Original title: Divorce does not leave the house, the chairman and his wife play insider trading, and the yield exceeds 90%!
The cash dividend rate is only 14.35%.
Author | Shell XY
Edit | Xiaobai
I am accustomed to seeing the big road after the divorce of the husband and wife, and I have seen a lot of sky-high divorce cases where A-shares can share the sorrows and hardships, and now there are chairman and wife who have been divorced for 20 years and still live in the opposite door to have breakfast together.
There is also love in the capital market?
(Source: Market Value APP)
It was not until November 30 that the Fujian Securities Regulatory Bureau issued a fine of 33 million yuan, and it was suddenly realized that the capital market does not necessarily have eternal love, but there must be eternal interests.
(Source: Fujian Securities Regulatory Bureau)
The owner of this 10 million ticket is named Zhang Yongji.
Haven't heard of this name? It is better to introduce it directly as the ex-wife of Yao Chengzhi, the actual controller and chairman of Menova.
After 20 years of divorce, they joined forces to perform insider trading dramas
01 Accurate eating before the big rise, with a yield of over 90%
Before knowing this relationship, Zhang Yongji can even be called a god.
From February 1 to 10, 2021, Zhang Yongji spent a total of 12.22 million yuan to buy 405,700 shares of Menova.
Since then, the stock price has immediately started a round of sharp rise, with the highest price rising to 61.28 yuan / share, an increase of nearly 150% from the buying point.
This accurate grasp of the time of buying, could it be that Zhang Yongji has opened his eyes?
(Source: Market Value APP)
Although the subsequent stock price has fallen, it is also higher than during the buying period, and Zhang Yongji gradually shipped, and as of November 8, 2022, a total of 405,700 shares have been sold.
After one trip, Zhang Yongji earned a total of 11.01 million, with a yield of more than 90%.
In this regard, Zhang Yongji said, "This is discussed with friends, we are optimistic about Menova, and we have a deep relationship with Menova", and it is by no means "insider, greasy, and ghost"!
(Source: Fujian Securities Regulatory Bureau)
02 Ex-husband and ex-wife, who lived in the opposite door before the stock was bought
Is this really the case?
Please ask the Fujian Securities Regulatory Bureau to unveil the answer for us.
Zhang Yongji and Boss Yao were classmates in middle school, childhood sweethearts, registered their marriage in July 2000, and soon had a daughter after marriage.
But the happy days did not last long, in December 2002, the two parties divorced, Yao Chengzhi was responsible for raising his daughter, and gave Zhang Yongji 300,000 yuan as compensation.
In fact, Yao Chengzhi pays Zhang Yongji about 100,000 yuan per month for living expenses, and the two also bought two houses together after the divorce, and they have held them to this day.
From January 23 to 28, 2021 and from February 6 to 7, 2021, Zhang Yongji lived in the property under the name of the subsidiary of Menova and lived opposite the door to Boss Yao.
In Zhang Yongji's WeChat chat on January 26, words such as "make a hearty breakfast, Yao Dong eats steak and sweet potatoes" also appeared, at first glance, I thought it was a happy life for a family of three!
(Source: Fujian Securities Regulatory Bureau)
After 20 years of divorce, he became a neighbor again, made a loving breakfast, and reunited after breaking the mirror?
It's better to take a closer look at this time, isn't this the time node before Zhang Yongji buys stocks in a big way?
03 The time when the stock is bought is just in time for the contract to be concluded
Coincidentally, this is also the time when Menova and Merck, an overseas pharmaceutical leader, finalize the cooperation.
Procurement negotiations between Menova and Merck began as early as May 2019 and a Non-Disclosure Agreement was signed at that time.
After more than one year of business negotiations, until November 20, 2020, Menova received an email from Merck & Co., Ltd. (MSD) regarding the general template of the Strategic Cooperation Agreement. This is a key step in the cooperation between the two parties, and represents the possibility that Merck and Menova will reach an agreement, and the relevant cooperation will enter into substantial progress.
In the following three months, the two parties made a series of final agreements, the last of which occurred during Zhang Yongji's purchase - on February 4, 2021, the two parties confirmed whether the "Product Quality Agreement" for animal health was met or not.
After the confirmation was completed, the contract review process was entered on March 15, 2021, and the signing of the Strategic Cooperation Agreement was finally completed on April 21, 2021, and disclosed to the public on the evening of the 22nd.
The stock price also rose for 3 consecutive trading days before and after the disclosure.
(Source: Menova Announcement 20210423)
In this timeline, everything is just right, but where in the world is there such a coincidence?
04 The chat record reveals the truth, and the funds for buying shares are suspected to come from Boss Yao
Although Zhang Yongji still flatly denied all of the above, he stated a series of plausible defenses.
Finally, the mobile phone chat history gave the fatal blow.
On February 7, 2021, Zhang Yongji and his friend Xie mentioned in WeChat: "Lao Yao said, according to the current stock price, give me a discount, let me buy it myself, I don't know if it's true or not" ("Lao Yao" refers to Yao Chengzhi in the conversation).
Then Yao Chengzhi suddenly asked Zhou to pay 25 million yuan to his ex-wife Zhang Yongji, who had been divorced for nearly 20 years, in the name of divorce compensation from February 8 to 10, during the sensitive period of inside information.
It goes without saying where the money comes from.
On February 8, 2021, Xie and Zhang Yongji mentioned in WeChat: "As soon as you buy it, it will rise again" (in the conversation, "you buy" refers to Zhang Yongji's purchase of Menova shares), which seems to have been confirmed again, this is a premeditated buying behavior.
On March 12, 15, and 23 of the same year, in the text messages of Zhang Yongji and Yao Chengzhi, the former couple, the words "stock account", "left hand for right hand", "eat all according to your will", "whether you can earn or not, you need to prompt" and other words appeared many times.
(Source: Fujian Securities Regulatory Bureau)
This time the insider trading didn't run away!
Finally, on November 30, 2023, the Fujian Securities Regulatory Bureau confiscated Zhang Yongji's illegal gains of 11.01 million yuan and imposed a fine of 22.02 million yuan.
On December 9 of the same year, the Ningbo Securities Regulatory Bureau took administrative supervision measures of issuing a warning letter to Menova on the grounds that the registration content of insiders related to the incident was irregular.
(Source: Menova Announcement 20231209)
Coincidentally, on July 8, 2021, the China Securities Regulatory Bureau issued a regulatory warning to Xu Jian, deputy general manager of Menova, for short-term trading by his spouse, and finally handed over 3,956 yuan of profits to the company.
(Source: Menova Announcement 20210708)
Therefore, how can there be a stock god who falls from the sky in A-shares? It's just that there are more people who have inside information and operate in the dark to make profits!
The actual controllers and management who are bent on cutting leeks still remember that every time they raise funds, they keep saying "protect the rights and interests of small and medium-sized investors"? Is the company led by such bosses still worthy of the trust of shareholders?
Double-digit growth, and the financial figures are really good
In order to be weird, let go of distractions, Fengyunjun will do a bowl of Minova fundamentals.
01 The average annual compound growth rate of profits in the past ten years is 15.79%
Menova, founded in 2004 and listed in 2017, started with the export trade of characteristic APIs, pharmaceutical intermediates and APIs, and later extended its business to downstream preparations, mainly involving cardiovascular, central nervous system, gastrointestinal and other fields, and began to expand to CDMO business since 2020.
(Note: Only some products are intercepted, source: Menova official website)
This can basically be regarded as the standard development path of an old API company, similar to Jiuzhou Pharmaceutical, Puluo Pharmaceutical, Aoxiang Pharmaceutical, etc.
The API and intermediates business has always been the main source of Menova's revenue, accounting for about 47% in 2022; CDMOs followed with about 35 percent, followed by formulations and trade at 16 percent and 2 percent, respectively.
(Chart: Market Cap APP)
Over the years, Menova has followed this path, and its life has been smooth, and its performance has increased steadily. Operating income increased from 502 million in 2013 to 1.457 billion in 2022, with an average annual compound growth rate of 12.57%.
(Chart: Market Cap APP)
Considering that the investment income of 179 million yuan will be generated due to the sale of Liaoyuan Pharmaceutical's equity in 2022, it is worth focusing on the change in net profit deducted from non-attributable to the parent company, which has nearly tripled from 62 million in 2013 to 232 million in 2022, with an average annual compound growth rate of 15.79%.
(Chart: Market Cap APP)
02 The first largest customer abandoned?
With such a dazzling result, it is none other than KRKA who is the first contributor behind it.
KRKA, founded in 1954, is the largest pharmaceutical company in Slovenia, ranked 16th in the global generic drug industry in 2014, and ranked 91st in the world with a revenue of 1.535 billion euros in 2020.
As early as 2010, Menova entered into a partnership with KRKA to supply APIs and intermediates.
Around 2017, when Indian products were not yet up to standard, Menova once became KRKA's largest supplier, accounting for 20%-25% of KRKA's total procurement.
（来源：美诺华招股书20170222）
But if you look at it the other way around, the importance of KRKA to Menova is much higher than the 20%-25%.
From 2011 to the first half of 2020, for nearly ten years, Menova's sales to KRKA accounted for about 70%, focusing on a big thigh, and relying on a single customer obviously.
(Chart: Market Cap APP)
In 2022, as Menova expanded its CDMO business, undertook orders related to new crown drugs, and cooperated with well-known pharmaceutical companies at home and abroad, such as Merck, Servier, Bayer, and Gerich, KRKA's share in Menova dropped to 26%.
However, in terms of the absolute value of sales between the two, it will only be 385 million in 2022, a significant decrease of 53.6% compared with 830 million in 2019, and even less than the 413 million in the first half of 2020.
In this way, at best, Menova has reduced the risk of single-customer dependence, and at worst, Menova is not as favored by KRKA as it used to be.
03 Low price to win the favor of customers
Having said that, why was Minova able to get the favor of KRKA earlier?
It is true that good R&D strength and stable production process are indispensable factors, but relatively low product prices should also be one of the important factors.
Taking the following four products as an example, the sales of these four products to KRKA account for about 40% of the sales revenue of Menova to KRKA, which is an important cooperation product between the two.
（来源：美诺华招股书20170222）
However, in the sales process of the same product, the unit price of Menova to KRKA is often lower than the unit price of sales to other customers, and even lower than the unit price of Indian exports to Europe.
(Note: The unit price of sales to KRKA is referred to as "KRKA unit price", and the unit price of sales to other customers is referred to as "unit price of other customers", source: Menova prospectus 20170222)
It's normal to win customers at low prices, but for KRKA, Menova is not so irreplaceable.
The progress of pie-style expansion is too slow
01 Lost new crown orders, and profits plummeted by 74.51% this year
In the first three quarters of this year, Menova's performance changed from usual to almost the worst report card in a decade: revenue was 929 million, down 24.55% year-on-year, and net profit attributable to the parent company was only 54.54 million, down 74.51% year-on-year.
(Source: Menova 2023 Third Quarter Report)
In this regard, the reason given by Menova is: Liaoyuan Pharmaceutical is no longer consolidated, the new crown orders are reduced, and the gross profit margin has declined more due to the transfer of production lines and capacity ramp-up.
(Source: Menova 2023 Third Quarter Report)
In fact, Liaoyuan Pharmaceutical was released in November 2022, with a revenue of 196 million yuan from January to October, and a net profit of only 3.8859 million yuan, which is by no means the main reason for the sharp decline in performance.
And the reduction in Covid orders was expected. Peer Proton shares (300363. SZ) also lost Pfizer's new crown orders, and its revenue fell by 41.79% in the first three quarters of this year.
In 2022, although Menova did not disclose the new crown order data, the CDMO performance (including new crown orders) increased by 89.99% year-on-year to 504 million, and the proportion of total revenue also increased from 21% to 35%.
After losing the new crown order, the future development prospects of Menova's CDMO business will depend on its R&D layout in cutting-edge directions such as CGT, ADC drugs, and synthetic biology, and these cutting-edge directions are also where China's CDMO market is better than the Indian market.
(Source: SSE Roadshow Center Menova 2023 Semi-Annual Report Briefing and 2022 Annual Report)
Menova said that it currently has corresponding technology and capacity reserves in these frontier directions, and has begun to undertake relevant CDMO business to complete the verification and delivery of preliminary orders.
In terms of R&D, Menova's R&D investment is not much, with 98.1551 million yuan invested in R&D in 2022, with a R&D expense rate of 6.74%.
(Chart: Market Cap APP)
02 IPO fundraising and investment draw a pie, and the project will only be completed in 6 years
As for the reason for the ramp-up of production capacity, it is worth mentioning.
At the time of the IPO in 2017, Menova planned to invest 320 million yuan (including 280 million yuan of raised funds) for the construction project of exporting solid preparations with an annual output of 3 billion tablets (granules), including valsartan, perindopril, clopidogrel, atorvastatin, etc.
（来源：美诺华招股书20170323）
He also swore that the construction period of the project was three years, with 33% of the production in the first year, 56.67% in the second year, and 100% in the third year, and it will contribute 635 million yuan in income and 143 million yuan in net profit after reaching production.
This is by no means a small amount for Menova, which had a revenue of only 605 million and a net profit of only 45 million that year.
（来源：美诺华招股书20170323）
This is equivalent to "give me three years, and the profit will triple after completion", this cake is really fragrant!
As a result, 0 yuan was invested in the first year of listing, and 552,000 yuan was invested in the second year of listing, and the two-year progress was only 0.55%......
In the middle of the project, the project was suddenly changed, and 200 million yuan of the funds were raised to build a "technical transformation project with an annual output of 400 tons of APIs", on the grounds that the demand was urgent, which we will talk about later.
(Source: Menova Announcement 20191012)
In the end, it was not until 2022 that the construction project with an annual output of 3 billion tablets (granules) for export of solid preparations was basically completed, and the workshop began trial production.
It has been 6 years since the IPO, and the total benefit of the project is zero.
(Tabulation: Market Cap APP)
03 Many expansions did not meet expectations, and one village and one store were missed
Let's talk about the "technical transformation project with an annual output of 400 tons of APIs" that was urgently added in the middle of the way.
This has to talk about the 2017 Huahai Pharmaceutical Saltan incident, because its sartan APIs contain harmful chemical residues and were banned by Europe and the United States, resulting in a global shortage of sartan APIs, and the price of sartan APIs soared.
(Source: Market Value APP)
In 2015, with a market share of 20%-30% in Europe, Menova ranked among the top three domestic API companies in this field, and is in direct competition with Huahai Pharmaceutical.
（来源：美诺华招股书20170323）
Taking advantage of this opportunity, Menova immediately decided to increase the size of sartan APIs.
First, in June 2017, it was decided to increase the scale of the first phase of Xuancheng Menova's "1,600-ton API project" from 35 million yuan to 330 million yuan, and planned to start trial production in October 2018.
(Source: Menova Announcement 20190702)
Later, in August 2017, it was decided to invest 300 million yuan in Anhui Menova to build a "technical transformation project with an annual output of 400 tons of APIs", with a construction period of 24 months, that is, in principle, it can be put into production in August 2019, and it is expected to increase revenue by 300 million yuan / year.
(Source: Menova bulletin 20170822, 20191012)
The need is urgent, the money is in place, and the technology is in hand, so hurry up and build it!
As a result, in 2020, the "1,600 tons of API project" was finally completed, and the price of sartan APIs at that time had already fallen from a high level to a normal level, and the great opportunity was not seized.
(Source: Market Value APP)
The "technical transformation project with an annual output of 400 tons of APIs" has been delayed again and again, and it is not until 2022 that workshop 9 will be officially put into operation, and workshop 10 has just completed trial production, with an overall progress of less than 80% and a benefit of only 7.2479 million yuan.
(Source: Menova Announcement 20230404)
There are also the first phase of Zhejiang Menova's "annual output of 520 tons of pharmaceutical raw materials" project, and the "high-end preparation project" planned when issuing convertible bonds in 2021, all of which are still in a stage where they only hear the pie and do not see the money.
(Source: Menova 2022 Annual Report)
Today, there are indeed two major projects of "annual output of 3 billion tablets (granules) export solid preparation construction project" and "annual output of 400 tons of API technical transformation project" to be put into operation, and the production capacity ramp-up has indeed been realized, but compared with the earlier planning, it is too late and too long, missing the high price range of sartan APIs and missing the opportunity of large orders for the new crown......
Missed one village after another, and whether there will be sufficient orders after this time is completed, we have to give an answer in time.
At least in September this year, Menova planned a fixed increase of 652 million yuan expansion plan, the regulator was skeptical, and inquired in detail about Menova's several fundraising projects and benefits, as well as the expected benefits of the "annual output of 3,760 tons of APIs and intermediates phase I project" for diabetes treatment, hyperlipidemia treatment, radiography and other fields.
(Source: Menova Announcement 20231114)
Cash inflow and outflow, dividend ratio of only 14.35%
Although the construction of the project is slow, there are no fewer large and small projects, and the capital expenditure is correspondingly more, totaling 2.596 billion since 2013.
In terms of upstream and downstream management, although there are many well-known large pharmaceutical companies in the downstream, the number of receivables (including notes receivable and accounts receivable) is small, only 293 million as of the end of September 2023, which is not even offset by the 526 million payables (including notes payable and accounts payable) owed on credit in the upstream.
However, due to the significant growth of the preparation business, the inventory was 594 million by the end of 2022, of which the inventory exceeded 380 million, and the inventory turnover days also increased from 140 days in 2018 to 242 days in 2022.
(Chart: Market Cap APP)
The final reflection in the cash flow statement is that since 2013, Menova has earned a total of 1.415 billion cash through operating activities, which is basically the same as the total net profit in the same period.
However, it did not cover capital expenditures, and free cash flow totaled -1.181 billion for the same period.
(Chart: Market Cap APP)
And this may be the reason why Menova's dividends are not enough, with 5 dividends in 6 years of listing, with a cumulative dividend of 133 million and a dividend rate of only 14.35%. But after reading this article, Lao Tie knows that these projects invested in capital expenditure seem to be less than expected.
Disclaimer: This report (article) is based on the public company nature of the listed company, based on the listed company's public company attributes, based on the listed company's public disclosure in accordance with its legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.) as the core basis; The information or opinions expressed in this report (article) do not constitute any investment advice, and Market Value Storm does not assume any responsibility for any actions taken as a result of the use of this report.
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