On February 9, Tang Renshen (002567), an A-share listed company, disclosed the record of investor relations activities on the 8th. Among them, the planning and incentive measures for pig production in 2022 are introduced. The announcement shows that Tang Renshen launched an incentive assessment mechanism of "no increase in income, please leave", which has aroused public opinion discussion and market attention.
At the close of trading on the 9th, Tang Renshen reported 9.16 yuan per share, up 7.51%, with a total market value of 11.05 billion yuan. After the opening of the market on the 10th, its stock price continued to rise. At the close of early trading, Tang Renshen reported 9.51 yuan per share, up 3.82%.
Screenshot of Tang Renshen's February 8 Investor Relations Activity Record Sheet
Don't increase the income please leave? Performance is a matter of concern
According to the information on the official website, Tang Renshen focuses on the operation of the whole industrial chain of pigs. Founded in 1988, the group was listed on the Shenzhen Stock Exchange in 2011 and has a revenue of 18.5 billion yuan in 2020. The announcement shows that the company plans to produce 2 million pigs in 2022. According to the production plan of its pig division, the overall trend of barn volume is rising, and it is expected that the proportion of barns in the first half of the year will be about 40%, and the proportion of columns in the second half of the year will be about 60%.
Regarding employee incentives, Tang Renshen said in response to the inquiry:
On the one hand, in line with the principle of high wages, high efficiency and high performance is low cost, the company implements equity incentives with 60 million shares (accounting for 4.98% of the total share capital) and raises the salary of front-line employees by 10%; on the other hand, the company launches the incentive assessment mechanism of "no increase in income, please leave", puts forward the three major income source schemes of salary package, efficiency sharing award and profit sharing award for employees in the feed and meat industry, and proposes three major income source schemes of salary package, efficiency sharing award and cost sharing award for employees in the aquaculture business sector. ”
The news sparked a discussion in the stock bar. Some netizens are concerned about its secondary market performance, some netizens are concerned about its profitability this year, and some netizens have criticized it, accusing Tang Renshen of hurting employees by the incentive assessment behavior. The loss of Tang Renshen has aroused the attention of many parties.
Social media screenshots
In the cycle of the overall downturn of similar enterprises in the industry, Tang Renshen is in a state of loss in 2021.
Tang Renshen's "2021 Annual Performance Forecast" released last month showed that the company's net profit for the current period is expected to be negative. The data shows that it is expected that the net profit attributable to the mother in 2021 will be 98-1.15 billion yuan, down 203.12% -221.01% year-on-year; the net profit after deduction of non-attributable net profit is expected to lose 88-1.05 billion yuan, down 195.72% -214.21% year-on-year.
Screenshot of Tang Renshen's 2021 annual performance forecast
For the main reason for the loss of the pig industry, Tang Renshen explained that the pig industry was overcapacity, and the company's fat pig sales price fell by about 51% compared with the same period last year; the continuous rise in feed raw material prices, the increase in personnel reserves and other factors caused the company's breeding costs to rise sharply compared with the same period last year; the company purchased some high-priced pig seedlings in the first half of the year for fattening in the "company + farmer" model, resulting in high fattening costs of "company + farmer".
Judging from the performance of the 1-3 quarters of 2021, Tang Renshen has a trend of increasing revenue and not increasing profits.
In the first three quarters of last year, Tang Renshen's revenue basically maintained growth, which was 5.025 billion yuan, 5.814 billion yuan and 5.426 billion yuan, an increase of 39.54%, 35.18% and 0.92% year-on-year. According to the official WeChat account of Tang Renshen Group on January 2, its revenue last year has exceeded 20 billion yuan.
However, in terms of profit, Tang Renshen performed poorly: the company's net profit in the first quarter was still 299 million yuan, an increase of 20.91% year-on-year; in the second quarter, it turned a profit into a loss of 0.96 billion yuan; and the loss in the third quarter expanded to 582 million yuan. Based on tang renshen's "2021 annual performance forecast" released last month, its annual operating performance may be in a state of loss of about 1 billion yuan.
Tang Renshen's performance in the 1-3 quarters of last year Wind screenshot
The saying "please leave without increasing income" is not the first time it has appeared in the Tang RenShen Group this year.
As early as the beginning of the year, Tao Yishan, chairman of Tang Renshen, said in his New Year's speech "Downward Roots and Upward Results" that in the past year, the pig industry has experienced a cold wave attack that has never been encountered in history and suffered heavy blows, but Tang Renshen has still achieved growth against the trend.
Tao Yishan proposed that in terms of taking root downwards, the group innovated the "cost-profit control model" and "cost-efficiency control model", translated the financial accounting indicators into management accounting indicators such as increasing revenue, reducing costs, improving efficiency, adjusting structure, controlling discounts, and creating value, and innovated the incentive scheme of "salary package + efficiency improvement award + profit increase sharing award" to open up the channel for personal income increase.
"Our New Year's slogan is: If you don't increase your income, please leave."
Screenshot of Tang Renshen Group's WeChat public account
In the same month, Tang Renshen announced the 2022 Stock Option Incentive Plan. The company will take out 4.98% of the company's total share capital for equity incentives in three phases. It plans to grant 55.49 million shares to 895 middle and senior managers, core or backbone (technical/business). Among them, the secretary of the board of directors, the financial director and the 893 employees accounted for 0.67%, 0.67% and 91.15% respectively. Together with the reserved portion, 4.51 million shares, for a total of 60 million shares. Based on the exercise price of RMB6.2 per share, it is equivalent to approximately RMB344 million.
Combing through the messages of major social media a few days ago, the content of "do not increase income and please leave" under the Incentive Assessment Mechanism of Tang Renshen, some netizens said that they could not agree, and some people questioned its logic: "According to what you said, the average Grade A criminal in those countries with economic recession is gone." However, there are also those who disagree.
A number of companies are expected to lose money, and the pig market last year attracted attention
It is worth mentioning that in addition to Tang Renshen, many other listed companies have also announced expected losses in 2021.
On January 18, "Pig Mao" Makihara Co., Ltd. (002714) released a 2021 performance forecast, saying that the net profit attributable to shareholders of listed companies for the whole year is expected to be 6.500 billion yuan - 8.000 billion yuan, down 70.86% - 76.32% year-on-year.
On January 21, Wen's shares (300498), a 100 billion farming giant, issued a performance forecast saying that it is expected to have a net loss of 13 billion yuan to 13.8 billion yuan in 2021, down 275.06% -285.84% from the same period last year, and a profit of 7.426 billion yuan in the same period last year.
However, these companies cannot be generalized. Tang Renshen's 2021 semi-annual report shows that the company's current feed revenue is about 6 times that of pig breeding, and the gross profit margin and cost changes are relatively optimistic.
According to the product division, Makihara shares in the same period (the first half of 2021) pig business revenue accounted for 95.65%, feed 5.08%. Wen's pig breeding revenue in the same period was 14.6 billion, and the revenue growth rate and gross profit margin were negative, but its broiler breeding revenue was 13.7 billion, an increase of 31.89% year-on-year, and its gross profit margin was 13.99%.
Screenshot of Tang Renshen's 2021 semi-annual report
In addition to the overall trend of the industry, the operating conditions of each enterprise may need independent analysis, which is worth further observation.
The pig market in 2021 has attracted attention. Comprehensive China Economic Network previously reported that pig prices will decline in 2021, with spot falling by about 55% and futures falling by about 47%. The main reason for the decline in spot futures is the imbalance between supply and demand in fundamentals. The pig market has gradually entered the oversupply stage from the shortage of supply in 2020, while the demand has been affected by the epidemic and continues to be weak.
At a press conference held by the State Council Information Office on January 20, the Ministry of Agriculture and Rural Affairs said that the high price of live pigs in 2021 gradually fell, from 35.8 yuan per kilogram in January to 17.59 yuan in December, and the average production cost of 15.5 yuan per kilogram in December was still higher than the average production cost of about 2 yuan. From the perspective of pig breeding income, in addition to the loss from June to October, the remaining 7 months are more profitable, according to the weighted average calculation of the amount of discharge, each pig in the whole year still has a profit of 564 yuan, higher than the profit level of about 200 yuan in normal years.
"For the whole industry, pig breeding in 2021 is still a bumper harvest year."
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