Text: "Investor's Network" Zhu Jingkai
New Hope Liuhe Co., Ltd. (hereinafter referred to as "New Hope", 000876.SZ) recently announced that at the 35th meeting of the 9th board of directors at the end of September, the "Proposal on Terminating the 2022 Employee Stock Ownership Plan" was deliberated and approved.
According to the plan, the company comprehensively considered the current industry market environment and other factors, and continued to implement the 2022 employee stock ownership plan (hereinafter referred to as the "employee stock ownership plan") has been difficult to achieve the expected incentive purpose and effect. According to the relevant regulations, the board of directors decided to terminate the employee stock ownership plan after the third meeting of the holders of the employee stock ownership plan and the first meeting of the remuneration and assessment committee of the ninth board of directors of the company in 2024.
In 2022, the employee stock ownership plan announced by New Hope is to motivate the company's employees to better achieve performance, and link performance with long-term incentives, so as to achieve the company's long-term development goals and promote the company's sustainable, healthy and long-term development. But now that the plan is terminated, what is the secret behind it?
The asset-liability ratio exceeded 70% during the periodThere was an important background for New Hope to put forward the employee stock ownership plan that year. The company's business entered a loss period in 2021, with a huge net profit loss of 9.591 billion yuan, compared with a net profit of 4.944 billion yuan in the same period in 2020, a sharp decrease of 293.98% year-on-year, and the company's stock price has also entered a downward cycle, and the market value has gradually fallen from the peak in 2020.
The company said that compared with the incentive plan in 2022, the company's external environment and internal strategy have changed, and the business objectives have been adjusted in real time. On the one hand, according to the external direction of the state's regulation and control of pig production capacity, the slaughter volume has been controlled accordingly, and on the other hand, it is necessary to change from the previous internal development requirements of "scale and quantity" to "high-quality development".
According to the National Bureau of Statistics, in the first half of this year, the national pig price rose by 1.4%, affected by the relationship between supply and demand, the price of live pigs rose for four consecutive months. According to the data of the National Bureau of Statistics on September 24, the price of live pigs in mid-September fell by 3.0% month-on-month to 19.2 yuan/kg.
According to the research report released by Huafu Securities on September 30, in the short term, pig prices have been adjusted recently, reflecting the pressure on the fourth quarter of 2024 due to reduced market expectations and destocking.
The New Hope announcement mentioned that the external environment has undergone great changes, and in the current industrial pattern, continuing to excessively pursue sales growth is not conducive to the stability of production capacity, nor is it conducive to the company's profitability and shareholder returns, and ultimately cannot achieve effective incentives for employees. Taking into account the current industry market environment and other factors, it is difficult for the company to continue to implement the employee stock ownership plan to achieve the expected purpose and effect.
At the same time, the incentive effect is not as expected is also reflected in the company's performance in recent years. In the first half of this year, New Hope achieved operating income of 49.577 billion yuan, down 28.62% from the same period last year, and net profit of -1.217 billion yuan, compared with -2.983 billion yuan in the same period last year, narrowing from the same period last year. In terms of business, the feed business, as the core segment, reached 32.885 billion yuan, a year-on-year decrease of 16%, accounting for 66.33% of the operating income; The revenue of the pig industry increased slightly by 3.02% to 14.672 billion yuan, accounting for 29.6% of the total revenue, but the gross profit margin of the pig industry was still negative, that is, -4.05%, indicating that the operating pressure of the sector was huge.
Judging from the announcement of the 2024 semi-annual report, the company benefited from the recovery of pig prices and internal structure adjustment in the second quarter of this year, and realized the transformation from a loss of 1.934 billion yuan in the first quarter to a profit of 720 million yuan in the second quarter. At the same time, the company obtained stable income through the equity investment of Minsheng Bank, and contributed profits of 420 million yuan and 280 million yuan respectively in the first quarter and Erli Du. However, the company's asset-liability ratio is still as high as 72.99%, and the company's own cash flow during the reporting period was -721 million yuan, compared with 436 million yuan in the same period last year.
In recent years, New Hope has adopted a variety of financing methods, including non-public issuance of shares, issuance of convertible bonds, project transfer and adjustment of private placement plan, but in the first half of this year, the company's monetary funds have been unable to cover the company's short-term borrowings. According to public data, at the end of June 2024, the company's monetary funds were 10.808 billion yuan, short-term borrowings were 19.65 billion yuan, non-current liabilities due within one year were 9.399 billion yuan, and long-term borrowings were even as high as 24.753 billion yuan.
Peers actively repurchase and plan to implement employee stock ownership plansJudging from the results of the first half of 2024 released by peers, thanks to factors such as the decline in breeding costs and the recovery of the pig market, many pig enterprises have generally achieved positive growth in operating income and net profit attributable to the parent company.
Among them, Muyuan shares (002714. SZ), Wen's shares (300498. SZ) net profit attributable to the parent company was 830 million yuan and 1.327 billion yuan respectively; Among the small-capitalization pig enterprises, ST Tianbang and Tiankang Biotechnology have the highest profit scale, with 841 million yuan and 276 million yuan respectively.
In addition to the performance driven by the recovery of the industry, a number of pig breeding enterprises are also actively implementing buybacks. Wen's shares disclosed in September that they planned to use their own funds of 900 million yuan to 1.8 billion yuan to repurchase shares for the implementation of employee stock ownership plans or equity incentives, and the first repurchase was implemented on September 20, with a total transaction amount of 35.8781 million yuan.
On September 26, Muyuan announced that it intends to use its own funds or self-raised funds to repurchase the company's shares in a centralized bidding transaction, with a total amount of not less than 3 billion yuan and no more than 4 billion yuan (including this number), which is intended to be used for employee stock ownership plans or equity incentive plans.
An industry insider told the "Investor's Network" that "the company's repurchase is based on its own management, business prospects, profitability and other aspects, indicating that the management has confidence in the company's future business development." At the same time, buybacks can also play a role in stabilizing stock prices and improving investor confidence. ”
Under the trend of general performance turnaround and active repurchase of peers, New Hope, as a large enterprise with both feed and pork business, still had a negative net profit margin attributable to the parent company in the first half of the year, and the gross profit margin of the pig industry was also negative. Moreover, the company also abruptly terminated the employee stock ownership plan under the current hot capital market, and made diametrically opposite choices to other pig companies in the same industry.
According to media reports, New Hope is currently using artificial intelligence to learn how to raise pigs intelligently, from weighing to feeding, physical examination, epidemic prevention and other links, digital intelligence is being rolled out in an all-round way, helping the pig industry improve quality and efficiency. According to the company, in order to manage more efficiently and refinedly, the New Hope scientific research team has developed a series of intelligent application instruments, including the third generation of portable weight estimation equipment, no need to drive pigs out of slaughter, as long as the breeder holds the equipment and gently sweeps, the weight of the pig can be weighed in less than 5 seconds, and the weight estimation accuracy can reach 98%.
At present, the traditional aquaculture industry is using artificial intelligence technology to improve the construction of education and help, improve production efficiency, and reduce the cost of breeding. I don't know if the blessing of these "black technologies" can help New Hope's future performance. (Produced by Thinking Finance)■