Yangtze River Business Daily News ● Yangtze River Business Daily reporter Huang Cong
In recent years, Zhongshun Jierou's operation has been wandering between "increasing income without increasing profits", "increasing profits without increasing income" and "double decline in performance".
On the evening of April 24, Zhongshun Jierou (002511. SZ) released its 2023 annual report, showing that the company achieved operating income of 9.801 billion yuan, a year-on-year increase of 14.37%, and a net profit of 333 million yuan, a year-on-year decrease of 4.92%, which is also the company's net profit has declined for three consecutive years.
Previously, Zhongshun Jierou released the 2022 stock option and restricted stock incentive plan (draft), and the company-level performance assessment is that the operating income in 2023 will not be less than 10 billion yuan, and it is obvious that the dream of 10 billion revenue has failed.
By 2024, the company's revenue will begin to decline. According to the quarterly report released on the same day, the company achieved operating income of 1.845 billion yuan, a year-on-year decrease of 10.45%, and a net profit of 95.4501 million yuan, a year-on-year increase of 6.72%.
It is worth mentioning that in May 2021, Zhongshun Jierou received a "bottom-up" shareholding increase plan issued by Deng Yingzhong, the director and actual controller, but the company's stock price fell all the way, and Deng Yingzhong had to make cash compensation.
Moreover, the current share price of Zhongshun Jierou is hovering around 8.5 yuan per share, down about 70% in two years.
Net profit has declined for three consecutive years
Zhongshun Jierou is one of the leading enterprises in the domestic household paper industry, and it is also the first domestic A-share listed household paper company.
In 1979, Deng Yingzhong started his entrepreneurial journey. In 1989, he realized the market potential of household tissues, began to transform into household paper, and created the Zhongshun Jierou brand. In 2010, Zhongshun Jierou was successfully listed.
According to the data, from 2017 to 2021, Zhongshun Jierou's operating income was 4.638 billion yuan, 5.679 billion yuan, 6.635 billion yuan, 7.824 billion yuan and 9.150 billion yuan respectively, an increase of 21.76%, 22.43%, 16.84%, 17.91% and 16.95% year-on-year respectively, and nearly doubled in five years.
From 2017 to 2020, the net profit of Zhongshun Jierou was 349 million yuan, 407 million yuan, 604 million yuan and 906 million yuan respectively, a year-on-year increase of 34.04%, 16.60%, 48.36% and 50.02% respectively, maintaining a medium and high-speed growth level.
However, due to the impact of the sales price of the main products not meeting expectations, the rise in production costs and the increase in brand promotion investment, in 2021, the company achieved a net profit of 581 million yuan, a year-on-year decrease of 35.85%.
As a result, the performance of Zhongshun Jierou has opened an alternating situation of "increasing income without increasing profits", "increasing profits without increasing income" or "declining operating income and net profit".
In response to the rise in raw material prices, at the beginning of 2022, Zhongshun Jierou issued a price increase notice to dealers.
However, in 2022, Zhongshun Jierou achieved an operating income of 8.57 billion yuan, a year-on-year decrease of 6.34%, and a net profit of 350 million yuan, a year-on-year decrease of 39.77%.
In December 2022, Zhongshun Jierou released the 2022 stock option and restricted stock incentive plan (draft), which shows that the company's assessment year is three fiscal years from 2023 to 2025, and the company-level performance assessment is that the operating income in 2023 will not be less than 10 billion yuan, the operating income in 2024 will not be less than 11 billion yuan, and the operating income in 2025 will not be less than 12.1 billion yuan.
On the evening of April 24, 2024, Zhongshun Jierou released its 2023 annual report, showing that the company achieved operating income of 9.801 billion yuan, a year-on-year increase of 14.37%, and a net profit of 333 million yuan, a year-on-year decrease of 4.92%, which is also the company's net profit has declined for three consecutive years.
Regarding the decline in net profit, Zhongshun Jierou said that it was affected by factors such as raw material wood pulp and energy price fluctuations.
Obviously, Zhongshun Jierou has not completed the goal of reaching 10 billion yuan in revenue in 2023, and it is not easy for the company to complete the performance assessment target in 2024.
On the evening of April 24, Zhongshun Jierou released a report for the first quarter of 2024, showing that the company achieved operating income of 1.845 billion yuan, a year-on-year decrease of 10.45%, and a net profit of 95.4501 million yuan, a year-on-year increase of 6.72%.
Debt increased by about 87% in two years
Under the poor performance, a number of business indicators of Zhongshun Jierou are also "not good-looking".
As of the end of the first quarter of 2024, the debt ratio of Zhongshun Jierou reached 43.22%, an increase of 12.15 percentage points from 31.07% at the end of the first quarter of 2022.
Zhongshun Jierou's total liabilities also increased from 2.274 billion yuan at the end of the first quarter of 2022 to 4.253 billion yuan at the end of the first quarter of 2024, an increase of about 87% in two years.
As of the end of the first quarter of 2024, Zhongshun Jierou's monetary funds reached 2.028 billion yuan, a year-on-year increase of 3.78%. During the same period, the company's short-term borrowings reached 1.548 billion yuan, a year-on-year increase of 30.15%.
is not only an "overestimate" of performance, Deng Yingzhong also overestimates the performance of Zhongshun Jierou in the secondary market.
Based on his confidence in the company's future sustainable development prospects, Deng Yingzhong advocated that all employees increase their holdings of shares, and promised that all employees who bought Zhongshun Jierou shares (not less than 1,000 shares) from May 10, 2021 to May 31, 2021 and held them continuously until May 30, 2022 will be fully compensated by themselves if they lose money due to the purchase of the company's shares during the aforementioned period, and if they generate income, all of them will be owned by the employees.
After the proposal was issued, Zhongshun Jierou and the employees of its subordinate holding companies actively responded to Deng Yingzhong's initiative.
According to statistics, a total of 282 employees declared to buy the company's shares, and the cumulative net purchase of the company's shares during the proposed increase period was 1.2087 million shares, with an average price of 33.04 yuan per share, and a total amount of 39.9303 million yuan.
However, as of May 30, 2022 (the date of calculating the loss), the average price of employees who participated in the initiative to increase their holdings was 33.04 yuan per share, and the closing price at the end of the initiative period was 10.86 yuan per share, and the share price of Zhongshun Jierou fell by 67.13%.
According to statistics, there are 264 employees who meet the compensation conditions, and the number of compensation shares of the employees who meet the compensation conditions is 1.1486 million shares, and the compensation amount is 25.4578 million yuan.
Deng Yingzhong has compensated the losses incurred by the qualified employees due to the increase in shares in accordance with the commitment.
It should be noted that the current share price of Zhongshun Jierou is hovering around 8.5 yuan per share, down about 70% in two years.