Kunpeng Project
Produced by |Bullet Finance.
Author |Duan Nannan.
Edit |Feng Yu.
American Editor |Qianqian.
Audit |Ode.
For pig enterprises, no one expected that this round of pork would take so long. Since peaking in 2020, pork ** has been in the doldrums for 3 consecutive years, which has also caused many pig breeding enterprises to fall into continuous losses.
In order to solve the financial dilemma, some pig breeding enterprises have resolved the company's crisis by means of equity. Some powerful pig breeding enterprises have taken the opportunity to merge and acquire distressed pig enterprises to expand their business scale, including pig breeding enterprises Dabeinong.
On December 13, Beijing Dabeinong Technology Group Co., Ltd. (hereinafter referred to as "Dabeinong") announced that the company signed a "Strategic Cooperation Agreement of Intent" with Aonong Biotechnology to acquire some high-quality assets of Aonong Biotech.
In addition, Dabeinong also plans to acquire at least 51% of the equity of Aonong Investment, the controlling shareholder of Aonong Biotech, and if the above plan is successfully implemented, Dabeinong will become the controlling shareholder of Aonong Biotech.
However, investors are not buying the deal. After the news was announced, Dabeinong's share price fell for 3 consecutive days, with a share price drop of nearly 10% and a market value of nearly 3 billion yuan.
Why was Dabeinong's acquisition of Aonong's investment equity bearish by investors?Dabeinong, which lost more than 900 million yuan in the first three quarters, can it help Aonong to turn the danger into a disaster?
The sharp drop in Dabeinong's share price has a lot to do with the acquisition target Aonong Investment and the financial difficulties of Aonong Biotechnology. According to public information, Aonong Biotech is a "pig feed + pig breeding" enterprise, which was listed on the main board of the Shanghai Stock Exchange in 2017.
Aonong Investment is the controlling shareholder of Aonong Biotech, and the main asset of Aonong Investment is to hold 3056% equity.
Therefore, whether it is to acquire part of the equity of Aonong Investment, or to participate in the acquisition of the assets of Aonong Biotech, the purpose of this action is to help Aonong Biotech get out of the quagmire.
Aonong Biotech started in the pig feed business and began to get involved in the pig breeding business in 2014. In 2018, under the influence of African swine fever, pig prices soared. Under the huge benefits, Aonong Biotech began to expand the scale of pig breeding.
Figure: Photo.com, based on VRF protocol).
In 2018, the pig breeding scale of Aonong Bio was only 420,000 heads, and by 2022, it will increase to 5.19 million heads, with a compound annual growth rate of 875%, which is the fastest expanding among all listed pig companies.
With the continuous expansion of the breeding scale, coupled with the sluggish pig **, the company's complete breeding cost has been higher than that of its peers, and the financial situation of Aonong Biotechnology has been deteriorating.
From 2021 to the first three quarters of 2023, the loss amount of Aonong Biotech was as high as 152 billion yuan, 103.9 billion yuan, 12900 million yuan, in less than three years, the cumulative loss of Aonong Bio is as high as 384.9 billion yuan. It is worth noting that from 2013 to 2020, the cumulative profit of Aonong Biotech was less than 1 billion yuan.
Due to the aggressive business strategy, the asset-liability ratio of Aonong Biotech has soared. In 2020, the asset-liability ratio of Aonong Biotech was 6752%。By September 30, 2023, the asset-liability ratio of Aonong Biotech has risen to 8941%, among all listed pig enterprises, second only to Zhengbang Technology, which applied for restructuring.
As of the end of September 2023, Aonong Biotech's total debt is as high as 147900 million yuan, of which interest-bearing liabilities exceed 7 billion yuan, and non-current liabilities due within one year are as high as 175.1 billion yuan. In the same period, the company's monetary funds were only 300 million yuan.
In order to solve the debt crisis, Aonong Biotech intends to raise funds through private placement and ** of its assets. However, under the interference of many unfavorable factors, it is not smooth for Aonong Biotech to raise funds through ** assets and private placement.
With such a huge funding gap, the pressure on Dabeinong, which has a market value of only 25 billion yuan, can be imagined. Although at the investor meeting, Dabeinong said that it would only be limited to the actual amount of capital contribution and bear limited liability for the acquisition target, but the investors did not buy it.
After the news was announced, Dabeinong's share price was **402%。Within three days, Dabeinong's share price fell by 999%。
Dabeinong's acquisition of Aonong Biotech led to a sharp drop in stock price, which has a lot to do with Dabeinong's own poor financial condition in addition to the large "pit" of Aonong Biotech.
Figure Dabeinong's financial report for the third quarter of 2023).
As an enterprise that started with pig feed, similar to Aonong Bio, Dabeinong is also expanding its pig breeding business downstream.
In the first three quarters of 2023, the company achieved revenue of 2393.1 billion yuan, of which 179 billion was from the feed business6 billion yuan, accounting for about 75% of revenue, and the revenue of pig business was 413.4 billion yuan, accounting for 1727%。
As the "ballast stone" of the company's main business, Dabeinong's feed business is mainly processed and sold, and the company earns "processing fees", so the profitability of the business has been relatively stable.
Under the last round of pig price surge, Dabeinong expanded its own pig breeding scale by expanding the scale of pig self-raising and mergers and acquisitions.
According to the data, in 2018, the number of pigs slaughtered by Dabeinong Holding Company was 1.13 million, which will increase to 2.64 million in 2022, with a compound annual growth rate of 236%。
Now, when the "pig cycle" continues to decline, Dabeinong's pig breeding business has fallen into losses because of pork.
And due to the continued downturn in pork, and the scale of Dabei agricultural breeding is not as large as that of Muyuan shares, the cost of breeding is relatively much higher. Therefore, the expansion of Dabeida's agricultural breeding business has not brought benefits to the company, but has caused the company to fall into continuous losses.
Dabeinong said in an interview with investors that the loss of pig business in the first three quarters was about 900 million yuan, which directly led to the company's overall loss of 9 million yuan in the first three quarters0.8 billion yuan.
The data shows that from 2021 to the first three quarters of 2023, the net profit attributable to the parent company of Dabeinong was -44 billion yuan, 5560180,000 yuan, -90.8 billion yuan. Except for a slight profit in 2022, the rest of the years were significantly loss-making. After deducting the profits brought by the feed business, Dabeinong's pig breeding business will actually still lose money in 2022.
In addition, due to continuous expansion, the scale of Dabeinong's interest-bearing liabilities is also growing rapidly. According to the data, the total interest-bearing liabilities of the company in 2018 were only more than 3 billion yuan, and as of September 30, 2023, the scale of Dabeinong's interest-bearing liabilities has increased significantly to more than 12 billion yuan.
Compared with pig companies such as Aonong Biotechnology and Zhengbang Technology, Dabeinong's debt risk and financial situation are much better, but after carrying the huge debt of Aonong Biotech, Dabeinong's existing funds and financing channels can still ensure the normal operation of the company and Aonong Bio.
Knowing that Aonong Biotech is in financial trouble with itself, why does Dabeinong still take risks to merge Aonong Biotech?
As a pig feed starter, Dabeinong wants to continue to expand, either continue to increase the scale of feed production, or transform into other businesses.
Especially in the past two years, a large number of small ** out of pig breeding, pig breeding concentration has risen sharply, general feed manufacturers have been difficult to expand the company's business scale by increasing production capacity, so can only expand the pig breeding business downstream.
For example, the domestic feed king New Hope passed a series of resolutions from 2017 to 2018 to expand the scale of pig breeding. Another example is Aonong Biotech, which was also engaged in pig feed processing business at the beginning. In the case that the feed business is difficult to grow, Aonong Biotech has also begun to develop the pig breeding business.
In this regard, Lin Guofa, research director of Brick Agricultural Products Purchasing Network, once told ** that due to the low gross profit margin of the feed business itself, even if it expands production, the profits that can be brought to the company are relatively limited.
Although pig breeding is cyclical, the company can get good profits when the "pig cycle" is up.
However, the acquisition of part of the equity of Aonong Investment and the acquisition of part of the assets of Aonong Biotechnology can be called a "big gamble" for Dabeinong.
Due to the continued low pig prices, Dabeinong's purchase ** is naturally much lower than at its peak. However, it is also necessary to bear the debt risk brought by Aonong Biotech. This is a great test of Dabeinong's financial level and management ability.
In addition, unlike the previous rounds of the pig cycle, this round of the pig cycle *** time is very long. According to past historical experience, a complete pig cycle is generally about 4 years, of which the pig price cycle is about 24 months, and the pig price cycle is also about 20-30 months.
Figure: Photo.com, based on VRF protocol).
However, since the peak of this round of pig prices in June 2020, the **cycle has been as long as more than 40 months, and it is only short-lived from April 2022 to October 2022**.
In this regard, Zhao Guangyu, a senior analyst at Yongan ** Research Center, said that due to the significant increase in the proportion of pig breeding collectivization and scale, the panic production reduction of pig prices has been greatly reduced, so the pig cycle has been ironed out by a more stable supply of pigs.
Taking the pig breeding giant Muyuan shares as an example, during this round of pig prices, Muyuan shares did not reduce production, but expanded production significantly.
According to the data, in 2018, the number of pigs slaughtered by Muyuan Co., Ltd. was only 18.12 million, which will increase to 61.2 million in 2022, with a compound annual growth rate of 535%。In addition, New Hope and Wen's shares have also expanded on a large scale in recent years.
In this regard, New Hope executives said at the investor meeting that there are many main players in the market, and it is difficult to judge the bottom of the pig cycle.
At present, because of the continuous development of pork, large pig breeding enterprises continue to be exposed to the news of tight cash flow. Previously, Muyuan shares reported the news of the rupture of the capital chain, although it was "falsified", but from the company's 2023 pig slaughter expectations, the capital chain of Muyuan shares has been under pressure.
When the giant was forced to shrink its business due to tight cash flow, Dabeinong took the initiative to take over the "mess" of Aonong Biotechnology. If pig prices continue to be low, Dabeinong will not only be unable to save Aonong creatures ashore, but will pull itself into the water.
If the pork ** reverses in 2024, Dabeinong is likely to become one of the "first-line pig enterprises". As for whether Dabeinong's "big gamble" can succeed, only time will be left to verify.
The title picture in the article comes from: Camera.com, based on the VRF protocol.