Last year, with a huge loss of 19.7 billion, Zhengbang Technology became the "most injured" pig enterprise in the pig downward cycle.
On the night of January 28, 2022, Zhengbang Technology disclosed its 2021 performance forecast. According to the company's announcement, in the whole year of 2021, Zhengbang Technology is expected to achieve a net profit of 18.2 billion yuan to 19.7 billion yuan, down 416.84% to 442.96% year-on-year; such a huge loss has also made it a new industry "loss king".
Looking back at the past two years, the performance of Zhengbang Technology has been tepid, especially in terms of market value, Zhengbang Technology has been ranked after Makihara, Wen's and New Hope, and is a stable "industry old four"; although under the influence of the downward trend of the pig cycle, the losses of major pig companies have become the norm, but no one may have thought that this inconspicuous pig company "old four" will become the most loss-making enterprise in the entire industry.
As one of the leading enterprises in the pig industry, Zhengbang Technology has always been focusing on a stable business strategy, why did it have such a huge loss last year? In addition to the huge loss of performance, zhengbang technology still has a debt ceiling of 44.7 billion, in the context of the industry downturn cycle is not over, where will Zhengbang technology go in 2022?
From a farmer to the richest man in Jiangxi, the legendary story behind Zhengbang Technology
Behind Zhengbang Technology is the story of a poor farmer who has become the richest man in Jiangxi.
In 1964, Lin Yinsun, the founder of Zhengbang Technology, was born in a poor mountain village 30 kilometers away from Linchuan County; the reason why he was named "Yinsun" was because his parents felt that his family was too poor and hoped that his children would become officials in the future and take the big seal, so as to change the poor life of the family.
However, things did not develop as parents expected, because the family is too poor, Lin Yinsun has begun to work in the fields very early, when he was in junior high school, his parents even hoped that Lin Yinsun would go out to work early and not to study, and his father gave an ultimatum before Lin Yinsun's middle school exam: If you can't get into high school, work as a carpenter in the village and help supplement the family.
Fortunately, Lin Yinsun, who studied hard, was finally admitted to jiangxi grain industrial school, although this is only a vocational middle school, but it is not easy in a poor small rural area, and after being admitted to a vocational middle school, his parents also chose to continue to provide Lin Yinsun with high school, and it is this choice that changed Lin Yinsun's life.
In 1984, Lin Yinsun, who graduated from jiangxi grain industrial school, was assigned to the first rice factory in Linchuan, Jiangxi as a technician, and the rice factory at that time was a "fragrant dumpling", not only with high wages, bonuses, and rice grain distribution indicators; however, Lin Yinsun was not very interested in this job, in 1985, not long after the establishment of Linchuan Feed Factory, Lin Yinsun applied for transfer to the feed factory and gave up this job that everyone envied.
Due to poor management, the operating conditions of the feed factory at that time deteriorated, once to the brink of closure, the first factory director also submitted a resignation letter, at this time, only 20-year-old Lin Yinsun Mao introduced himself, became the second director of the feed factory, and took on the burden of the operation of the entire feed factory.
After becoming the director of the factory, Lin Yinsun soon discovered the problem of the feed factory. Although feed farming is now very common, but at that time feed is still a new thing, farmers do not know what is feed, no one in the factory output of feed is willing to buy, so there is a situation of slow sales.
In response to this problem, Lin Yinsun proposed that farmers can divide the pigs into two columns to breed, one side is the traditional feeding method, the other is to feed with feed, to observe the effect of feed breeding.
A few months later, after seeing that the pigs fed with feed were larger than the pigs fed in the traditional way, the farmers who bought feed began to gradually increase, and the sales channels of feed were opened, and after Lin Yinsun became the director of the factory for a few years, the feed factory successfully turned a profit and became bigger and bigger.
However, this is only the beginning of Lin Yinsun's counterattack. In the years of running the feed factory, Lin Yinsun saw the opportunity behind the feed industry, and after accumulating a certain amount of experience, Lin Yinsun submitted a resignation letter and formed a Sino-foreign joint venture Jiangxi Yonghui Industrial Company with a Canadian Chinese, which is the predecessor of Zhengbang Technology.
With the continuous development of the domestic feed industry, Yonghui Industry also sat on the fast track of development, in 1997, the Sino-foreign joint venture Jiangxi Zhengbang Group was formally established, in 1999 to expand to the pesticide industry, in 2001 to invest in animal health products production, in 2004, Zhengbang Technology began to formally try to raise pigs.
In 2007, Zhengbang Technology officially landed on the capital market, and Lin Yinsun also became the richest man in Jiangxi, a counterattack story from a farmer to the richest man in Jiangxi, which was born.
Into also African swine fever, defeat also African swine fever
After being listed in 2007, plagued by the pig cycle, the development of Zhengbang Technology was not stable.
From the perspective of revenue, although zhengbang technology climbed from 1.631 billion yuan at the beginning of its listing in 2007 to 22.113 billion yuan in 2018, the stock price of zhengbang technology did not rise much, and the market value was only a few billion at the highest.
What really made the qualitative change in Zhengbang Technology was the arrival of African swine fever in 2018.
Under the influence of African swine fever, the pig cycle began to enter the upward channel, and the price of live pigs soared from the lowest 5 pieces / kg to the highest 20 pieces / kg; with the sharp rise in pork prices, the performance of Zhengbang Technology also began to soar, achieving a net profit of 1.647 billion yuan in 2019, a sharp increase of 751.53% year-on-year, and a net profit of 5.744 billion yuan in 2020, an increase of 248.75% over 2019.
Driven by performance, the stock price of Zhengbang Technology also continued to rise. On the eve of the outbreak of African swine fever in October 2018, the stock price of Zhengbang Technology was only about 3 yuan; but with the fermentation of African swine fever, the stock price of Zhengbang Technology fluctuated all the way up, and by September 2020, it hit a record high of 25.98 yuan, and the market value also reached 81.837 billion.
However, just as the so-called success is also Xiao He, defeat is also Xiao He, although African swine fever brought Zhengbang Technology to the peak, but later also let it fall off the altar, as for the reason behind this, is that Zhengbang Technology began a radical expansion after seeing the sharp rise in pork prices affected by African swine fever, in order to seek rapid development.
According to media reports, since the beginning of the epidemic in 2020, Zhengbang Technology has purchased pig pens and sows from all over the country on a large scale, which is the reason for its rapid rise in revenue. From the perspective of liability data, in 2017, the total liabilities of Zhengbang Technology were only 9.914 billion, and the asset-liability ratio was 59.67%; and in the third quarter of 2021, the total liabilities of Zhengbang Technology reached 44.79 billion, and the asset-liability ratio reached 75.23%, which was a substantial increase compared with 2017.
If pork prices continue to rise, aggressive expansion is naturally not much of a problem; but with the plunging decline in pork prices, zhengbang technology's previous aggressive expansion has become a big problem.
With the expansion of production capacity, Zhengbang Technology fell into the embarrassing situation of selling more and more losses, the cost surge brought about by superimposed expansion, and the soaring price of feed, which eventually led to a huge loss of 19.7 billion yuan in 2021.
In 2022, can Zhengbang Technology bottom out and rebound?
From the current point of view, the prospects of Zhengbang Technology are full of uncertainty.
The first is huge debt. As of the third quarter of 2021, the total liabilities of Zhengbang Technology were 44.79 billion yuan, and the asset-liability ratio was 75.23%, which was the highest debt of all listed pig enterprises. Among the liabilities, short-term liabilities are 13.99 billion, bills payable and accounts payable are 5.06 billion, while its monetary funds are only 6.07 billion, and the short-term debt repayment pressure is huge.
The second is the price of pork that is unstable. As of February 5, 2022, the latest hog price is 14.25 yuan / kg, which has rebounded significantly from the low of 11 yuan / kg in November last year.
However, the rebound in pig prices is largely due to the promotion of the Spring Festival, when the Spring Festival, the peak consumption season, lacks strong purchasing power to support the price of pork, may continue to find the bottom.
Finally, there is more intense industry competition. In the past, as pig prices fell, pig production capacity would decrease rapidly, which would lead to an increase in pig prices in the future.
However, from the current point of view, although the price of pigs fell sharply, but the major pig companies have not significantly reduced pig production capacity, according to media reports, the current Makihara shares, Wen's shares and New Hope are still continuing to expand, and Zhengbang Technology although in the second half of last year to reduce production, but in 2022 but continue to implement expansion plans.
In a public occasion not long ago, Lin Yinsun said in a high profile: Zhengbang will achieve an annual output value of 180 billion yuan in three years and advance into the world's top 500; within five years, it will achieve an annual output value of 300 billion yuan and catch up with the world's top 500 companies.
In the case of intensified competition in the industry, although the price of pork continues to decline, the major pig companies are still continuing to run the fence, without any signs of stopping; in this context, Zhengbang Technology, which has high debt and no advantage in breeding costs, is difficult to say optimistic about the prospects in 2022.