Produced by Radar Finance and EconomicsLi Yihui edDeep sea
Under the strongest pig cycle, listed pig companies have suffered large-scale losses, and even industry bigwigs can't sit still.
Recently, at the 2023 Annual Meeting of Chinese Business Leaders, Liu Yonghao, chairman of New Hope Group, said frankly that although New Hope has a strong family background, the unprecedented difficulties it is currently facing also objectively exist. The entire breeding industry has been hovering at the bottom for nearly three years, and almost all farmers are losing money.
According to the financial report, from 2021 to the first three quarters of this year, New Hope, which is mainly engaged in feed and breeding, has a cumulative loss of 14.9 billion yuan. As of the end of the third quarter, New Hope's debt-to-asset ratio reached 7276%, the highest level since listing.
However, the huge loss caused by New Hope is not only affected by the pig cycle, but also related to the company's aggressive expansion. Liu Chang, chairman of New Hope, once said that after the rapid expansion of the pig industry, the management ability did not keep up in time, which affected production efficiency and profitability.
In this context, New Hope embarked on the road of "self-help". On the one hand, the company cleared some pig farm resources and revitalized assetsOn the other hand, New Hope advances 73The 500 million yuan fixed increase plan is intended to be used to acquire assets, upgrade pig farms and repay debts.
Since its establishment, New Hope Group has spent an extraordinary 40 years, and China's largest feed producer once helped Chairman Liu Yonghao become the richest man in China. But now, New Hope needs to survive the winter.
It is planned to add more than 7.3 billion yuan to "self-help".
Pig prices are still falling.
According to national data, as of December 6, the national pig market was 1463 yuan kg, than November 29 **135%, the lowest since the end of July.
In addition, as of the week of December 6, the national pig feed price ratio was 434, down 023%。According to the current ** and cost estimates, the average loss of pig breeding heads in the future is 741 yuan.
Many market views believe that pig prices are still under pressure in the short term. Guojin ** said that in 2023, the number of pigs slaughtered will continue to grow, the state of oversupply in the industry has not changed, and the annual breeding profit is expected to be negative, looking forward to 2024, it is expected that the supply and demand pattern will be difficult to improve in the first half of next year, and the pig ** will still be sluggish.
Under the situation of oversupply in the market, the sales of listed pig enterprises have further declined. According to the November live pig sales briefing disclosed by New Hope, the company sold 167 live pigs in November590,000 heads, an increase of 1389%, a year-on-year decrease of 089%；The revenue from the sale of hogs was 23800 million yuan, an increase of 167%, a year-on-year decrease of 3165%。
Compared with the sales revenue and sales volume have improved month-on-month, pig prices still continue to decline. The average sales price of commercial pigs in November was 1395 yuan kg, a decrease of 644%, a year-on-year decrease of 4013% and hit a new low for the year. The other two leading pig companies, Muyuan shares and Wen's shares, also saw a year-on-year and month-on-month decline in the average sales price in November.
In this regard, New Hope explained that the main reason for the large year-on-year decline in the average sales price of commercial pigs is the fluctuation of the industry cycle, the pig price in the same period last year was relatively fast, the base was high, and the industry production capacity has been relatively oversupplied since this year.
The continued slump in pig prices has put pressure on New Hope's financial statements. The financial report shows that in the first three quarters of this year, New Hope achieved an operating income of 10674.8 billion yuan, an increase of 6 percent year-on-year3%；Net profit attributable to the parent company was -385.8 billion yuan, a year-on-year decrease of 4252%。
At the same time, New Hope's debt ratio climbed rapidly, from 53 at the end of 202006% climbed to 72 at the end of the third quarter of this year76%。At the end of September 2023, the company's total liabilities were 9699.7 billion yuan, and short-term borrowings were 16.4 billion5.6 billion yuan, current liabilities of 5776.1 billion yuan. But the company's monetary funds are 1159.7 billion yuan, short-term debt repayment pressure is greater.
In this context, New Hope has launched a large fundraising. On the evening of November 30, the company released a private placement fundraising plan, planning to raise 73500 million yuan, of which 364.6 billion yuan for pig farm biosecurity prevention and control and digital intelligence upgrade projects, 1.5 billion yuan for the acquisition of minority shares in holding subsidiaries, 220.4 billion yuan to repay bank debts.
At present, New Hope's total liabilities are approaching 100 billion yuan, and it has become a top priority to alleviate the tension in the capital chain. However, some investors are worried that the sluggish share price of New Hope may affect the company's promotion of the private placement plan.
On December 4, New Hope's stock price fell to an intraday low of 883 yuan, a new low since February 21, 2019. In the year alone, the company has fallen by about 25%.
Previously, Lixun Precision and Tongwei took the initiative to stop the private placement because the stock price was too low. On the evening of December 1, Lixun Precision announced the termination of the 2022 non-public offering, one of the reasons is that the company's current stock price is at a low level, and in order to protect the interests of investors and all shareholders, the company intends to terminate the non-public offering.
When Tongwei terminated the 16 billion yuan private placement plan, it also said that based on the changes in the current capital market environment, the company's value was significantly underestimated, and in order to safeguard the interests of all shareholders, it planned to terminate the issuance of ** to specific objects.
From a massive expansion to a contraction of the front
In addition to the external environment, the bitter fruit of New Hope's loss actually occurred two years ago.
Looking back, 2013 was an important turning point for New Hope. This year, Liu Yonghao, who was over sixty years old, decided to hand over the listed company New Hope Liuhe to his daughter Liu Chang.
As a rich "daughter", Liu Chang is not a typical good girl. At the age of 14, she aspired to be a socialite, and when she was in junior high school, she became Miss Avon, and opened a jewelry store on Chunxi Road in Chengdu.
In 1996, 16-year-old Liu Chang was sent abroad to study. Later, in a speech at Peking University, Liu Chang revealed that he was very depressed when he was in the United States, dyed his yellow hair and white hair to express his different self. But the difference in the way of thinking between China and the United States has also taught her to try to understand her own differences and learn to accept herself.
In 2002, after Liu Chang returned to China, he entered New Hope in a low-key manner under the name of "Li Tianmei" and engaged in administrative management. After years of experience in different positions, the fledgling Liu Chang walked to the front desk and began to take charge of New Hope.
Previously, the sale of feed had been New Hope's main income**. But three years after Liu Chang**, New Hope officially set foot in downstream pig breeding from the feed industry.
With feed profits declining year by year, New Hope's business model has further shifted from feed sales to commercial pig sales. In 2018, the company set the goal of slaughtering 8 million pigs in 2020 and 25 million in 2022.
Two years later, New Hope caught up with the Super Pig cycle. Under the influence of various factors such as the swine fever epidemic and environmental protection and production restrictions, from the end of 2018 to mid-October 2019, the number of live pigs increased from 101 yuan kilogram rose to 4029 yuan kg, an increase of 3 times.
In the midst of the rise, pig enterprises have made a lot of money, and the actual controllers behind them have staged various wealth myths, and a large amount of social capital has poured into pig breeding, and New Hope is no exception.
Pig farming requires the construction of a factory, and New Hope's solution is to acquire and build itself. According to ** statistics, in 2019, New Hope merged with 7 companies;In 2020, 12 more were merged. According to the public financial report, from 2019 to 2021, New Hope's capital expenditure on engineering construction totaled more than 70 billion yuan.
To build a factory, funds are needed, so Liu Chang transferred Zhang Minggui, who is doing real estate, to New Hope as president. In Liu Chang's view, Zhang Minggui's "ability to fund turnover, construction speed and quality assurance in the real estate field are all needed to raise pigs."
After more than a year of large-scale expansion, New Hope further adjusted its target in the second half of 2020: the target of 8 million heads for slaughter in 2020 remains unchanged, the target of 30 million heads for 2021 will be challenged, and 40 million heads will be guaranteed for slaughter in 2022.
In 2022, New Hope's annual pig slaughter has reached 14.62 million, although there is still a gap from the original slaughter target, but it has ranked third in the country.
However, in 2021, there will be overcapacity in the pig market, and after the pig market falls, the market will be inverted with the cost, and the more you sell, the more you will lose.
Flush iFinD data shows that from 2021 to the first three quarters of 2023, New Hope has suffered continuous losses, with a cumulative loss of about 149 during the period100 million yuan, this data almost wiped out the company's total profit from 2016 to 2020, and the cumulative profit during this period was 164400 million yuan.
At the performance briefing in June this year, in the face of investors' questions about the previous radical expansion, Zhang Minggui said frankly that at that time, it was indeed underestimated that the dilution of management capabilities after the rapid expansion of the scale was underestimated, and if it could really go back to the past, it would be more stable in the pace of expansion.
Under pressure, New Hope also began to shrink its front. According to public information, since 2022, New Hope has returned 22 to 18 pig farms under construction and put into operation in Chengdu$4.3 billion in funding.
In the institutional survey in early December, the management revealed that in terms of asset revitalization, it will cooperate with some regional private and state-owned enterprises to jointly promote the further improvement of capacity utilizationAt the same time, it is planned to surrender 50 projects this year, and 41 projects have been completed in the first three quarters, and will be promoted in the future.
In addition, reducing costs and increasing efficiency are also key measures of New Hope. In November, the company's complete cost of slaughtering fat pigs in the operating yard line was reduced to 15About 6 yuan kg.
However, compared to the 13 of the month95 yuan kilogram of commercial pig sales price, this cost is still above the sales **, the cost is inverted.
Liu Yonghao's family foundation is still thick
New Hope's pig business continues to lose money, but it is not enough to make the former richest man Liu Yonghao break his bones.
New Hope has been in business for 41 years, has gone through many cycles, and has seen a lot of storms, we have a toolbox and room to maneuver. In a recent speech, Liu Yonghao said that everyone on the New Hope Ship has a thick bottom, and it is a treasure to take out a piece of it, and firmly believes that the winter will pass and the storm will definitely stop.
Liu Yonghao's four brothers went to sea to start a business, which began in 1982. At that time, the four brothers all had an enviable "iron rice bowl": the eldest Liu Yongyan worked in the computer institute of Chengdu 906 Factory;The second Liu Yongxing works in the Xinjin County Education Bureau;Liu Yongmei, the third child, works as an agricultural technician in the county agricultural bureau;Liu Yonghao is the fourth, graduated from Sichuan Vocational and Technical College and stayed on to teach.
At the initial stage, the Liu brothers sold their watches and bicycles to make up 1,500 yuan, earned the first pot of gold from quail breeding, and then relied on Sichuan, a major pig-raising province, to switch to feed production, calling the leading Zhengda feed at that time.
In 1989, "Hope Brand" No. 1 suckling pig feed was introduced to the market, and monopolized the Chengdu feed market in one fell swoop. With the gradual deepening of reform and opening up, the careers of the four Liu brothers are getting bigger and bigger.
In 1992, the brothers bought 30-40 state-owned feed companies in about a year, turning them into mixed-ownership enterprises. It was also this year that on the basis of Hope Feed Company, Hope Group was successfully established.
In 1995, the four Liu brothers went to separate families, Liu Yongyan established the Mainland Hope Company, Liu Yongxing founded the Oriental Hope Company, Liu Yongmei established the West China Hope Company, and Liu Yonghao established the Southern Hope Company, which is the predecessor of today's "New Hope Group".
After the separation, unlike other brothers who stayed away from the capital market, Liu Yonghao grasped both industry and capital. Among them, New Hope was successfully listed in 1998, becoming the first listed company of a private enterprise in the mainland, and Liu Yonghao's family has also won the title of China's richest man several times.
Today, Liu Yonghao is over seventy years old, and after more than 40 years of ups and downs in the business world, the business empire he has established is very large. According to the official website, New Hope Group has the world's largest feed production capacity, China's first poultry meat processing capacity, and is one of China's largest comprehensive meat, egg, and milk suppliers.
In the financial field, Liu Yonghao also showed his strength, not only initiated the establishment of Minsheng Bank, participated in Minsheng Life Insurance, and was involved in banks, insurance, trusts, financial companies, etc., but also sat on 6 listed companies such as New Hope, Xingyuan Environment, New Dairy and Huarong Chemical.
He stressed several times this year that New Hope will not fall, lie down, or be anxious, and New Hope will live to be 120 years old.
But navigating cycles and living longer in a changing environment requires transformational pains. Especially today, when all industries are under a lot of pressure, it is a test of the responsiveness of the big ship of New Hope and the wisdom of Liu Yonghao, the head of the family.