A few days ago, Muyuan shares, the "pig star" with the first annual net loss since its listing, received an inquiry letter from the Shenzhen Stock Exchange for its annual report.
FMCG understands that the regulator requires the company to explain in detail five major issues, including 1. whether there is liquidity risk; 2. The specific reasons why the gross profit margin of the aquaculture business is higher than that of comparable companies in the same industry; 3. Explain the difference and reasons for the difference in the proportion of provision for price decline of the same type of inventory with comparable companies in the same industry; 4. The reasons and reasonableness of the non-provision for impairment of fixed assets; 5. List and explain the top five related suppliers one by one. At the same time, the annual audit accountant is required to verify and express clear opinions on some issues.
In 2023, Muyuan Co., Ltd. will achieve operating income of 110.861 billion yuan, a year-on-year decrease of 11.19%; The net loss was 4.263 billion yuan, a year-on-year decrease of 132.14%, which was also the company's first annual loss since its listing. In terms of business, the aquaculture business achieved operating income of 108.224 billion yuan, a year-on-year decrease of 9.62%, and a gross profit margin of 2.92%. The asset-liability ratio was 62.11%, an increase of 7.75 percentage points from the end of the previous year, and the amount of short-term liabilities was 46.929 billion yuan, an increase of 60.91% year-on-year.
In the first quarter of 2024, Muyuan Co., Ltd. achieved operating income of 26.272 billion yuan, a year-on-year increase of 8.57%; The net loss was 2.379 billion yuan, a year-on-year decrease of 98.56%. Liabilities also widened to $125.1 billion.
The top two issues include corporate debt stress and liquidity risk, which are the focus of the exchange. The Shenzhen Stock Exchange requires an explanation of the specific composition and details of the use of restricted monetary funds, the reasons for the restrictions, whether there is a risk of freezing or deduction, an explanation of the overdue situation, the scale and future payment plan, and requires the annual audit accountant to verify the authenticity and accuracy of the company's monetary funds and issue a clear opinion.
Another issue that the Shenzhen Stock Exchange is concerned about is the cost of the company's pig breeding business. The annual report shows that the company's breeding business will achieve operating income of 108.224 billion yuan in 2023, a year-on-year decrease of 9.62%, and a gross profit margin of 2.92%. In the same period, the gross profit margin of Wen's shares, New Hope and other pig breeding businesses was negative.
The inquiry letter mentioned that in 2022, the amount of soybean meal used in the feed of Muyuan Co., Ltd. will account for 7.3%, which is about half of the industry average of 14.5%; In 2023, the amount of soybean meal used in the company's feed will be further reduced to 5.7%. The feed structure in the company's pig breeding business is different from that of the same industry. The Shenzhen Stock Exchange requires that the impact of the price trend of live pigs on the company's operating performance be analyzed and explained in combination with the development status and trend of the industry, the cost and changes of pig breeding, and the specific reasons for comparing the gross profit margin and fluctuations of the pig breeding business of comparable companies in the same industry in the past three years.
In addition, the Shenzhen Stock Exchange said that in 2022 and the half year of 2023, Muyuan shares did not make any provision for inventory decline in consumable biological assets. At the end of 2023, the company made provisions for inventory decline of 43.0951 million yuan and 159 million yuan respectively for inventory commodities and consumable biological assets in the inventory, accounting for 3.32% and 0.49% of the inventory book balance at the end of the period, respectively. In addition to inventory, the Shenzhen Stock Exchange also raised questions about the company's fixed assets that have not been provided for impairment.
In this regard, the Shenzhen Stock Exchange requires an explanation of the opening and semi-annual balances of the provision for inventory decline or the impairment provision for contract performance costs are 0 yuan, the specific reasons and reasonableness of the new provision for inventory decline at the end of the period, and the difference between the proportion of fixed assets and operating income and that of comparable companies in the same industry.