During the critical period of the transformation of the "MSG King", the "old injury" occurred again 17 years ago
Text | Zhang Jiaru
On November 16, Lotus Health issued an announcement, saying that it had received an enforcement notice and had become the person subject to execution, with an execution amount of 36.8449 million yuan.
The incident originated from a loan contract dispute in 2006, and has not ended in 17 years, during which it has experienced a tortuous process of reversal and reversal.
In the past 17 years, Lotus Health has undergone great changes, experienced the elimination of the monosodium glutamate industry, and deducted non-net profit losses for 10 consecutive years. In order to turn things around, Lotus Health changed hands and transformed, but with little effect, and finally embarked on a reorganization.
After the reorganization in 2019, Lotus Health ushered in a new owner, Li Houwen, who has the title of private AMC (asset management company) boss, and its subsidiary Guohou Asset Management Co., Ltd. is a professional institution specializing in bailing out distressed enterprises.
After Li Houwen became the owner, Lotus Health began the journey of exploring the second growth curve, such as the layout of diversified condiments, drinking water, prefabricated dishes and other related products. The action that Lotus Health pays the most attention to by the outside world is the cross-border computing power.
On September 29, Lotus Health announced that its wholly-owned subsidiary had signed a procurement contract with Xinhua III to purchase computing power servers, with a total contract price of 693 million yuan. Computing power is one of the hottest concepts in the second half of 2023, is Lotus Health, as the "king of MSG", reliable cross-border computing power?
According to the 2023 semi-annual report, Lotus Health's monetary funds are 1.38 billion yuan, of which 590 million yuan are raised funds, 770 million yuan are restricted funds, and the company's available liquidity is only about 20 million yuan, far lower than the contract amount of 693 million yuan.
On October 12, Lotus Health said that it would raise funds through credit from financial institutions and financial leasing, but because financial institutions have not yet signed formal contracts for credit and financial leasing, there is still some uncertainty about whether the company can obtain funds on schedule, and the above-mentioned financing methods may have certain financial pressure on the company.
In the critical period of Lotus Health's transformation, funds are facing certain pressure, and the "old injury" 17 years ago has flares up again, if the company needs to pay off 36.8449 million yuan, it is not good news. Lotus Health's statement is that the company will file an application for an enforcement objection, and it is currently unable to estimate the impact of the above matters on the company's current or future profits.
How will the old case end 17 years ago? What will be the result of Lotus's health transformation? Now it is all in suspense.
17 years ago, the "old wound" attacked
The hand of time is turned back to 2006.
In 2006, the Zhoukou Intermediate People's Court ruled that Lotus Health should repay the principal of CDB Henan Branch of RMB 99,577,900, as well as interest and liquidated damages, totaling RMB 102 million. Lotus Group shall be jointly and severally liable for liquidation.
According to the disclosure of Lotus Health, during the execution of the case, the two parties reached an enforcement settlement agreement orally through coordination: Lotus Health repaid 30 million yuan to the Henan branch of China Development Bank. In December 2009, Lotus Health repaid 30 million yuan, and then the Zhoukou Intermediate People's Court ruled that the enforcement procedure of the case was terminated.
However, in March 2021, Lotus Health received the "Notice of Resumption of Enforcement" from the Zhoukou Intermediate People's Court, stating that because the applicant for execution applied for resumption of enforcement, Lotus Health became the person subject to execution again, and the amount involved was 102 million yuan.
After receiving the notice, Lotus Health filed an application for enforcement objection to the Zhoukou Intermediate People's Court on two grounds: first, the relevant claims had been repaid through enforcement and settlement under coordination. Second, in 2019, under the auspices of the Zhoukou Intermediate People's Court, the Company had repaid and dealt with the historical creditor's rights and debts through bankruptcy reorganization, and CDB did not declare its claims to the administrator during the bankruptcy reorganization.
In April 2021, Lotus Health received the Enforcement Ruling from the Zhoukou Intermediate People's Court, ruling to revoke the previous notice of resumption of enforcement. Subsequently, CDB Henan Branch was dissatisfied with the ruling and filed a reconsideration with the Henan Provincial High Court, which rejected CDB's application for reconsideration in June 2021.
The matter is not over yet, the Supreme Court intervened in 2022, and since 2023, the case has not been pending.
In July 2023, Lotus Health will become the person subject to execution again, and the amount involved is 102 million yuan. Since then, the enforcement has gone through a cycle of being revoked, and the Henan branch of China Development Bank has filed an application for reconsideration, and the application for reconsideration has been rejected.
On November 16, Lotus Health announced that the company became the person subject to execution again, with an execution amount of 36.8449 million yuan. It is not difficult to see that the above-mentioned cases have gone through a tortuous process of reversal and reversal, and we will stay tuned to see what the final outcome will be.
The winter of the "MSG King".
In 2006, when the above case originated, Lotus MSG was in a glorious moment and was an out-and-out "MSG king".
According to the 2006 annual report, Lotus MSG sold 167,900 tons of MSG, an increase of 23.41% over the same period last year. A total of 50,000 tons of flavor essence were produced in the international market, an increase of 24.6% over last year. The export volume of Lotus monosodium glutamate accounts for more than 90% of the total export volume of the same industry in China, and the international network of monosodium glutamate sales has developed to Asia, Europe, the United States, Africa and other regions.
In 2006, Lotus was also selected as the "Industry Pioneer Enterprise" of MSG by the China Light Industry Federation, the "Industry Landmark Brand" of MSG by the China Brand Research Institute, and one of the "Top Ten Economic Business Cards of Henan".
However, since 2010, the monosodium glutamate industry has begun to knock out, and Lotus Health's performance has entered the winter, deducting non-net profit losses for 10 consecutive years.
Under the downturn of the main business, Lotus Health embarked on the road of change of ownership and transformation. In December 2014, Xia Jiantong became the new actual controller of the company. Xia Jiantong graduated from Harvard with a Ph.D. at the age of 24, and at his peak owned three listed companies and the Premier League club Aston Villa.
Under the management of Xia Jiantong, in 2015, Lotus Health determined the company's transformation strategic plan to enter the field of smart agriculture and health in the future, and changed its name from "Lotus MSG" to "Lotus Health".
However, the Harvard genius failed to help Lotus Health "change its life". Since then, Xia Jiantong has been riddled with lawsuits and has become a dishonest person subject to execution, giving up control of Lotus Health, and the strategic transformation of Lotus Health has also come to naught, and it has also moved towards reorganization due to heavy debts.
In December 2019, after the reorganization, Lotus Health ushered in the new actual controller Li Houwen. After Li Houwen became the owner, Lotus Health began to explore the second growth curve. Judging from the two major moves in 2023, Lotus Health has the meaning of chasing the wind.
For example, prefabricated dishes are the tuyere industry in 2023. In March 2023, Lotus Health announced that it intends to acquire part of the equity of Hangzhou Golden Antelope, the parent company of the "Zihai Pot" brand, with the intention of cooperating in the development of the prefabricated vegetable market. In August, the acquisition was terminated.
In the second half of 2023, the computing power industry will become a new outlet, and Li Houwen will lead Lotus Health to transform computing power across borders after prefabricated dishes. It's just that Lotus Health's current main business is monosodium glutamate, and there is a big gap with the computing power industry, what is Li Houwen considering?
The bigwig's "acquaintance bureau"
On September 29, Lotus Health announced that according to the company's strategic development plan, Lotus Kechuang, a wholly-owned subsidiary of the company, purchased 330 NVIDIA H800 GPU series computing power servers from Xinhua 3C Information, a subsidiary of Xinhua 3 Group, with a total contract price of 693 million.
Lotus Health's cross-border computing power is the "acquaintance bureau" under Li Houwen, specifically:
Li Houwen's Guohou Assets participated in the bankruptcy reorganization of Tsinghua Unigroup. Tsinghua Unigroup controls Tsinghua Unigroup through its subsidiary, Tibet Unigroup. The subsidiary of Tsinghua Unigroup is New H3C Group, and the holding subsidiary of New H3C Group is New H3C Information. H3C Information is a partner of Lotus Health's 693 million yuan procurement contract.
For Lotus Health's cross-border computing power, in mid-October, Li Houwen said that entering the field of scientific and technological innovation such as intelligent computing power and AI is by no means a story to be told in the short term, but a practical thing to be done in the long term. In the future, the main business of Lotus condiment and food will form a "two-wheel drive" with the science and technology business segment.
Recently, Lotus Health said on the interactive platform that the company has successively signed cooperation agreements related to computing power leasing business with several partners, and has reserved certain computing power customer resources.
Why are there so many cross-border moves in 2023? Li Houwen said that the reorganization has entered its fourth year, and the company has multiple favorable conditions for the second venture.
In terms of performance, in the first three quarters of 2023, Lotus Health achieved revenue of 1.614 billion yuan, a year-on-year increase of 22.8%, and net profit attributable to the parent company of 95 million yuan, a year-on-year increase of 93.8%. The main reason for the increase in performance is that the main business monosodium glutamate and chicken essence have maintained a growth trend, and the profitability has continued to improve.
From 2020 to 2022, Lotus Health will either increase revenue without increasing profits, or increasing profits without increasing income, with a single-digit growth rate. Lotus Health's data for the first three quarters of 2023 is the best three-quarter report data in recent years, laying the foundation for the double increase in revenue and net profit for the whole year.
Even if Lotus Health's performance grows, the transformation computing power still faces certain financial pressure.
According to the 2023 semi-annual report, the company's available liquidity is only about 20 million yuan, which is not far from the purchase of computing power servers of 693 million yuan. The regulator asks for clarification of the source of funds in the letter of inquiry.
On October 12, Lotus Health said that this procurement does not involve the use of the company's raised funds, and the company will arrange to raise funds based on the following methods to solve the source of funds for this procurement in batches:
The company's paid-in registered capital of 50.2 million yuan can be used as a source of funds for the first batch of purchases. It will also obtain funds through credit and financial leasing from financial institutions, but because a formal contract has not yet been signed, there is still some uncertainty about whether the company can obtain funds on schedule, and the above-mentioned financing methods may have certain financial pressure on the company.
However, Lotus Health said that the financing plan is achievable, and the company has less risk of not being able to perform the contract due to insufficient funds.
Lotus Health has taken the first step in the transformation of computing power, and the significant recovery of performance data will help solve the financial pressure faced by the transformation, but at this time, the company has once again become the person subject to execution, and if the company needs to repay 36.8449 million yuan to the applicant for execution, it is equivalent to pouring cold water on the company's performance and finance.
At present, this 17-year-old case has not yet been concluded, and Lotus Health said that it will file an application for an enforcement objection, and the final outcome of the matter remains to be seen. What do you think about Lotus Health becoming the executor again and the prospect of transforming computing power?