New Hope lost 3.4 billion yuan in the first half of the year, and the head Liu Chang encountered the first "big test" since taking over New Hope.
On August 2, New Hope Group ushered in a historic moment - in the 2021 Fortune Global 500 list, New Hope ranked 390th on the list with a revenue of $31.6057 billion.
It is worth mentioning that this is the first local Fortune Global 500 enterprise in Sichuan Province, and the only Chinese enterprise on the list of "food production" enterprises.
However, soon after, New Hope ushered in another moment - the official announcement of the semi-annual report, the first half of the performance of the huge loss of 3.415 billion yuan, which is the company's first performance loss since its listing in 1998.
For New Hope, it is certainly proud to be on the list of the world's top 500 companies, but the huge loss in the first half of the year is the most important thing for New Hope to pay attention to at the moment, because with the continuous decline in pig prices, the challenge of New Hope has just begun...
<h1 class="pgc-h-arrow-right" Data-track="4" > aggressive expansion, new hope in the first half of the year a huge loss of 3.415 billion</h1>
With the sharp decline in pig prices, performance losses have become a situation that most pig companies will face in 2021.
According to statistics, in addition to the leading Makihara shares, the four major listed pig companies "Wen's, New Hope, Tianbang, Zhengbang" have experienced losses of varying degrees in the first half of this year, but what people did not expect is that the most loss is not Wen's shares with the highest revenue, but New Hope.
According to the semi-annual report data, in the first half of this year, New Hope achieved revenue of 61.519 billion yuan, an increase of 37.64% year-on-year; the realized net profit was 3.415 billion yuan, down 207.94% year-on-year, which was the first performance loss since new hope was listed in 1998, while another "big pig farmer" Wen's shares "only " lost 2.498 billion yuan in the first half of the year, which was 917 million less than New Hope.
Judging from the semi-annual report, although New Hope has increased its investment in pig raising in recent years, according to the product classification, its main business is still in feed.
According to the data, in the first half of this year, New Hope's feed business revenue was 32.827 billion, accounting for 53.36% of the revenue; while the pig industry revenue was 10.182 billion, accounting for 16.55% of the revenue; poultry industry revenue was 9.209 billion, accounting for 14.97% of the revenue, in fact, the proportion of revenue in the pig industry is not too high.
So, why did New Hope lose so much in the first half of the year, and the amount of loss ranked first among the major listed pig companies? Behind this is the radical expansion of New Hope.
According to media reports, in the first half of this year, New Hope's pig industry lost more than 4.6 billion yuan, including 1 billion yuan of inventory price loss provisions, while the revenue of the business was only 10.182 billion.
Although the huge loss of the pig industry has the impact of the sharp decline in pig prices, the main reason is that New Hope disregarded the pig cycle and carried out aggressive expansion at a high pig price level, which led to a huge loss in the first half of this year.
<h1 class="pgc-h-arrow-right" data-track="6" pig prices fell sharply >, and Liu Chang, the head of the government, encountered a "big test"</h1>
Since Liu Chang took over New Hope in 2013, Liu Chang has handed over a good answer sheet both in terms of revenue and stock price performance.
According to statistics, after Liu Chang took over New Hope in 2013, New Hope's revenue soared from 69.4 billion yuan in 2013 to 109.8 billion yuan in 2020, breaking through the 100 billion revenue mark; and New Hope's stock price also soared from the lowest 3.05 yuan in 2013 to the highest 42.2 yuan in 2020, and the stock price rose by a staggering 1283%.
However, behind Liu Chang's seemingly good report card, there is a great element of luck, because in the fifth year of his takeover of New Hope, African swine fever broke out and pig prices soared, and most of his results were achieved after the sharp rise in pig prices in 2018.
Now, as the pig cycle enters the second half, pig prices continue to fall, and Liu Chang, the young leader, ushered in the first "big test" since taking over New Hope.
In terms of performance, in addition to the huge loss, New Hope also faces a big problem - the debt is soaring.
According to the data of the semi-annual report, the total liabilities of New Hope in the first half of this year were 83.31 billion yuan, and the asset-liability ratio was 62.93%; compared with the same period last year, the total liabilities of New Hope were 53.82 billion, and the asset-liability ratio was 58.95%, and the total liabilities and asset-liability ratios in the first half of this year increased.
In terms of stock prices, as the pig cycle enters the second half and the company's performance deteriorates, New Hope's stock price has also experienced a sharp correction.
In terms of specific data, as of September 5, New Hope's latest stock price was 11.72 yuan, compared with the highest point of 42.2 yuan has fallen by 72.23%; the market value has fallen from the highest 190.3 billion to today's 52.8 billion, and the market value of New Hope has shrunk by 137.4 billion in one year.
<h1 class="pgc-h-arrow-right" Data-track="8" > where will new hope go? </h1>
After suffering heavy losses in radical expansion, New Hope also began to turn conservative.
In an interview in August, Zhang Minggui, president of New Hope, said that New Hope has adjusted its development focus: from the expansion of scale to the production center, and from the past to the construction site as the main battlefield to the pig farm and the farm as the main battlefield. "In the past, we may have pursued the scale and total amount of the column more, but today we have turned to the pursuit of quality and effective operation of the column." Zhang Minggui said in an interview.
As for the target output in 2021, New Hope has also been significantly reduced from the previous target of 25 million heads to 9 million heads to 10 million heads.
For New Hope, the timely change of strategy, from radical expansion to conservative development is undoubtedly a good news - after all, with the sharp decline in pig prices, now pig farming has become a loss-making business, no longer blind expansion, it means that losses can be reduced, saving strength, can wait for the arrival of the next pig cycle.
For the head Liu Chang, the transition from radical to conservative development has also taught him an important lesson - running a business is not blindly rushing forward, and it needs to adjust its strategy with the cycle, which will be of great help to its new hope for continued operation in the future.
From this point of view, although New Hope is full of difficulties in the short term, with the timely adjustment of strategy, New Hope has a great chance to overcome this difficulty. At the next time the pig cycle arrives, Liu Chang, the more experienced leader, may be able to lead New Hope to the next new height.