Produced by | Bullet Finance
Author | Duan Nannan
Edit | Feng Yu
American Editor | Qianqian
Audit | Ode
A piece of news sent Zangge Mining's share price soaring nearly 9%.
On the evening of June 30, Zangge Mining announced that the company's shareholding company, Tibet Julong Copper Co., Ltd. (hereinafter referred to as "Julong Copper"), has added 14.726 million tons of copper metal resources compared with the previous filing.
After the completion of the filing, the cumulative identified copper metal resources in the Julong Copper Mining Area reached 25.88 million tons, which is the largest copper mine in China at present. Affected by this news, the share price of Zangge Mining rose nearly 9% on July 1.
As one of the two major producers of lithium extraction from salt lakes in China, Zangge Mining has benefited from the outbreak of the new energy vehicle industry, and the company's lithium extraction business from salt lakes has made a lot of money. In addition, Julong Copper, which cooperates with Zijin Mining, has made a lot of profits, and Zangge Mining has had a very prosperous life in recent years.
In the past two years, Zangge Mining has used more than 70% of its annual profits to distribute dividends. As the actual controller of the company, Xiao Yongming also earns a lot of money every year by paying dividends.
But on the other hand, due to the various operations of the actual controller, Zangge Mining has been in turmoil, and even suspected of tax evasion in the context of large dividends.
1. Hold on to the "thighs" of Zijin Mining, and Zangge Mining has made a lot of money
According to public information, Zangge Mining was established in 1996, and the founder of the company is Xiao Yongming. In the early days of his business, Xiao Yongming was not engaged in potash fertilizer, minerals and other fields, but started with catering.
In 2002, Xiao Yongming began to get involved in the potash fertilizer business and established Golmud Zangge Potash Fertilizer Co., Ltd. At that time, one of the leading potash fertilizer enterprises in Qinghai was Salt Lake Co., Ltd., and the other was Hanhai Group.
In 2009, under the mediation of various forces, Zangge Mining took control of Hanhai Group at a price of 380 million yuan.
In 2014, after years of development, Zangge Mining has become a large-scale local potash fertilizer leading enterprise in Qinghai, and began to set its sights on the capital market.
In 2016, Zangge Mining was listed on the backdoor of Jinguyuan. Due to the soaring stock price, the net worth of the actual controller Xiao Yongming once reached 26.5 billion, and he became the richest man in Qinghai, and the outside world also called him the "potash king".
After consolidating the main business of potash fertilizer, Zangge Mining also set its sights on the field of new energy. In 2017, Zangge Mining established Golmud Zangge Lithium Co., Ltd. (hereinafter referred to as "Zangge Lithium"), specializing in the development of lithium resources.
Due to the high concentration of salt lakes such as the Great Salt Lake of Zarhan, coupled with the explosion of the new energy vehicle industry in 2020, Zangge Mining's lithium carbonate business ushered in a big explosion.
In 2020, Zangge Mining's lithium carbonate business revenue was only 63.55 million yuan, and in 2022, the company's lithium carbonate revenue will grow explosively to 4.323 billion yuan. Due to the extremely high concentration of lithium ions in the company's salt lakes and the low development and production costs of Zangge Mining, the company's lithium carbonate gross profit margin will be as high as 92.20% in 2022, which is almost the same as the gross profit margin of Kweichow Moutai, the "king of wine".
In addition, Zangge Mining also vigorously deploys copper ore resources. In 2018, Zangge Mining spent a huge amount of money to acquire a 51% stake in Julong Copper. In 2020, after Zijin Mining took a stake in Julong Copper, Zangge Mining's shareholding decreased to 30.78%.
At present, Zijin Mining holds a 50.1% stake in Julong Copper and leads the production and operation of Julong Copper. Under the leading operation of Zijin Mining, the development of Julong Copper has been relatively smooth. In 2023, Zangge Mining's investment income alone will be as high as 1.263 billion yuan, and the company's net profit attributable to the parent company that year will be 3.420 billion yuan, which also means that more than one-third of Zangge Mining's profits come from Julong Copper.
(Photo / 2023 financial report non-core business details)
In 2023, due to the sharp drop in lithium carbonate prices, the company's revenue from lithium carbonate will drop from 4.323 billion yuan in 2022 to 1.980 billion yuan, and the gross profit margin will also decrease from 92.20% to 80.51% in the same period.
However, due to the extremely powerful operation of Julong Copper under the leadership of Zijin Mining and the high price of copper, Julong Copper's performance in 2023 has risen sharply, and the investment income of Zangge Mining has also increased from 231 million yuan in 2021 to 1.263 billion yuan, making Zangge Mining not fall into losses in 2023 like other lithium carbonate companies.
The discovery of a huge amount of copper resources by Julong Copper is also a huge benefit to Zangge Mining. The company's backing to Zijin Mining also enables Zangge Mining to cope with the cycle of lithium carbonate fluctuations more calmly.
2. The actual controller is suspected of a criminal case, and there have been many turmoil in recent years
At the same time, the layout of potash fertilizer, lithium carbonate, copper resources three major businesses, so that Zangge Mining is extremely stable in operation, but in fact, the controller seems to make the company not very worry-free.
On April 15, 2024, Zangge Mining announced that the company recently received a notice from the family of Xiao Yongming, the actual controller of the company, that Xiao Yongming was placed under residential surveillance at a designated location by the Zigong Municipal Public Security Bureau on suspicion of a criminal case. Affected by this news, Zangge Mining closed with a falling limit on April 16.
In fact, this is not the first time Xiao Yongming has had an accident. In the past ten years, Xiao Yongming has been in trouble, which has also brought great uncertainty to the development of Zangge Mining.
As early as 2017, because the National Day Expressway was too congested, Xiao Yongming spent 300 million yuan to buy a private jet to return to his hometown for the holiday, which caused heated discussions.
The high profile of life did not cause trouble for Zangge Mining, and what really put Zangge Mining into crisis was Xiao Yongming's illegal operation in daily operation.
On February 22, 2021, Zangge Mining announced that Xiao Yongming had been taken into criminal detention by the Qinghai Provincial Public Security Department on January 29, 2021 on suspicion of illegal mining.
(Photo / Photo Network, based on VRF protocol)
Xiao Yongming's illegal mining can be traced back to 2006, when Xiao Yongming became a shareholder of Qinghai Coking Coal Industry (Group) Co., Ltd. ("Qinghai Coking Coal") through an acquisition.
During the period of equity participation in Qinghai Coking Coal, Qinghai Coking Coal mined coal resources without obtaining a mining license, and Xiao Yong clearly knew that Qinghai Coking Coal Company was mining coal without obtaining a mining license, but still actively organized or participated.
During the trial, Xiao Yongming was sentenced to three years in prison, suspended for four years, confiscated illegal gains, and fined for illegal mining. However, in August 2023, after a retrial, the court found that Xiao Yongming did not constitute the crime of illegal mining and changed the verdict to not guilty.
It is worth noting that in September 2019, Zangge Mining was given disciplinary actions by the Shenzhen Stock Exchange for related party capital occupation, letter disclosure violations and other crimes, and Zangge Mining and Xiao Yongming were publicly reprimanded.
On May 6, 2020, because the financial report was issued by the audit institution that could not express an opinion, the shares of Zangge Mining were forced to "wear a cap", and the company's securities abbreviation became *ST Zangge (*ST on behalf of the company was implemented "delisting risk warning").
Although financial fraud is a corporate behavior, as the actual controller of the enterprise, Xiao Yongming is likely not to be able to escape responsibility for the company's financial fraud. It is worth noting that because of various negatives, Xiao Yongming also stepped down as chairman of the company in 2019, and the current chairman of the company is Xiao Yongming's son Xiao Ning.
3. The actual controller has reduced his holdings, pledges, and dividends of more than 10 billion yuan, but Zangge Mining has evaded taxes
Although Xiao Yongming has been in turmoil, he has earned a lot of money by holding Zangge Mining, and only the dividends he receives every year can be said to be a lot of money.
In 2022, due to the outbreak of the new energy industry, the stocks of upstream lithium carbonate companies began to rise sharply. As a leading enterprise in lithium extraction from salt lakes, Zangge Mining is also chased by capital.
At the beginning of 2021, the company's share price was only about 5 yuan per share, and at the beginning of 2022, the company's stock price soared to more than 35 yuan per share. In the face of huge gains, Xiao Yongming began to act.
From June to November 2022, Tibet Zangge Venture Capital Group Co., Ltd. (hereinafter referred to as "Zangge Investment"), controlled by Xiao Yongming, reduced its holdings of 37.275 million shares of Zangge Mining, with a cumulative reference amount of more than 1.1 billion yuan.
(Photo / Zangge Investment's shareholding reduction)
In addition to cashing out through the reduction of holdings, Xiao Yongming and the companies controlled by him also pledged a large amount of equity in Zangge Mining. Wind data shows that as of July 6, Xiao Yongming and the companies controlled by him have pledged 556 million shares, accounting for 94.43% of his shareholding.
The reference price given by Wind shows that the amount of pledged equity is nearly 10 billion yuan. Such a high proportion of pledges is rare in the entire A-share market.
(Photo / Equity pledge details)
In addition to reducing holdings and pledges, Xiao Yongming also obtains a large amount of income through dividends. In the past two years, as Zangge Mining's profitability has become stronger, the company has begun to pay large dividends.
Wind data shows that in 2022, the dividend amount of Zangge Mining will be as high as 4.507 billion yuan, and the company's net profit attributable to the parent company that year will be 5.655 billion yuan, with a dividend rate of nearly 80%. In 2023, on the basis of a profit of 3.420 billion yuan, the company will pay another dividend of 2.513 billion yuan, with a dividend rate of more than 73%.
(Photo / Dividend Breakdown)
As of press time, Xiao Yongming personally directly holds 9.85% of Zangge Mining. Xiao Yongming also holds a 22.88% stake in Zangge Mining through Zangge Investment, which he and his wife hold together 100% of the shares.
In addition, Xiao Yongming is also the actual controller of Sichuan Yonghong Industrial Co., Ltd. (hereinafter referred to as "Yonghong Industrial"), the fourth largest shareholder of Zangge Mining. This also means that in the past two years, Xiao Yongming and the enterprises controlled by him have received a cumulative dividend income of more than 2.6 billion yuan.
It is worth noting that Zangge Mining, which is so generous in terms of dividends, actually has tax evasion. On April 11, Zangge Mining announced that it had received the Notice of Tax Matters from the State Administration of Taxation, which clearly stated that the company's wholly-owned subsidiaries had significantly lowered the selling price in related party transactions.
The State Administration of Taxation requires Zangge Mining to pay back VAT, resource tax and other taxes and late fees. In the end, Zangge Mining needs to pay a total of 398 million yuan in taxes and fees, and 81.7196 million yuan in late fees, with a total of more than 480 million yuan.
For Zangge Mining, it has three major businesses: potash fertilizer, lithium carbonate and copper resources, which makes the company's operation very stable and an important guarantee for its shuttle industry cycle. However, a series of "mysterious operations" of the actual controller put the company in danger for a time, and the actual controller's reduction of holdings and high proportion of pledges also made the company face certain risks in corporate management.
*The title image in the article comes from: Camera.com, based on VRF protocol.