Waiting for the new hope of the reversal of the pig cycle (000876SZ) began to sell assets one after another. On December 26, New Hope announced that the transfer of 51% of the equity of its white feather meat and poultry business operation - Shandong Zhongxin Food Group (hereinafter referred to as "Zhongxin Food") to China Animal Husbandry Industry and Commerce Group (hereinafter referred to as "China Animal Husbandry Group") was approved by the counterparty, and the transaction price was about 2.7 billion yuan, and after the transaction, New Hope still holds 49% of the equity of Zhongxin Food through Shandong New Hope Liuhe Group.
According to public information, the controlling shareholder of China Animal Husbandry Group is China Agricultural Development Group, which is 100% controlled by the State-owned Assets Supervision and Administration Commission. In this transaction, the overall valuation of Zhongxin Food reached 52.%.9.9 billion yuan, with a net loss of 20.9 billion yuan, based on the net assets of Zhongxin Foods as of August 31, 2023 159.3 billion calculation, corresponding to about 1 PB7 times.
This is not an isolated case, in the past month, New Hope has been frequently selling assets to introduce war investment.
On December 16, New Hope announced that it plans to price 67% of the equity of Deyang New Hope Liuhe Food, the main operator of its food deep processing business, as 150.1 billion yuan was transferred to Hainan Shengchen Investment, hereinafter referred to as "Hainan Shengchen"), which is 100% controlled by New Hope Investment Group, and the actual controller is Liu Yonghao.
In other words, Liu Yonghao seems to be bailing out New Hope by taking over the above-mentioned shares.
At the investor conference, the management of New Hope said that the company's asset-liability ratio has been high in the industry in recent years, and the company hopes to reduce the asset-liability ratio in an orderly manner through these two transactions.
New Hope management expects the company's gearing ratio to decline by 4-5% if the transaction is completed. New Hope's next step in the pig breeding unit is expected to be completed by the end of 2023 or the first quarter of 2024.
New Hope's frequent divestments are against the backdrop of its increasingly tight liquidity and the long-delayed private placement plan.
On November 30, 2023, New Hope announced that it intends to issue 136.4 billion shares, raising no more than 73500 million yuan, of which 364.6 billion yuan will be used for biosecurity prevention and control and digital intelligence upgrade projects in pig farms, but the fixed increase plan has not yet been reviewed at the shareholders' meeting.
As of the third quarter of 2023, New Hope's total liabilities reached 9699.7 billion yuan, of which 577 was current liabilities6.1 billion yuan, and the total non-current liabilities and short-term borrowings due within one year of current liabilities reached 3155.4 billion yuan.
In terms of cash ratio, New Hope is 021, which is lower than 023, but higher than 019γIn terms of current ratio, New Hope has a minimum of 056, Wen's shares and Muyuan shares were 112 and 07γ
The revenue of poultry business and food business does not account for a high proportion of New Hope, only 1282% and 767%, and the gross profit margin was 317% and 875%γ
Whether New Hope can finally get out of the predicament depends on its pig business, which accounts for about 15% of its revenue.
Since the price of pigs has not bottomed out for a long time, the unit cost of New Hope has been much higher than the selling price for a long time, resulting in the more it sells, the more it loses.
Some private equity people in East China analyzed Trade Winds (ID: tradewind01) that in the short term, the contribution of the upcoming Spring Festival to destocking may be limited.
On the one hand, the consumption power of the demand side is limited, and on the other hand, the sick pigs infected with swine fever can still be frozen and stored as frozen pork, so the impact of the high incidence of swine fever in winter on destocking will not be too obvious.
From the perspective of production capacity, New Hope also told Trade Winds (ID: tradewind01) earlier that winter is relatively a high incidence period of swine fever, but the current impact of swine fever on production and breeding is much weaker than that of the previous wild poison era. In the case of weak virulence, the pig will not die immediately, and there will not be much loss if the disease is found to be dealt with immediately.
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