonal high incidence of pig epidemic disease in winter has an impact on the breeding results of the slaughter batch from January to February; There are Spring Festival holidays from January to February, with few effective sales days and low sales volume, and the cost sharing per unit period increases. The company proposed to achieve the phased cost target of 13 yuan / kg by the end of 2022. We believe that if the annual raw material price remains at the current high level, the company’s cost target may be moved up by about 1 yuan / kg.
