Text | Yang Wanli
On the evening of April 16, Jilin Aodong, a well-known pharmaceutical company, disclosed its 2023 annual report, with a year-on-year increase in the company's revenue, a year-on-year decline in attributable net profit, and a year-on-year decline in non-net profit for two consecutive years, showing the characteristics of "increasing revenue but not increasing profits". In addition, the gross profit margin of Jilin Aodong hit a new low in the past 9 years.
In the context of sluggish earnings data, Jilin Aodong plans to add 1 billion yuan for securities investment. In the past five years, the company has suffered four annual securities investment losses, with a total loss of more than $800 million. What is the reason why Jilin Aodong is so keen on secondary market investment?
As of the close of trading on April 17, the share price of Jilin Aodong was 14.52 yuan, and the total market value was 18.02 billion yuan.
"Stock speculation" failed, and losses occurred 4 times in 5 years
On the evening of April 16, Jilin Aodong announced that the company intends to use no more than 1 billion yuan of idle own funds for securities investment, and the planned securities investment includes but is not limited to new share placement or subscription, stock investment, bond investment and other investment behaviors identified by the Shenzhen Stock Exchange.
Jilin Aodong said that the purpose of the proposed investment is to "improve the efficiency of the company's capital use, rationally use idle own funds, and strive to maximize the company's and shareholders' returns".
This time, Jilin Aodong plans to add funds for securities investment. Previously, the company has successively become an important shareholder of listed companies such as First Pharmaceutical, Nanjing Pharmaceutical, and Liaoning Chengda through secondary market investment.
It is understood that the accounting subject for securities investment in Aodong, Jilin Province is "trading financial assets". Looking back at the data of the past five years (2019 to 2023), the trading financial assets of Jilin Aodong were 906.3 million yuan, 1.3 billion yuan, 2.189 billion yuan, 1.64 billion yuan, and 1.658 billion yuan respectively.
Transactional financial assets have risen as a whole, but the securities investment situation in Jilin Aodong in recent years has not been ideal.
The 2023 annual report shows that the profit and loss of Jilin Aodong in the reporting period is about -76.5822 million yuan, and the fair value change profit and loss in the current period is about -111 million yuan.
In detail, in 2023, Jilin Aodong will invest in 9 stocks and 1 fund product, of which 6 stocks will lose money, such as investing in Liaoning Chengda, Yatai Group, etc. to achieve negative returns, and the stocks with positive returns are First Pharmaceutical, Luye Pharmaceutical, East Sunshine, and Changjiang Pharmaceutical. In addition, Jilin Aodong Investment's fund products also had negative returns.
Looking further back, in 2019, 2020, 2021, and 2022, the profit and loss of Jilin Aodong's securities investment in the reporting period will be about 35.16 million yuan, -36.9 million yuan, -226 million yuan, and -551 million yuan respectively.
It is not difficult to find that in the past five years, Jilin Aodong has suffered losses in four years, made profits in one year, and the total loss of securities investment has exceeded 800 million yuan.
Judging from the above data, Jilin Aodong's securities investment has not achieved good results, what is the company's investment purpose?
Jilin Aodong said in the announcement of the "Special Description of Securities Investment" that the investment purpose includes "creating an asset structure with Aodong characteristics" and "realizing a virtuous cycle of integrated development of industrial capital and financial capital".
In addition, some investors have asked questions about investment matters. On April 13 this year, the staff of Jilin Aodong replied on the interactive easy platform that "in the future, we will choose the opportunity to withdraw in combination with the capital market environment and the stock price situation to minimize the fluctuation of securities investment on the company's performance." A few days later, Jilin Aodong announced that it planned to invest an additional 1 billion yuan in securities.
We are concerned that a leading Chinese medicine company has used a large amount of money to invest in securities, which once caused widespread heated discussions. However, after experiencing market volatility, the company announced that it would exit all secondary market securities investments in the third quarter of 2023.
A-shares have learned from the past, and listed companies may face unstable investment returns when investing in securities in the secondary market. The future investment income of Jilin Aodong is worth paying attention to.
Behind the outstanding revenue indicators, the profitability indicators are not outstanding
Jilin Aodong is mainly engaged in the research and development, manufacturing and sales of traditional Chinese medicine and chemical drugs. With pharmaceuticals as its core business, the company actively lays out the field of big health, and at the same time makes extensive investments, gradually forming a multi-wheel drive model of "medicine + finance + big health".
As of the end of 2023, pharmaceutical, chain pharmacy wholesale and retail, food and other businesses accounted for 75.63%, 10.87%, and 10.53% of Jilin Aodong's revenue, respectively.
From the perspective of business segmentation, last year, the revenue of traditional Chinese medicine and chemical drugs in the pharmaceutical business of Jilin Aodong increased by double digits, the revenue of the food business increased by 1.1% year-on-year, a slight increase, and the revenue of the wholesale and retail business of chain pharmacies decreased by 16.36% year-on-year, because the subsidiary no longer undertook the task of providing related material procurement services.
Jilin Aodong mentioned the following in the main business analysis module of the 2023 annual report, such as "achieving various operating indicators determined by the board of directors at the beginning of the year, operating income reaching a record high, and achieving new breakthroughs in performance".
Jilin Aodong seems to be more prominent in revenue indicators, but judging from the financial report, the relevant profit indicators of Jilin Aodong are not as good as the revenue indicators.
In 2023, Jilin Aodong's performance will show the characteristics of "increasing revenue but not increasing profits", with revenue of 3.449 billion yuan last year, a year-on-year increase of 20.25%, attributable net profit of 1.460 billion yuan, a year-on-year decrease of 18.02%, and a non-net profit of 1.313 billion yuan, a year-on-year decrease of 15.63%. It is worth mentioning that the net profit of Jilin Aodong has declined year-on-year for two consecutive years.
It is worth noting that in the third quarter report of 2023, Jilin Aodong mentioned that the change in the company's attributable net profit is affected by factors such as investment income, fair value change income of trading financial assets, and main business profits. Last year, the company's fair value change income on trading financial assets was negative, which dragged down the company's net profit performance to a certain extent.
In terms of profit indicators, in 2023, Jilin Aodong's gross profit margin will be 49.23%, the first time since 2015 that it will fall below the 50% mark.
Jilin Aodong did not explain the reason for the year-on-year decline in gross profit margin in its 2023 annual report. However, some of the reasons can be found in the data.
It is observed that the gross profit margin of Jilin Aodong's pharmaceutical and food business fell by 2.92% and 18.88% year-on-year respectively last year, and the gross profit margin of the wholesale and retail business of chain pharmacies increased by 3.17% year-on-year. It is not difficult to find that two of the above three businesses have experienced a decline in gross profit margin, of which the pharmaceutical business is the company's largest source of revenue.
In terms of secondary market trends, since the beginning of this year, Jilin Aodong has fallen by 4.1%. The latest stock price is 14.52 yuan, and the total market capitalization is 18.02 billion yuan.
Earnings data declined, increased "stock speculation", Jilin Aodong stock price performance in the future, we will continue to pay attention.