How can the money from investment projects be used to supplement liquidity?
When listed companies raise funds, shareholders support the company out of optimism, but there are some projects that reach the construction stage, and the "urgent need to expand production" when raising funds becomes "the existing production capacity is enough" when it is replenished.
The same situation occurred with a listed Shaanxi pharmaceutical company. On February 1, Panlong Pharmaceutical (002864) announced that the fund-raising project "Shaanxi Provincial Medical Institutions Preparation Centralized Preparation Center Construction Project" will be postponed, and the "Quality Inspection and Testing Sharing Platform Upgrading and Transformation Project" will be terminated, and the remaining raised funds are intended to permanently replenish working capital.
This also means that the company's public issuance of convertible bonds in March 2022 raised net funds of 2The three purposes of the 7.2 billion yuan invested will be postponed and terminated except for replenishing liquidity.
Let's take a look at the postponed "Shaanxi Provincial Medical Institution Preparation Centralized Preparation Center Construction Project", according to the 2022 fundraising plan, the project is planned to be invested in 15.1 billion yuan, and reach the scheduled usable state by the end of 2023.
And the reality is that by the end of 2023, only 2038010,000 yuan, the progress of the use of funds is 1353%, the company also said that the project is still necessary and feasible for investment, and decided to extend the implementation period of the project to December 31, 2024.
Panlong Pharmaceutical Announcement.
As for the reason for the postponement, Panlong Pharmaceutical did not go into too much detail in the announcement. It said that the feasibility analysis of the project was based on factors such as the market environment and industry development trend at that time, and the actual implementation process was affected by the company's actual operation situation, market environment and other factors, resulting in the delay of the project.
According to the disclosure of the project at the time of fundraising, the project intends to provide R&D, production and distribution services of in-hospital preparations for medical institutions in Shaanxi Province.
What is an in-hospital preparation? It can be understood as the "unique secret recipe" of each hospital, which is prepared by the hospital itself, although it has rarely done clinical trials, but it has been verified by long-term real patient data for many years of clinical use, and can only be used in the prescribed medical institutions after approval, and shall not be marketed.
When the project was first launched, the company had high expectations. On the one hand, Panlong Pharmaceutical said that after the completion of the project, it is expected to have an average annual net profit of 510020,000 yuan, and the internal rate of return on investment after tax is 2898%, which is a good return; On the other hand, according to the company's previous introduction, Panlong Pharmaceutical has reached cooperation intentions with a number of hospitals, etc., and has a certain number of orders in hand.
From this point of view, it seems that such a project with a high degree of "certainty" should not be pushed so slowly, at least not by the time the funds are only 13 years old by the scheduled date of use53%, the reasons behind which may need to be explained in more detail.
In this regard, the reporter of "Daily Economic News" called the secretary of the board of directors of Panlong Pharmaceutical, and the other party said: "The company did this project because of the future policy orientation, but about the specificity of the project, because it involves some undisclosed and possibly undisclosed information, it is inconvenient for me to disclose too much in **." ”
The reporter noticed that shortly after the disclosure of the preparation fundraising project in the hospital, Panlong Pharmaceutical disclosed through the interactive platform that it had signed a strategic cooperation agreement with the Shaanxi Institute of Traditional Chinese Medicine, and planned to carry out the joint development of "Qingwen Lung Protection Granules" through the fundraising project.
It is reported that "Qingwen Lung Protection Granules" is a hospital preparation of Shaanxi Institute of Traditional Chinese Medicine, which is added or subtracted from the traditional Chinese medicine prescription "Yinqiaosan", "Xuanmai Ganju Soup" and "Four Gentlemen Soup", mainly for mild and suspected symptoms of new coronavirus infection, and is a hospital preparation approved by the Shaanxi Provincial Food and Drug Administration in 2020. At that time, during the epidemic, "new crown drug" was a popular concept in the market, and Panlong Pharmaceutical, which had many advantages, immediately began to count the board and took a stock price "roller coaster".
According to Panlong Pharmaceutical's reply on the interactive platform on November 7, 2023, the company has carried out the research and development of a class of traditional Chinese medicine innovative drugs "Qingwen Lung Protection Granules" and a class of chemical innovative drugs "3cl protease inhibitors", which means that the drug is still in the research and development stage.
In fact, as the impact of the epidemic fades, it is a fact that the value of new crown drugs continues to decline, and will this affect the order and development progress of Panlong Pharmaceutical's in-hospital preparations, so that it will be cautious about project investment?
The official website of Panlong Pharmaceutical.
In addition, "the original intention of hospital preparations is mostly for the best patients, not for profit, so the general price is low, there is less room for profit, and the threshold for the declaration and registration of hospital preparations and preparation and production continues to increase, and the investment of hospitals is also increasing, resulting in less and less enthusiasm for R&D and production, and the industry's formal and clear profit model is still being explored, which needs to be carefully considered." A person related to the pharmaceutical industry told reporters.
Panlong Pharmaceutical also made a risk reminder in the prospectus: Shaanxi Province has not yet developed into a large-scale industry, and the implementation process and later operation of the fundraising project, such as major changes in relevant industry policies, economic and market environment, etc., may lead to the project cannot be completed or implemented smoothly as scheduled, which will affect the progress of the project or expected benefits.
However, the good news is that on September 7, 2023, the Shaanxi Provincial Medical Security Bureau issued a notice that 533 in-hospital preparations in Shaanxi will be included in the medical insurance ** payment category and will be implemented uniformly in the province from October 1, bringing substantial benefits to the in-hospital preparation industry, and this has a trend in the country, such as Wuhan, Wuhu, Qinghai, etc., which may also be one of the considerations for Panlong Pharmaceutical to choose long-term betting.
Along with the postponement of the project, there is also the news that the "Quality Inspection and Testing Sharing Platform Upgrading Project" has been terminated and the remaining raised funds are planned to be permanently replenished.
According to the announcement, the project plans to invest 4956840,000 yuan, which is expected to reach the scheduled usable state on September 30, 2023. By the end of 2023, only 622 of the funds raised by the project have actually been used200,000 yuan, and the used funds account for 1255%, the company said that the existing quality inspection site and equipment can basically meet the company's quality inspection and testing needs, and the termination and replenishment of the project will not adversely affect the company.
This also somewhat reflects the deviation of the company's previous judgment. In the prospectus, it said that the company's demand for inspection and testing will continue to increase, and the service capacity of the existing R&D quality control center is saturated and needs to be expanded.
As a result, Panlong Pharmaceutical was also issued a regulatory letter by the Shaanxi Securities Regulatory Bureau on January 13, 2024, which showed that the project invested 608 in equipment in 2022730,000 yuan, which can meet the needs of the company's production and operation, and the company's disclosure of the use of relevant raised funds is inaccurate and violates relevant regulations.
Panlong Pharmaceutical Announcement.
In fact, Panlong Pharmaceutical's performance growth has been relatively stable over the years, and fundraising has always been relatively smooth, but there have been some delays in the construction stage. For example, in 2017, when the company went public, it raised a net amount of 18.4 billion yuan was used for expansion projects such as the construction of production lines, R&D centers and marketing networks, as well as replenishment of working capital, but according to the 2021 announcement, the three projects have been postponed to varying degrees due to the impact of the West-Chongqing high-speed rail line and the new crown epidemic.
In December 2023, the company announced that it plans to build the "Qinling Panlong Valley Health and Cultural Tourism - Qinling ** Hospital Affiliated to Xi'an Medical College" in Panlong Ecological Industrial Park, Zhashui County, Shangluo City, Shaanxi Province, through Sun Company, with an estimated total investment of 1800 million yuan, the investment cycle is expected to be 12 months, and the funds are its own funds.
In addition, the company is also exploring the offline distribution of "Panlong Seven Medicine Liquor", and has begun to lay out and promote a series of business expansion actions such as Panlong Yunkang's online e-commerce business.
Behind this, Panlong Pharmaceutical's inherent core products may have limited upside, and the company is actively taking action to explore the second growth pole to maintain sustainable development, and the demand for capital costs may increase in the process.
National Business Daily.