Produced by | At the forefront of entrepreneurship
Author | Wang Yajing
Edit | Egg total
American Editor | Li Yufei
Audit | Ode
On April 22, Dajia Weikang released its 2023 performance financial report.
According to the financial report, in 2023, the company will achieve revenue of 3.904 billion yuan, a year-on-year increase of 18.56%, and a net profit attributable to the parent company of 34.2998 million yuan, a year-on-year decrease of 32.85%.
Wind data shows that this is the largest decline in Dajia Weikang's net profit attributable to the parent since the disclosure of 2012 financial data, setting a record year.
The reason for this is inseparable from Dajia Weikang's strategy of continuous expansion. In the past year, the rising costs caused by large-scale mergers and acquisitions and the expansion of the sales force have directly led to pressure on profits and "high debt" for enterprises.
According to the financial report, as of March 31, 2024, the company's short-term borrowings were as high as 1.672 billion yuan and long-term borrowings were 1.134 billion yuan, but the monetary funds were less than 400 million yuan.
At a time when cash flow is under pressure, Dajia Weikang plans to raise funds in a fixed placement. According to the plan, it is planned to issue shares to Wang Yiqing, one of the controlling shareholders, chairman and actual controller, at a price of 7.49 yuan per share, and raise no more than 120 million yuan (including the principal number) to supplement liquidity.
As of the close of trading on April 26, Dajia Weikang's share price closed at 8.98 yuan per share, 16.6% higher than the fixed increase price. If the fixed increase is successful, Wang Yiqing may make a profit.
1. The net profit attributable to the parent company fell by more than 3%, setting a record for the largest decline in history
Dajia Weikang was developed from a large pharmacy.
In 2002, Wang Yiqing, Yin Xulin and Yi Tuyao jointly funded the establishment of Tongjian Pharmacy, which was later restructured and renamed to form Tongjian Co., Ltd., the predecessor of Dajia Weikang. Today, Wang Yiqing is the controlling shareholder of the company.
Wang Yiqing has been deeply involved in the pharmaceutical industry for many years and has rich experience. According to the red network, he has served as a member of the 11th Political Consultative Conference of Hunan Province, vice president of Hunan Pharmaceutical Association, vice chairman of Hunan Pharmaceutical Association, vice president of Hunan Medical Insurance Research Association, and vice president of Changsha Pharmaceutical Association.
Under the leadership of Wang Yiqing, in March 2015, the company was listed on the New Third Board under the name of "Tongjian Shares". Soon after the listing, Tongjian Co., Ltd. announced that it planned to purchase 100% of the shares of Dajia Weikang held by Wang Yiqing and Zhong Xuesong by issuing shares, at a price of 390 million yuan.
In August 2016, Tongjian announced that it would change its name to "Dajia Weikang", and in January 2018, the company terminated its listing on the New Third Board. Since then, Dajia Weikang has begun to impact the Shenzhen Stock Exchange and landed on the GEM in December 2021.
Today, Dajia Weikang has grown into a leading regional pharmaceutical distribution enterprise rooted in Hunan, mainly engaged in the distribution and retail business of drugs, biological products, medical devices and other products.
(Photo / Dajia Weikang Pharmacy official WeChat)
In 2023, Dajia Weikang's performance has set a record - the net profit attributable to the parent company has fallen the most since the disclosure of 2012 financial data.
According to the financial report, in 2023, the company will achieve revenue of 3.904 billion yuan, a year-on-year increase of 18.56%, and a net profit attributable to the parent company of 34.2998 million yuan, a year-on-year decrease of 32.85%.
(Photo / Dajia Weikang financial report)
In the long run, in the 12 years from 2012 to 2023, Dajia Weikang's net profit attributable to the parent company declined in 4 fiscal years, namely 2018, 2020, 2022 and 2023.
(Photo / Wind (unit: 100 million yuan))
Wind data shows that in the above four years, Dajia Weikang's net profit attributable to the parent company fell by 2.45%, 26.01%, 25.11% and 32.85% year-on-year respectively. From this point of view, 2023 is the first time that the company's net profit attributable to the parent company will decline by more than 30%.
For the decline in profits, the company explained that the main reason is that the payment of the equity transfer of the M&A enterprise has increased the cost of capital, and the M&A company is still in the transition period of delivery, and the full delivery and consolidated financial statements have not been completed during the reporting period, resulting in an increase in related costs and expenses. In addition, the company's industrial sector will integrate national sales channels and expand the sales team in 2023, resulting in an increase in sales expenses and administrative expenses without realizing profitability.
For Dajia Weikang's performance in recent years, investors voted directly with their feet.
Wind data shows that as of April 26, the company's share price closed at 8.98 yuan / share, which has already fallen below the issue price of 12.37 yuan / share, down 75.5% from the highest value of 36.69 yuan / share in the session.
On December 7, 2024, Wang Yiqing, Minghui and his wife, Tongjia Investment (Wang Yiqing is the executive partner), Wang Yiqing's sister Wang Mengjun and Wang Huijun's initial restricted shares will be lifted.
(Photo / Dajia Weikang financial report)
Under the dual pressure of performance and stock price, Dajia Weikang urgently needs to find a new way out.
2. Enter the whole country and grab the market at a high price
As a regional enterprise that started in Changsha, Dajia Weikang's business focus has always been in Hunan Province.
According to the financial report, in 2023, Hunan Province will contribute 76.86% of its revenue, reaching 3 billion yuan, a year-on-year increase of 12.63%.
(Photo / Dajia Weikang financial report)
However, it is worth noting that although the business in Hunan Province has maintained growth, it has obviously not kept up with the overall growth rate of the enterprise.
As a result, Dajia Weikang began to expand on a large scale, aiming at the national market.
In the financial report, the company announced its future development strategy. Specifically, it is necessary to expand chain pharmacies by means of new construction and mergers and acquisitions, forming a strategy of taking Hunan as the foundation and continuously developing to the whole country.
In addition, it is necessary to build a new model of national professional pharmacies based on chain pharmacies, and build a national sales team based on the pharmaceutical industry sector.
In order to expand rapidly, Dajia Weikang even did not hesitate to acquire at a high premium.
In July 2023, Dajia Weikang said that its holding subsidiary plans to acquire 100% of the equity of Yinchuan Meihetai, a retail chain pharmaceutical company, for a consideration of 251 million yuan.
(Photo / Dajia Weikang announcement)
As of the valuation base date, the book value of all shareholders' equity of Yinchuan Meihetai was 8.9512 million yuan, the appraised value was 251 million yuan, and the appreciation rate was as high as 2707.55%.
(Photo / Dajia Weikang announcement)
This move quickly attracted the attention of the Shenzhen Stock Exchange, and issued a letter of concern, requiring it to explain the basis and reasonableness of determining the main parameters used in the valuation of the income method, and whether the transaction was suspected of benefit transfer and whether it harmed the legitimate rights and interests of small and medium-sized investors.
Dajia Weikang replied to the Shenzhen Stock Exchange in detail, and explained the reasonableness of the valuation, and stated that this move is not suspected of benefit transfer, nor does it harm the legitimate rights and interests of small and medium-sized investors.
In fact, this is just a microcosm of Dajia Weikang's high-priced acquisition.
Two months later (that is, in September 2023), Dajia Weikang announced again that it planned to acquire 51% of the shares of Shanxi Smart, a retail chain pharmaceutical company, at a purchase price of 326 million yuan.
(Photo / Dajia Weikang announcement)
As of the appraisal base date, the book value of all shareholders' equity of Shanxi Smartmerle was 74.7238 million yuan, the appraised value was 642 million yuan, and the appreciation rate was as high as 758.82%.
(Photo / Dajia Weikang announcement)
In addition, according to incomplete statistics from "Interface News, Entrepreneurship Frontline", Dajia Weikang also disclosed 2 acquisition plans in 2022.
In July 2022, Dajia Weikang plans to acquire 51% of the shares of Ningxia Delixin at a purchase price of 144 million yuan and an appraised value-added rate of 865.07%, and in December 2022, it plans to acquire 85.7143% of the shares of Hunan Tianji Caotang at a purchase price of 341 million yuan and an appraised value-added rate of 159.58%.
(Photo / Dajia Weikang announcement)
It is true that under the massive expansion, the company's stores have grown rapidly. According to the 2023 financial report, the company has more than 1,400 retail pharmacy stores across the country, while at the end of 2021, the total number of directly operated stores opened by the company was only 121.
3. The controlling shareholder intends to increase the price at a low price, and the pharmacy has defrauded the medical insurance fund
But it should not be overlooked that this "brutal" expansion has also brought a heavy cash flow burden to the enterprise.
As of March 31, 2024, Dajia Weikang's monetary funds were 393 million yuan, and short-term borrowings were as high as 1.672 billion yuan. In addition, the company has long-term borrowings of 1.134 billion yuan.
(Photo / Dajia Weikang financial report)
In December 2021, Dajia Weikang landed on the GEM of the Shenzhen Stock Exchange, raising a net amount of 569 million yuan, but only more than 2 years have passed, and Dajia Weikang's cash flow has been quite tight.
(Photo / Dajia Weikang financial report)
Therefore, on the eve of the release of the financial report, Dajia Weikang announced a fixed increase plan, planning to issue no more than 16,021,400 shares (including the number) to Wang Yiqing, accounting for 7.76% of the company's total share capital before the issuance, the price of the fixed increase was 7.49 yuan per share, and the funds raised did not exceed 120 million yuan (including the number).
(Photo / Dajia Weikang announcement)
This private placement price is significantly lower than the value of Dajia Weikang's own shares. Wind data shows that as of April 26, its share price closed at 8.98 yuan per share, if this is calculated, the fixed increase price per share discount of 16.6%, Wang Yiqing's increased holdings of this part of the stock will be more than 20 million yuan.
In fact, this is not the first time that a company has planned a fixed increase.
According to public information, in 2023, the company plans to issue shares to no more than 35 (including 35) specific investors, raising no more than 300 million yuan (including the number). Among them, 210 million yuan is planned to be used for the construction of chain pharmacies and 90 million yuan for supplementing working capital.
(Photo / Dajia Weikang announcement)
In 2022, the company also planned to issue shares to no more than 35 (including 35) specific investors, raising no more than 199 million yuan (including the principal number). Among them, 144 million yuan is intended to be used to acquire 51% of the equity of Delixin, and 55 million yuan is used to supplement working capital.
(Photo / Dajia Weikang announcement)
However, these two fixed increase plans have been "aborted". In April 2023, the Company announced the termination of matters related to the 2022 private placement, and in September 2023, the Company withdrew the application documents for the 2023 private placement.
At the time of the planned fixed increase, an employee of a pharmacy of Dajia Weikang was involved in a case of defrauding the medical insurance fund.
In September 2023, the Hunan Provincial Medical Security Bureau handed over the "dual channel" drug sales violations found in the unannounced inspection of Dajia Weikang's Hengyang Xiangjiang City Garden Branch from May 1, 2021 to May 31, 2023 to the Hengyang Municipal Medical Security Bureau for handling.
According to the investigation of the Hengyang Municipal Medical Insurance Bureau, Fang Moumou, an employee of the pharmacy, took advantage of his position to return and resell the drug data reimbursed by medical insurance patients in the pharmacy sales system, and was suspected of illegally brushing the patient's medical insurance fund, resulting in a total loss of 289267 yuan to the medical insurance fund.
The Hengyang Municipal Medical Insurance Bureau recovered the loss of 289267 yuan caused by the medical security fund, and ordered Dajia Weikang to conduct a comprehensive investigation of its chain pharmacies and report the investigation to the Municipal Medical Insurance Bureau.
At present, the public security department has taken compulsory measures against Fang Moumou, an employee of the pharmacy.
It is not yet known how much impact this will have on the company's fixed increase plan, but it is known that there are loopholes in the company's current management.
Wang Yiqing may understand that if the company's internal management and cash flow management are not in place, how can it win the trust of investors?
*Note: The title image in the article is from the photo network and is based on the VRF protocol.