The stock price broke and was at a low level, and Jieya shares did not repurchase shares but made a large amount of financial management was questioned by investors
"China Science and Technology Investment", Zhang Ting, He Ziyan
A few days ago, Jieya shares (301108.SZ) held a performance briefing, because investors expressed their concerns and questions about the company's performance, repurchase and stock price issues at the performance exchange meeting, and the rhetoric was sharp, causing concern.
In fact, investors' dissatisfaction comes from the fact that the IPO of Jieya shares overraised 656 million yuan, but after listing, the performance changed face, the stock price broke, and the company's repurchase efforts were small and slow, which may damage the rights and interests of investors. In addition to its poor performance in the secondary market, Jieya shares also have problems such as insufficient capacity utilization, low R&D expenses and shareholder reduction at the operating level.
Performance changes
According to the record of investor relations activities of the 2023 online results briefing, the doubts of investors in Jieya shares are sharp, mainly from the performance and secondary market performance. For example, "after four years of listing, profits have been declining year by year, and the listed stock price has been discounted by as much as 5%, is the company fraudulently issued and listed?" "I don't know if your company's executives usually look at the market, and the daily trading volume of a tiny few million is ranked after 5000, commonly known as "zombie stocks", does this represent the extreme disapproval of the market? "Buying stocks is for the chairman and the company's development prospects, and as a result, it is not as good as a year after year, what are the company's plans for market value management in 2024?" Wait.
*Screenshot of the relevant content of the record form of investor relations activities of the 2023 online performance briefing of Jieya shares
Investors' high expectations for Jieya shares come from the stable growth performance of the "first share of wet wipes". From 2019 to 2021, the operating income of Jieya shares was 277 million yuan, 743 million yuan, and 984 million yuan, and the net profit was 68.1227 million yuan, 180 million yuan, and 220 million yuan respectively. However, after the listing of Jieya shares, the first performance was very different from the high growth before the listing, and the performance changed. In the first quarter of 2022, the operating income of Jieya Co., Ltd. fell from 347 million yuan in the same period last year to 181 million yuan, a year-on-year decrease of 47.91%; The net profit attributable to the parent company fell from 82.12 million yuan to 47.45 million yuan, a year-on-year decrease of 42.22%.
In 2023, the performance situation has not improved, and Jieya shares will achieve operating income of 623 million yuan, a year-on-year decrease of 6.6%; the net profit attributable to the parent company reached 115 million yuan, a year-on-year decrease of 18.28%; Following the year-on-year decline of 32.29% and 35.94% in revenue and net profit in 2022, respectively, the performance of Jieya shares declined again. In the first quarter of 2024, Jieya achieved a total operating income of 130 million yuan, a year-on-year increase of 1.43%; The net profit attributable to the parent company was 13.9017 million yuan, a year-on-year decrease of 62.7%. Although the operating income performance in the first quarter of this year has been restored, the net profit of Jieya shares is still in a downward trend, and investors do not buy it.
The poor performance of Jieya shares made its first equity incentive also fail. According to the revised draft of the equity incentive plan disclosed by Jieya shares on July 21, 2022, the assessment year for the first grant of restricted shares is three fiscal years from 2023 to 2025, and the vesting period is based on the operating income in 2022, and the assessment standard for the equity incentive of Jieya shares in 2023 is that the revenue growth rate is not less than 10%.
From an operational point of view, the production capacity and cost problems of Jieya shares have also been criticized. In 2021, the design capacity of wet wipes and facial mask products of Jieya Co., Ltd. will reach 14.973 billion pieces and 63.1584 million pieces respectively, and the capacity utilization rate will reach 109.15% and 128.78% respectively; In 2023, the design capacity of wet wipes and facial mask products of Jieya Co., Ltd. will be 15.856 billion pieces and 87.5232 million pieces respectively, and the capacity utilization rate will reach 69.04% and 95.09% respectively. According to the financial report, the multi-functional wet wipes project is still being expanded, and the expected usable date is December 31, 2024.
Secondly, the performance report shows that the R&D rate of Jieya shares has also been declining. From 2021 to 2023, the R&D expenses of Jieya Co., Ltd. will be 36.382 million yuan, 25.2912 million yuan, and 22.5196 million yuan respectively; However, its sales expenses have been increasing, respectively 6.9556 million yuan, 7.1638 million yuan, and 9.6609 million yuan. While R&D expenses are decreasing and sales expenses are rising, the gross profit margin of all products of Jieya Co., Ltd. in 2023 will be declining, and the gross profit margin of wet wipes, facial masks, washing and care products and other businesses will decline by 2.82%, 5.04%, 2.4% and 12.26% year-on-year respectively; The company's comprehensive gross profit margin was 29.62%, a year-on-year decrease of 1.85 percentage points.
It is worth mentioning that some investors raised the issue of "future digestion of wet wipes capacity expansion" at the performance briefing, and Jieya replied that "the company is actively improving product innovation capabilities, enriching product categories, increasing marketing efforts, better digesting existing production capacity, and enhancing the company's competitiveness." ”
The performance of the secondary market has caused dissatisfaction
According to the record of investor relations activities of Jieya's 2023 performance briefing, 17 of the 28 questions are related to the company's repurchase, stock price and over-raised funds for financial management, which is full of investors' dissatisfaction with its secondary market performance and the company's repurchase.
As of May 10, the closing price of Jieya shares was 30.39 yuan per share, down nearly 50% from the issue price and nearly 65% from the closing high. Since its listing, the highest point of the stock price of Jieya shares has stayed on the day of listing, and it has continued to fall since then. To the dissatisfaction of investors, in the face of the continuous decline in stock prices, Jieya shares are not active in repurchasing the company's shares, and investors ask the company "Would rather use idle over-raised funds for financial management than for repurchasing shares?" "All the funds raised are used for financial management, why not buy back vigorously? Is repurchase not as cost-effective as financial management? Or is the current share price not worth it? ”
*Screenshot of the relevant content of the record form of investor relations activities of the 2023 online performance briefing of Jieya shares
On February 24, Jieya shares issued an announcement on the plan to repurchase the company's shares, announcing that the company plans to repurchase 50-1 million shares with no less than RMB 20 million and no more than RMB 40 million in the initial public offering of part of the over-raised funds, accounting for about 0.62% to 1.23% of the company's current total share capital, which is also the first time that Jieya shares proposed to repurchase shares. On April 11, Jieya disclosed its announcement of repurchasing 10,000 shares of the company for the first time, and investors were dissatisfied with it. After the performance briefing, Jieya Co., Ltd. announced on May 6 that as of April 30, 2024, it had repurchased a total of 100,000 shares of the company through the Shenzhen Stock Exchange stock trading system through centralized bidding transactions, accounting for 0.1231% of the company's total share capital.
On January 20, Jieya also issued an announcement on the use of idle funds for cash management. According to the announcement, the company deliberated and passed the "Proposal on the Use of Part of the Idle Raised Funds for Cash Management" on January 19, and agreed to use part of the idle raised funds (including over-raised funds) with a limit of no more than 600 million yuan for cash management on the premise of ensuring that the construction of the investment project of the raised funds and the normal operation of the company are not affected, and the short-term investment and wealth management products with high security, good liquidity and a term of no more than 12 months.
In December 2021, the IPO of Jieya Co., Ltd. planned to raise 507 million yuan, but the actual raised funds were 1.163 billion yuan, and the over-raising ratio was 656 million yuan, with an over-raising ratio of 129%. However, in the month of listing, Jieya Co., Ltd. announced that it planned to use no more than RMB 600 million of part of the idle raised funds (including over-raised funds) for cash management, and since then, it has been using idle raised funds for financial management every year. In 2023, the closing balance of Jieya's trading financial assets will be 410 million yuan, an increase of 36.55% from the beginning of the period.
As for the idle raised funds for financial management and not for increasing efforts to repurchase the company's shares, poor performance in the secondary market and other related issues, Jieya shares said that the stock price of listed companies is affected by a combination of multiple factors. The company attaches great importance to the interests of investors, and will continue to strive to promote business development, strive to enhance the company's competitiveness, and create value for shareholders. The company uses temporarily idle over-raised funds for cash management, which is to improve the efficiency of capital use and obtain certain benefits without affecting the construction of fund-raising projects and the company's normal operating capital needs, and the company is implementing share repurchase in a planned manner, and will disclose the progress of share repurchase in a timely manner in accordance with relevant regulations.
It is worth mentioning that the performance report shows that in 2023, the total number of ordinary shareholders at the end of the reporting period will decrease from 11,419 shares in 2022 to 9,190 shares; Among the top ten shareholders in the 2022 annual report, many shareholders such as Cai Shuguang, Wang Wuxing, Cheng Yuanguang, and Zheng Shanrong have reduced their shareholdings. At the earnings briefing, investors also asked whether the continued reduction of institutional and shareholder holdings of the company's shares means that they are not optimistic about the company's prospects. Jieya said: "Institutional investors will appropriately adjust their holdings to reduce risks in a bad market, which does not mean that they are not optimistic about the company's prospects." ”
The reporter sent a letter to Jieya shares on issues such as performance stock price, market value management, and fund management, but has not received a reply as of press time.