"Pig Enterprise" Zhengbang Technology added 40 billion new energy projects, but Zhengbang Technology lost nearly 19 billion in net profit in 2021, and more than 500 million commercial bills were overdue and this month, so this transformation has a bit of a burden to move forward.
Cross-border play New Energy
On June 17, Zhengbang Technology and Zhejiang Branch of State Power Investment Group Co., Ltd. (hereinafter referred to as "State Power Investment") signed the "Cooperation Agreement on "Carbon Neutral" Comprehensive Smart Energy Project". Based on the principles of mutual benefit, common development and win-win cooperation, the two sides have established cooperation on investment and development of photovoltaics, wind power, comprehensive smart energy and other projects.
According to the announcement, State Power Investment Corporation regards Zhengbang Technology as an important strategic partner, and conducts unified planning of Zhengbang Technology's land and energy, leverages its advantages in agricultural development, clean energy development, scientific and technological research and development innovation, industrial technology, etc., continue to increase investment, accelerate the layout of photovoltaic, wind power, comprehensive smart energy and other industries, and strives to build about 10 million kilowatts of ecological photovoltaic, wind power, distributed and centralized comprehensive smart energy within three years, with an estimated total investment of about 40 billion yuan.
Zhengbang Technology said that this move will help the company's transformation and development. Through the three-dimensional utilization of agricultural space and the advantages of photovoltaics and wind power generation, we will create agricultural intelligence and energy-saving, empower the company's operations and promote the company's future business development.
On June 20, Zhengbang Technology opened at the daily limit. As of the lunch break, Zhengbang Technology hit the daily limit. However, on the same day, Zhengbang Technology received a letter of concern from the Shenzhen Stock Exchange, requiring the company to explain in detail the background, purpose and specific cooperation methods of cooperation with State Power Investment, and whether it matches the company's current development status and future development plan; explain in detail the obligations the company needs to bear in this cooperation, the expected asset scale or investment amount, and the possible impact of this cooperation on the company; in combination with the company's current production and operation conditions, liquidity conditions and the source of funds required for this cooperation, etc., whether the company has risks such as financial conditions that are insufficient to support related project development.
is still operating pressure at present
It is worth noting that Zhengbang Technology currently has operating pressure on many aspects. As we can see from the 2021 annual report alone, raising pigs is not easy.
In 2021, Zhengbang Technology achieved revenue of 47.7 billion yuan, a decrease of 3.04% from 2020; and achieved a net profit loss of 18.819 billion yuan, a year-on-year decrease of 427.62%. In the first quarter of this year, sales situation was still not optimistic. According to Zhengbang Technology's first quarter financial report in 2022, the revenue was 6.49 billion yuan, a year-on-year decline of 48.92%; the net profit was 2.433 billion yuan, a year-on-year decline of 1249.73%.
Zhengbang Technology stated in its 2021 annual report that due to the fluctuation and decline in domestic pig market prices, the rise in the company's sales volume and the decline in sales prices have a great impact on performance. In addition, the company's industry is single, and its revenue and profit contribution mainly comes from pig breeding business. Therefore, compared with companies with diversified business, it is more affected by the pig cycle.
In addition to performance pressure, Zhengbang Technology, with a market value of 20 billion yuan, is also facing the problem of tight liquidity. Zhengbang Technology will even terminate part of the raised funds investment projects of a total of 3.6 billion yuan to supplement its own liquidity.
On May 20, Zhengbang Technology issued an announcement stating that in order to make good financial reserves, it plans to terminate new production capacity in some areas based on the current industry and the actual production and operation of the company to ensure the safety of operating cash flow. Against this background, given that the construction of 8 raised funds investment projects for the public issuance of convertible corporate bonds in 2019 and 14 raised funds investment projects for the private placement of stocks in 2020 has been stagnant, after careful research, the company plans to terminate the above projects and permanently replenish working capital with the surplus funds of the fundraising project of 3618.0258 million yuan, which will be used for the company's daily production and operation and business development, alleviate the company's liquidity tension, and promote the company's stable development.
This announcement also made investors wonder whether Zhengbang Technology's capital flow was "pressure" or "big problem". On the evening of June 8, Zhengbang Technology's announcement directly woke up the investors.
Announcement Zhongzhengbang Technology stated that due to the impact of the pig cycle, the company and its subsidiary Jiangxi Zhengbang Breeding Co., Ltd. and other companies recently suffered some commercial bills not redeemed due to shortage of liquidity. As of the date of disclosure of the announcement, the total balance of unpaid overdue was 542 million yuan. The company will continue to negotiate with creditors to deal with relevant matters of overdue payment of commercial bills, and may face risks such as litigation and arbitration.
Behind the restriction of liquidity is the "shackle" of Zhengbang Technology's high debt.
As of the end of the first quarter of 2022, Zhengbang Technology's total liabilities reached 40.69 billion yuan, and its debt-to-asset ratio was as high as 97.03%. Among them, current liabilities were 28.68 billion yuan, short-term loans were 12.15 billion yuan, notes payable and accounts payable were 4.224 billion yuan, and non-current liabilities due within one year were 4.011 billion yuan. The cash is only 3.073 billion yuan.
When will the spring of pig companies come
Previously, listed pig companies also transformed into the new energy sector. In April this year, Tianbang Co., Ltd. announced that it had signed a strategic cooperation agreement with the State Energy Group Jiangsu Electric Power Co., Ltd. (hereinafter referred to as Jiangsu Guoneng). The two parties will cooperate in multiple dimensions such as photovoltaics and biomass power generation.
I don’t know if it is because the transformation brings market popularity or because it really makes money. There are also listed companies that have transformed many times, first becoming pig companies, and then crossing the border to enter new energy. On the evening of January 4, 2021, Tianyu Ecology issued an announcement stating that in order to match the company's development strategy, the company and its related holding subsidiaries intend to sign a "Pig Farm Rental Service Agreement" in Caidian District, Wuhan City and Panzhou City, Guizhou Province, respectively, to enter the pig breeding industry. Then on the evening of February 22, Tianyu Ecology announced that it plans to increase its capital in Qinghai Juzhiyuan New Materials Co., Ltd. (hereinafter referred to as Qinghai Juzhiyuan) with no more than 610 million yuan in cash to achieve its controlling stake.
It is undeniable that the life of pig companies was basically not easy last year.
According to industry data, 21 pig companies listed in 2021 had a total revenue of 590 billion yuan and a profit loss of 43.1 billion yuan. Zhengbang, Wen's and New Hope Liuhe lost a total of 41.8 billion yuan, accounting for 97% of the total profit of the 21 companies. In addition, only 7 of the 21 companies made profits, totaling 9.7 billion yuan.
However, since this year, pig prices have gradually stabilized, and the pork sector has also begun to recover in the A-share market.
Guotai Junan's recent research report pointed out that the total output in May fell by 7%, and the total number of fattening pigs fell by 10.8% month-on-month. In May, piglet prices rose significantly, and the proportion of fattening pigs decreased. The supply of pork has declined in trend, and the pig cycle has officially begun.
CITIC Securities believes that as the early production capacity sales gradually cashed on the supply side and demand turned stronger, the bottom of the pig price has passed. From the perspective of listed companies, major pig breeding companies are tightening investment at this stage, reducing costs and increasing efficiency, and protecting effective production capacity. Their subsequent performance is expected to improve.
Caixin Securities stated that generally speaking, the lead pigs in stock of sows will be slaughtered for about 10 months, and the turning point in stock of sows will be also the turning point in supply of live pigs in the next 10 months. The stock of sows with breeding reached a high turning point in June 2021, which means that the highest level of pig supply may be around May 2022. Considering that the sales rate of breeding sows is slow, the stock of sows is still at a high level, and it is expected that the turning point of the pig cycle in the second half of 2022 may be ushered in.
Kaiyuan Securities said that pig prices are highly expected in the second half of the year. June to July is the upward phase of live pig prices. The momentum of rising pig prices from late July to August may be relatively strong. If the pig output (slaughtered volume) is relatively stable from June to July, the subsequent "oversupply" state of pigs will be switched to "less than supply" in the second half of the year, and pig prices may enter the double helix driven price increase stage of "demand-driven, supply to support prices".
I wonder if Zhengbang Technology can ride on this "pig cycle" and new energy wind to usher in its spring as soon as possible.
Xiaoxiang Morning News reporter Hao Yongqi
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