Stock Price Change Observation | Tens of billions of revenue pig enterprises apply for reorganization, and the big creditor Tongwei shares or become a white knight?

Source of this article: Times Business School Author: Chen Jiaxin

Source | Times Business School

Author | Chen Jiaxin

Edit | Zheng Shaona

After expressing its openness to various possible "reorganization plans", Tianbang Food (002124. SZ) shares rose sharply for two consecutive days.

Following the stock price limit on March 21, on March 22, Tianbang Food's opening stock price rose again, and then opened the price limit, closing at 3.46 yuan per share on the same day, up 5.81%, with a total market value of 7.688 billion yuan. Two days ago, on March 20, Tianbang Food disclosed in the investor interactive platform that the pre-reorganization application is currently in its infancy, and the company is open to all possible reorganization plans and will maintain active communication with various stakeholders.

Following the listing of the pig enterprise Aonong Biotechnology (603363. SH), *ST Zhengbang (002157.SZ, hereinafter referred to as "Zhengbang Technology") issued a reorganization application, Tianbang Food is the third since 2023. On March 19, Tianbang Food announced that due to insolvency, the company applied to the court for reorganization.

Since 2023, after a long period of low pig prices and a large expansion of production in the early stage, a number of large pig enterprises, including Tianbang Food, have experienced a debt crisis, and the pig breeding industry may be experiencing a round of reshuffle.

According to the research of Times Business School, referring to the reorganization case of Zhengbang Technology and Twins (Group) Co., Ltd. (hereinafter referred to as "Twins Group") last year, peer pig enterprises are important potential reorganization participants of Tianbang Food.

In addition, the creditors of Tianbang Food are natural potential participants in the reorganization, and the 2023 semi-annual report shows that Tianbang Food still owes Tongwei shares (600438. SH) 2.092 billion yuan of feed, and before applying for reorganization, Tongwei Co., Ltd. had acquired a subsidiary of Tianbang Food to "transfuse blood" to it. The two companies have a close relationship, and Tongwei shares may also become the "white knight" of Tianbang Food.

Times Business School called the secretary of the board of directors of Tianbang Food about the potential reorganization target, but could not get through after repeated calls.

According to the financial report, in 2022, Tianbang Food's revenue will be 9.571 billion yuan, close to 10 billion. In 2023, the company expects a net profit loss attributable to the parent company of 2.6 billion ~ 2.9 billion yuan, a year-on-year decrease of 631.7% ~ 693.05%.

Pig enterprises are expected to go public through backdoor listing

For Tianbang Food, the reorganization case of Zhengbang Technology in 2023 is of reference significance.

After being applied for reorganization by creditors, on August 4, 2023, Zhengbang Technology announced the reorganization plan (draft). According to the plan, Zhengbang Technology and its managers will sign reorganization investment agreements with a total of 17 reorganization investors, including Jiangxi Twin Agriculture Co., Ltd. (hereinafter referred to as "Twin Agriculture"). Twin Agriculture is the main investor of Twin Group to participate in the reorganization of Zhengbang Technology, and it is also the industrial investor of this reorganization.

According to the reorganization plan (draft), the reorganization investors will provide a total of 4.34 billion yuan for Zhengbang Technology, which will be used to pay for the reorganization costs of Zhengbang Technology and Zhengbang Breeding Series Company, common benefit debts, repayment of various debts and replenishment of Zhengbang Technology's liquidity. In addition, Zhengbang Technology will use 2.550 billion shares to pay off the debts of Zhengbang Technology and Zhengbang Breeding Series Company by way of swapping shares for debts.

According to the official website, Twins Group is a national large-scale agricultural and animal husbandry enterprise specializing in pig breeding, pig raising services, feed sales, corn storage and pig slaughtering. In 2023, the feed sales volume of the twin group will reach 13.66 million tons, the number of live pigs on the market will be 13.52 million, and the operating income will be 86.8 billion yuan, and it will be rated as one of the "Top 500 Chinese Enterprises" by the China Enterprise Confederation and the China Entrepreneurs Association.

According to the reorganization plan (draft), the twin group promised that after the completion of the reorganization, it will gradually place its own pig breeding, feed and other business assets into Zhengbang Technology until the overall listing of related businesses and assets is completed within 4 years.

After the reintegration of the two, Zhengbang Technology is expected to become the top three pig enterprises in the country. According to the statistics of Xinzhupai, in 2023, the number of pigs slaughtered by the Twins Group will rank fourth in the country, and the number of pigs slaughtered by Zhengbang Technology will be 5.48 million, ranking tenth in the country. After the assets are placed, the twin group will also achieve a curve listing.

From the perspective of asset quality, the asset-liability ratio of Tianbang Food, which actively applied for reorganization, is significantly better than that of Zhengbang Technology, and it may be more attractive to peer pig enterprises, especially unlisted pig enterprises.

According to Flush iFinD data, as of the end of the third quarter of 2023, Zhengbang Technology's total assets were 20.897 billion yuan, total liabilities were 33.981 billion yuan, and the asset-liability ratio was 162.61%, which was obviously insolvent, while the total assets of Tianbang Food at the end of the same period were 18.652 billion yuan, the total liabilities were 16.233 billion yuan, and the asset-liability ratio was 87.03%, and the asset-liability structure was significantly better.

The slaughter volume of Tianbang food is also higher than that of Zhengbang Technology. According to the announcement, the number of live pigs slaughtered by Tianbang Food in 2023 will be 7.12 million, higher than the 5.48 million heads of Zhengbang Technology.

At present, the number of live pigs slaughtered is higher than that of Tianbang Food, and there is only one unlisted pig company, Zhengda Investment Co., Ltd., which applied for listing on the main board of the Shanghai Stock Exchange in March 2023, but terminated the IPO application after more than half a year (October 2023), which does not rule out the possibility of the company participating in the reorganization of Tianbang Food and backdoor listing.

However, compared with Zhengbang Technology, affected by the continued low pig prices since 2023, it remains to be seen whether the current peer pig enterprises still have the financial strength to participate in the restructuring of Tianbang Food after a longer period of losses.

The creditor, Tongwei shares, is expected to take the opportunity to improve the industrial chain

Compared with peer pig enterprises, creditors are natural potential participants in restructuring.

According to the 2023 semi-annual report, as of the end of the first half of 2023, Tianbang Food's liabilities have accumulated to 16.461 billion yuan, including 2.092 billion yuan of feed payments payable to Tongwei shares.

In recent years, Tianbang Food has a close relationship with Tongwei Co., Ltd., which has acquired some of the businesses and subsidiaries of Tianbang Food, and Tongwei Co., Ltd. is also the main purchaser of pig feed of Tianbang Food.

On July 5, 2021, Tongwei Co., Ltd. signed a strategic cooperation agreement with Tianbang Food. According to the agreement, in terms of aquatic feed, Tianbang Food will entrust all the assets and business of its aquatic feed to Tongwei Co., Ltd. In terms of pig feed, Tianbang Food transferred 51% of its pig feed assets and business to Tongwei Co., Ltd., and all the feed needs of Tianbang Food will be entrusted to the joint venture company and Tongwei Co., Ltd. in the future.

Shortly before Tianbang Food's application for reorganization, on March 7, 2024, Tongwei Agricultural Development Co., Ltd., a subsidiary of Tongwei Co., Ltd., acquired 30% of the equity of Shiji Biotechnology Co., Ltd. (hereinafter referred to as "Shiji Biotechnology") held by Tianbang Food at a price of 1.65 billion yuan.

According to the data of Flush iFinD, Tongwei Co., Ltd. is a large-scale private technology-based listed company with agriculture and new energy as the core business. In terms of agriculture, the company takes the feed industry as the core, with an annual feed production capacity of more than 10 million tons, and in the main business of new energy, Tongwei has become a photovoltaic enterprise with upstream high-purity crystalline silicon production, midstream high-efficiency solar cell production, and terminal photovoltaic power station construction and operation.

Although the current agricultural sector of Tongwei Co., Ltd. is mainly based on feed business, in the 2023 semi-annual report, Tongwei Co., Ltd. mentioned: "Focusing on the main business of feed, the company has also actively carried out businesses including breeding, breeding, animal protection, food processing and trade, etc., to further improve the industrial chain and enhance the comprehensive competitiveness of the enterprise." ”

Previously, the main business of Shiji Biology acquired by Tongwei Co., Ltd. is pig breeding and breeding, so it is not excluded that Tongwei Co., Ltd. will participate in the reorganization of Tianbang Food and further extend the industrial chain to pig breeding.