Guangdong Longping Hi-Tech announced on the evening of August 6 that the company intends to issue A-share shares to CITIC Agricultural Technology Co., Ltd. (hereinafter referred to as CITIC Agriculture), a subsidiary of CITIC Group, with a total amount of funds to be raised of no more than 1.2 billion yuan, to help the company optimize its capital structure, enhance the company's financial strength in high-quality R&D investment, operation development and industrial integration, and further enhance the company's leading position in the seed industry.
After the completion of the issuance, CITIC Group's total equity interest in Longping Hi-Tech through its subsidiaries such as CITIC Agriculture will increase from 17.36% to 25.93%.
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CITIC Group's shareholding ratio will increase to 25.93%
The expansion of the industrialization of biological breeding has been accelerated, and the integration of the seed industry has continued to deepen, which has put forward higher capital requirements for seed industry enterprises.
According to the announcement, the total amount of funds to be raised in this issuance is 12000000000 yuan, which will be used to repay bank loans and supplement liquidity after deducting the issuance costs, which will help the company optimize the asset-liability structure, improve its financial situation, enhance the company's high-quality R&D investment, operation development and industrial integration of the financial strength, and further enhance the company's leading position in the seed industry.
Longping Hi-Tech said that this issuance reflects CITIC Group's firm determination to actively implement the national food security and seed industry revitalization strategy, as well as firm confidence in the company's development prospects, which will enhance the company's financial strength, accelerate the promotion of breeding research and development and industrial integration, enhance the company's innovation, core competitiveness, market influence and anti-risk ability, help the company promote the industrialization of biological breeding, strengthen the protection and utilization of germplasm resources, give full play to the leading role of seed industry formation enterprises, and provide self-reliance and self-improvement for the national seed industry science and technology. The provenance is independent and controllable to make new contributions.
Since CITIC Group became a shareholder in 2016, it has been committed to building Longping Hi-Tech into a world-class seed industry group. Since the 20th National Congress of the Communist Party of China, under the guidance of the Ministry of Agriculture and Rural Affairs, CITIC Group has thoroughly implemented the action plan for the revitalization of the seed industry, adhered to long-term investment, made patient capital, and firmly supported the high-quality development of Longping Hi-Tech in terms of strengthening capital and technology investment, promoting industrial integration, and improving corporate governance, so as to build a national seed industry team serving the "great man of the country".
With the support of CITIC Group and all shareholders, Longping Hi-Tech takes "Longping Seeds, China Chips, National Feelings, and Chinese Quality" as its responsibility, and deeply practices the revitalization of the seed industry. The company and a number of its subsidiaries were selected as "strong advantages, making up for shortcomings, and solving problems" formation enterprises in the national seed industry. The company continues to promote the implementation of the national yield improvement action, serve the "three rural" areas, and help rural revitalization, with an annual seed promotion area of nearly 200 million mu in the world. Among them, the domestic promotion area is about 120 million mu, increasing grain production by 2.5 billion kilograms, and helping farmers increase income by 12 billion yuan. The company promotes the implementation of mergers and acquisitions at home and abroad, and has successively acquired a number of outstanding seed industry enterprises such as Lianchuang, Xuntian, and Sanrui, and in 2023, it will be held through major asset restructuring and consolidated Longping Development to form an international development pattern and realize the synergy and integration of domestic and international business in R&D technology and germplasm resources. In addition, the company has also continuously strengthened scientific research and innovation, established a commercial breeding system led by biotechnology and information technology, and led the country in the number of maize transgenic varieties and demonstration area, helping the company's digital transformation, continuously optimizing the "double full and double zero" quality management model of modern seed industry with Chinese characteristics, realizing the quality management of "full life cycle and full business process" of seeds, and leading the reform of the quality management model of the mainland seed industry. In 2023, Longping Hi-Tech was selected as the highest honor in the field of quality in China - the 5th China Quality Award. In 2024, the company will further learn from the practical experience of outstanding technology-based enterprises, implement the president rotation system, and explore and improve the governance system in line with the characteristics of China's seed industry and Longping Hi-Tech; Promote the company to focus on its main responsibilities and main businesses, divest non-core main business assets, and carry out special work such as cost reduction and efficiency improvement, so as to effectively improve asset quality.
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The net profit in the first half of the year is expected to be 90 million yuan to 120 million yuan
Previously, Longping Hi-Tech disclosed the 2024 semi-annual performance forecast, from January 1, 2024 to June 30, 2024, the company is expected to achieve an attributable net profit of about 90 million yuan to 120 million yuan, a year-on-year turnaround.
Regarding the reasons for the change in performance, Longping Hi-Tech said that during the reporting period, the company's independent research and development capabilities continued to improve, high-yield and high-quality varieties were welcomed by the market, and on the basis of consolidating the stock business, the company continued to expand the incremental market, so that the company's market share continued to increase, the operating income of the rice industry increased by more than 20% over the same period last year, and the net profit increased by about 65 million yuan over the same period last year. At the same time, based on the strategic development needs of focusing on the main business and supporting the medium and long-term development of Longping Biotechnology (Hainan) Co., Ltd. (hereinafter referred to as Longping Bio), during the reporting period, the company introduced strategic shareholders with resource advantages for Longping Biotechnology through equity transfer, and transferred 10.94% of the equity held by Longping Biotechnology to the central enterprise Rural Industry Investment Fund Co., Ltd. The transaction is expected to increase the company's current investment income by about 340 million yuan, which is a non-recurring profit or loss. In addition, during the reporting period, due to the impact of the Fed's continuous interest rate hike cycle, the foreign exchange rate fluctuated greatly, and the exchange loss generated by the medium and long-term foreign currency loans of overseas subsidiaries increased by about 280 million yuan year-on-year, resulting in a significant increase in financial expenses compared with the same period last year.
At present, Longping Hi-Tech has gradually grown into a comprehensive multinational seed industry group, and has entered the top eight global seed industry enterprises: the hybrid rice seed business is leading in the world, with a domestic market share of nearly 20%, and it has a layout in Africa and other countries and regions along the "Belt and Road", especially in the Philippines and Pakistan. The domestic hybrid corn seed promotion area is 60 million mu, with a market share of about 10%; Brazil's corn seed business has a market share of more than 20%, ranking in the top three and ranking second in the winter corn seed market; Specialized and special new seed businesses such as hybrid millet, sunflower, pepper, and cucumber have maintained a leading position in all regional markets across the country; In 2023, the operating income will increase by 22.45% year-on-year to 9.223 billion yuan, quadrupling from the 2.299 billion yuan in 2016 when CITIC Group became a shareholder.
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Article source: Longping Hi-Tech
Editors of this issue: Zhai Yiting and Wei Rong
Review of this issue: Wang Meihong
Producer of this issue: Jiang Shanjun
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