ST Tiansheng disclosed the third quarter report of 2022, which showed that the net profit attributable to shareholders in the third quarter and the first three quarters showed losses. At the same time, revenue in the first three quarters dropped sharply by more than 30%. Judging from the annual report, ST Tiansheng has had net losses for three consecutive years. In the case of such continuous losses, ST Tiansheng also provided loans of over 100 million yuan to the shareholders' shareholders, and recently announced a one-year extension, which is puzzling. It is worth noting that ST Tiansheng mentioned in the third quarter report that the company was prosecuted for suspected bribery by the unit and has been sent back to retrial; in addition, the company's controlling shareholder had embezzled and misappropriated the company's funds for more than 100 million yuan, and the case involved has also been sent back to retrial.
The third quarter report continues to lose money
has been losing money for three consecutive years
According to the "2022 Third Quarter Report" disclosed by ST Tiansheng, the net profit is a loss in both the single quarter and the first three quarters. Among them, in terms of net profit attributable to shareholders, the third quarter and the first three quarters were -16 million yuan and -63 million yuan respectively; in terms of net profit attributable to shareholders after deducting non-operating items, the third quarter and the first three quarters were -24 million yuan and -84 million yuan respectively. In terms of revenue, the third quarter and the first three quarters were RMB 134 million and RMB 405 million, respectively, an increase of 25.81% year-on-year and a decrease of 32.75%. The net cash flow of in operating was reflected in the first three quarters as net outflow of 56 million yuan, a year-on-year decrease of 59.07%, mainly due to the payment of cash on the notes payable in the previous year in the current period.
ST Tiansheng said that the operating income decreased by 32.75% compared with the same period last year and the operating costs decreased by 51.61% compared with the same period last year, mainly due to the company's transfer of controlling equity of its subsidiary Changsheng Pharmaceutical at the end of April 2021, and the scope of the merger in this period decreased compared with January-April last year.
. ST Tiansheng did not clearly mention the specific reasons for the net profit loss in the above third quarter report. However, regarding expenses, the report mentioned that financial expenses increased by 89.00% compared with the same period last year, mainly because of the small financial expenses received from the controlling shareholder's capital occupation fee in the same period last year.
Judging from the semi-annual report, ST Tiansheng's "2022 Semi-annual Report" shows that during the reporting period, the net profit attributable to shareholders was -46 million yuan, compared with -40 million yuan in the same period last year. ST Tiansheng mentioned that since the company transferred Changsheng Pharmaceutical's controlling stake to Chongqing Pharmaceutical at the end of April 2021, Changsheng Pharmaceutical will no longer be included in the scope of merger, and the parent company's out-purchased pharmaceutical business was also transferred to Changsheng Pharmaceutical according to the equity transfer agreement. Therefore, the company's pharmaceutical distribution business has been greatly reduced, and the revenue of the pharmaceutical distribution business and profit are no longer an important source of the company's revenue and profit. Data shows that in the first half of 2022, the revenue share of pharmaceutical manufacturing and pharmaceutical circulation was 94.58% and 0.74% respectively, compared with 45.05% and 53.51% in the same period last year. It can be seen that the pharmaceutical distribution business once supported half of ST Tiansheng's half of its annual revenue. However, in terms of gross profit margin, the semi-annual report mentioned that the gross profit margins of pharmaceutical manufacturing and pharmaceutical circulation were 57.67% and 2.13% respectively, with a big gap.
It should be noted that in addition to the losses in the semi-annual and third-quarter reports, the author noticed that in the past three years, ST Tiansheng's net profit was shown to be losses, that is, in 2019, 2020 and 2021, the net profit was -223 million yuan, -491 million yuan, and -68 million yuan, respectively.
For annual losses, ST Tiansheng mentioned three reasons in his 2021 annual performance forecast: 1. The company made large-scale asset impairment provisions for in the previous year, among which large-scale impairment provisions were set aside fixed assets, under-construction projects, and intangible assets. According to the initial evaluation results, there has been no major changes in this year, so the impairment of assets this year has been significantly reduced compared with the previous year. 2. On April 29, 2021, the company transferred the 51% equity of Chongqing Pharmaceutical Group Changsheng Pharmaceutical Co., Ltd. to the name of Chongqing Pharmaceutical (Group) Co., Ltd., resulting in a decrease in the scope of the company's consolidated financial statements and a decrease in operating income compared with the previous year. 3. In order to build a marketing system, strengthen marketing team building and professional academic promotion, the company has invested high sales expenses, but has not yet achieved significant results; the company's asset depreciation expenses, labor costs, and other fixed expenses are relatively high, resulting in loss of operating performance.
It is difficult to protect itself and has also invested 100 million yuan in foreign capital
Chairman Liu Shuang serves as general manager and director of the funding target
suffered losses for three consecutive years, and the latest financial report continued to lose money. In such a "hard" environment, ST Tiansheng also provided loans of over 100 million yuan to a shareholder company, which is puzzling.
The aforementioned "2022 Third Quarter Report" shows that the reduction in cash funds by 56.12% compared with the beginning of the year is mainly due to the investment in project construction in this period and the provision of financial support to Changsheng Pharmaceutical. As of September 30, 2022, ST Tiansheng's cash had only 149 million yuan.
According to the "Announcement on Providing Financial Assistance Extension and Related Transactions to Shared Companies" disclosed by ST Tiansheng, Tiansheng Pharmaceutical Group Co., Ltd. (hereinafter referred to as the "Company") intends to extend the loan of 147 million yuan to the shareholder Chongqing Pharmaceutical Group Changsheng Pharmaceutical Co., Ltd. (hereinafter referred to as "Changsheng Pharmaceutical") for one year, and the interest is calculated at an annual interest rate of 4% (adjusted with the change in the interest rate of Changsheng Pharmaceutical Major Shareholder, and the current annual interest rate is 4.35%).
It is understood that ST Tiansheng held the seventh meeting of the fifth board of directors and the sixth meeting of the fifth board of supervisors on November 22, 2021, and reviewed and passed the "Proposal on Providing Financial Assistance and Related Transactions for Shared Companies", agreeing that the company will provide financial assistance of no more than RMB 147 million at 49% of the holdings of , which will be used to meet the daily operation and development needs of Changsheng Pharmaceutical. The funding period is 1 year, and the interest is calculated at an annual interest rate of 4% (adjusted with the change in the interest rate of Changsheng Pharmaceutical's major shareholders. The current annual interest rate is 4.35%). Chongqing Pharmaceutical (Group) Co., Ltd. (hereinafter referred to as "Chongqing Pharmaceutical"), the controlling shareholder of Changsheng Pharmaceutical, provides financial assistance with the same conditions based on its shareholding ratio of 51%.
ST Tiansheng provided two loans to Changsheng Pharmaceuticals with a total of 147 million yuan on December 15, 2021 and January 18, 2022 respectively. The above two loans will expire on December 15, 2022 and January 18, 2023 respectively.
In view of the fact that the stakeholder Changsheng Pharmaceutical is a pharmaceutical distribution enterprise and is affected by the impact of the new crown pneumonia epidemic on its daily operations, Changsheng Pharmaceutical needs a large amount of working capital turnover. In order to ensure its cash flow support and future development needs and alleviate its financial pressure, ST Tiansheng plans to extend the above-mentioned financial assistance of 147 million yuan to one year for an extension, and the remaining terms of the original loan agreement remain unchanged. Changsheng Pharmaceutical pledged its 200 million yuan accounts receivable to the company as a repayment guarantee measure. At the same time, Chongqing Pharmaceutical, the controlling shareholder of Changsheng Pharmaceutical, will provide financial support with the same conditions based on its shareholding ratio of 51%.
data shows that in terms of Changsheng Pharmaceutical's equity structure, Chongqing Pharmaceutical (Group) Co., Ltd. holds 51% of the shares, and Tiansheng Pharmaceutical Group Co., Ltd. holds 49%. In addition, Liu Shuang, chairman and general manager of ST Tiansheng, serves as general manager and director of Changsheng Pharmaceutical; Ms. Zhang Ya, director of ST Tiansheng, serves as director of Changsheng Pharmaceutical. According to the relevant provisions of Article 6.3.3 (IV) of the " Shenzhen Stock Exchange Stock Listing Rules ", Changsheng Pharmaceutical is an affiliated legal person of the company, and this transaction constitutes an affiliated transaction.
Regarding the risks involved in the extension of the above loans, ST Tiansheng said that after this financial support extension, the company will actively track the subsequent operating conditions of the sponsored recipients, closely monitor changes in their assets and liabilities, grasp the purpose of their funds, and ensure the safety of funds. According to the announcement, the debt-to-asset ratios of Changsheng Pharmaceutical in 2021 and the first three quarters of 2022 were as high as 93.05% and 92.26% respectively.
It is worth mentioning that ST Tiansheng mentioned in the third quarter report that the company was prosecuted by the First Branch of the Chongqing People's Procuratorate for suspected bribery of the unit and bribery of the unit. As of the date of disclosure of this report, the above cases have been sent back for retrial, and there is still uncertainty in the final judgment. At the same time, as of the date of disclosure of this report, the case of controlling shareholder Liu Qun suspected of embezzlement and misappropriation of funds has been sent back for retrial, and the final judgment is still uncertain. There is a possibility of modification or adjustment in the repayment plan of the controlling shareholder Liu Qun and the signed terms of the "Asset Transfer Agreement and Debt Restructuring Agreement".
According to the Criminal Judgment, the first-instance judgment ordered the defendant Liu Qun to refund the remaining unrepaid funds of the company totaling 121,474926 million yuan (121 million yuan). In order to resolve the problem of embezzlement and misappropriation of funds on the company as soon as possible and protect the tangible interests of small and medium-sized investors, after consultation by all parties, Liu Qun repays the above-mentioned unrepaid funds to the company in a combination of cash and non-cash totaling RMB 121.474926 million. As of April 8, 2021, the principal and interest of the funds occupied by the controlling shareholder Liu Qun have been repaid.
(Picture source: Juchao Information Network)
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