Reporter | Zhang Qiaoyu
After the corn starch of 3.65 yuan / kg is processed, the enzyme preparations and microecological preparations made can be sold to 12.6 yuan / kg and 21.48 yuan / kg, and the average gross profit margin reaches more than 50%.
Recently, a biotechnology company, Wuhan Xinhuayang Biological Co., Ltd. (hereinafter referred to as: Xinhuayang), changed to the Science and Technology Innovation Board after two unsuccessful attempts to break through the ChiNext board, which has now been accepted by the Shanghai Stock Exchange.
Xinhua Yang is a biotechnology enterprise with biological enzyme preparations and microecological preparations as the main products, and its downstream applications are mainly in feed, food and textile fields. Enzymes (enzymes), also known as "biological catalysts", can efficiently catalyze various biochemical reactions at room temperature and pressure to promote the metabolism of organisms. During the reporting period, New H2O's enzyme products included feed enzymes, food enzymes and other industrial enzymes. Microecological preparations are also known as "prebiotics", and New H2H microecological preparations are mainly used as feed additives in the field of feed and aquaculture.
In the first two rounds of listing process, the operation of Xinhua yang's subsidiary establishment, transfer of 2 million yuan and repurchase of 36 million yuan after several transfers of hands was questioned by the market. This time to break through the science and technology innovation board, the company still has problems such as being related to large customers and raising funds to expand production under the condition of insufficient capacity utilization. On the other hand, Xinhuayang is also affected by the downstream aquaculture industry. Due to the outbreak of African swine fever in China in the second half of 2018, Xinhuayang's feed enzyme business revenue in 2019 fell by 7.42% year-on-year, resulting in a 3.62% year-on-year decline in main business income. In addition, Zhan Zhichun, the actual controller of Xinhua Yang, was also involved in two bribery cases during the reporting period.
<h3>He once sold a subsidiary at a low price and bought it back at a high price</h3>
As early as November 2010, Xinhuayang had announced that it would accept the listing counseling of GF Securities, and in March 2011, Xinhuayang's counseling securities company was changed to Guotai Junan, and at the end of 2011, it submitted listing application materials to the CSRC to prepare for an IPO on the ChiNext Board, but it was not approved for a long time. In January 2012, the CSRC suspended its review of Xinhuayang's IPO.
Chen Ruifeng, secretary of the board of directors of Xinhuayang, once told the media that the reason for terminating the listing on the ChiNext board was that the conditions for listing on the ChiNext board were not yet in place. He said at the time that Xinhuayang would not submit listing application materials in the short term.
In August 2017, Xinhua Yang launched another attack on the GEM, planning to issue no more than 20 million shares and raise 345 million yuan, which is intended to be invested in the second phase of the construction project of the Kowloon enzyme preparation production base and supplementary working capital. However, the IPO was also terminated, and the reasons behind it were not disclosed.
After four years, Xinhuayang turned to the science and technology innovation board for the third time, and was accepted by the science and technology innovation board on September 28 this year, and has entered the first round of inquiry stage recently.
The interface news reporter checked the prospectus disclosed by Xinhuayang once broke through the CHINext board and found that in 2013, Xinhuayang successively acquired Huayang Technology and Jiangxi Xinhuayang Enzyme, but the acquisition of these two companies was quite strange.
According to the prospectus, Huayang Technology was established on January 9, 2007 by Xinhuayang, with a registered capital of 2 million yuan at the time of establishment. On May 16, 2008, Xinhuayang transferred 95% of the equity of Huayang Technology to Chen Xinjie for 1.9 million yuan, and transferred 5% of the equity of Huayang Technology to Zhang Yumei at a price of 100,000 yuan.
After successive capital increases and equity transfers, huayang technology has invested 30 million yuan in 2013, a 15-fold increase in three years. In May 2013, Xinhuayang bought back 100% of the equity of Huayang Technology for 36 million yuan. It is worth noting that before the acquisition of Huayang Technology, the shareholders of Huayang Technology were only Wang Yuxian, accounting for 100% of the registered capital, and the 36 million yuan was in Wang Yuxian's pocket.
In addition, in the acquisition of Jiangxi Xinhuayang enzyme, Xinhuayang also has a premium acquisition. Jiangxi Xinhua Yang Enzyme was established on December 29, 2001, jointly funded by Xia Liming and Yu Yanchun, with a registered capital of 6 million yuan at the time of establishment. As of the Acquisition in September 2013, the shareholders of Xinhua Yang Enzyme were Hangzhou Xianglong Biotechnology Co., Ltd. (hereinafter referred to as Hangzhou Xianglong), Hu Zhenchang, Shen Xueliang and Yu Yanchun, with shareholding ratios of 59%, 20%, 20% and 1% respectively.
On October 16, 2013, Xinhuayang acquired 20% and 20% of the equity held by Hu Zhenchang and Shen Xueliang respectively for 7 million yuan (corresponding to the capital contribution of 4.4 million yuan and 4.4 million yuan) at a price of 1.59 yuan / registered capital; on the 31st of that month, Xinhuayang acquired 25% of the equity of Hangzhou Xianglong (corresponding to 5.5 million yuan of capital contribution) for 6.5 million yuan, according to which the purchase price was 1.18 yuan / registered capital.
In July 2014, Hangzhou Xianglong transferred 35% of the shares of Xinhuayang Enzyme to Xinhuayang at a transfer price of 7.7 million yuan, calculated based on 220,000 yuan in 2013 accounting for 1% of the registered capital, at this time the transfer price was only 1 yuan / registered capital, and the transfer price was declining.
Xinhua Yang said that the reason for the acquisition is to conform to the trend of the development of the times and tap new profit growth points.
<h3>Major customers are related parties</h3>
In recent years, more animal diseases, such as blue ear disease, avian influenza, African swine fever, etc., have a greater impact on the corresponding animal breeding scale and feed market size, bringing certain cyclical risks to the industry. In the second half of 2018, African swine fever broke out in China, and the scale of pig stocks fell sharply, which in turn had a very adverse impact on the feed industry.
According to the prospectus, from 2018 to the first quarter of 2021 (reporting period), The main business income of Xinhua Yang was 338 million yuan, 325 million yuan, 395 million yuan and 118 million yuan, respectively; the net profit attributable to the mother after deduction was 49.7311 million yuan, 51.3524 million yuan, 88.7434 million yuan and 31.155 million yuan, respectively. Among them, enzyme preparations are the most important products of Xinhuayang, accounting for 82.79%, 78.33%, 73.17% and 73.85% of the main business income of each period, respectively.
During the reporting period, Xinhuayang also sold some of its products to overseas markets, including more than 20 countries and regions such as the European Union, Russia, Ukraine, Mexico, Brazil and India. The proportion of overseas market sales to the main business income in the reporting period was 11.09%, 12.26%, 10.21% and 8.86% respectively.
It should be pointed out that Xinhuayang's operating income mainly comes from the downstream feed industry, and the feed industry is closely related to the aquaculture industry. According to data from the Ministry of Agriculture and Rural Affairs, in 2019, the total output of pig feed in the country was 76.632 million tons, down 26.6% year-on-year. Affected by African swine fever, Xinhuayang's feed enzyme business revenue in 2019 fell by 7.42% year-on-year, resulting in a 3.62% year-on-year decline in main business revenue.
It can be seen that as an important part of pig, poultry, rumination and aquatic feed, the feed enzyme preparations, microecological preparations and functional feed additive products produced by Xinhuayang may lead to stagnation or even decline in the growth of downstream industries once there is an outbreak of animal diseases or meteorological disasters, which may lead to stagnation or even decline in the growth of the downstream industry, which in turn will have a certain impact on the sales of Xinhuayang products and affect the performance.
It is worth noting that one of The five major customers of New Huayang, New Hope Liuhe Co., Ltd. (hereinafter referred to as New Hope, 000876.SZ), is a related party of the company. According to the prospectus, New Hope is a leading domestic feed, breeding and food enterprise, mainly purchasing Xinhuayang feed enzyme preparations, micro-ecological preparations and functional feed additives and other products for the production of feed, there is no distribution of Xinhuayang products, because New Hope is an important related party of Suzhou Houqi, which holds 6.82% of Xinhuayang's shares, and Suzhou Houqi, which holds 6.68% of Xinhuayang's shares, and is identified as a related party according to the principle of substance over form.
In 2018, New Hope was The second largest customer of New Hwyo, and from 2019 to the first quarter of 2021, New Hope has been the largest customer of Hwyo Yang. During the reporting period, the sales amount of Xinhua Yang to New Hope was 30.4022 million yuan, 42.1251 million yuan, 44.9608 million yuan and 13.1028 million yuan, accounting for 9.00%, 12.94%, 11.38% and 11.11% of the operating income, respectively.
In addition to New Hope, Xinhua yang also had related party transactions with a number of business entities such as Shijiazhuang Daoxing Agriculture and Animal Husbandry Technology Co., Ltd. and Changkai Feed Business Department of Jiang'an District of Wuhan City. The amount of related party transactions in the reporting period was 35.4527 million yuan, 48.2304 million yuan, 52.5885 million yuan and 14.893 million yuan, accounting for 10.50%, 14.82%, 13.33% and 12.65% of the revenue of the current period, respectively.
<h3>Raising funds to expand production is difficult to digest</h3>
In this listing, Xinhuayang plans to raise 532 million yuan, of which 245 million yuan is used for the bioenzymatic preparation refining project, 157 million yuan is used for the expansion project of feed enzyme preparation and micro-ecological fermentation base (Phase I), and 130 million yuan is used for the construction project of Xinhuayang Biotechnology R&D and innovation platform.
According to the interface news reporter, after the completion of the biological enzyme preparation refining project, it will form an industrial scale with an annual output of 2,000 tons of refined liquid enzyme preparations, 300 tons of high-concentration powder enzyme preparations and 6,000 tons of granulated coated enzyme preparations. Another feed enzyme preparation and micro-ecological fermentation base expansion project is currently under construction, and 105,800 yuan, 3,027,500 yuan and 5,589,600 yuan have been invested from 2019 to the first quarter of 2021, respectively. It is expected that after the completion of the project, Xinhuayang will form an industrial scale with an annual output of 7,000 tons of microecological preparations, 5,000 tons of enzyme preparations, and 30,000 tons of cake meal deep processing products.
However, in each period of the reporting period, the capacity utilization rate of New Huayang enzyme preparations was 80.95%, 74.5%, 87.76% and 84.35%, respectively, and the capacity utilization rate of microecological preparations was 36.7%, 43.7%, 58.3% and 45.3%, respectively. The capacity utilization rate of enzyme preparation products fluctuates significantly and declines significantly in 2019, and the capacity utilization rate of micro-ecological preparations is low.
Xinhua Yang explained that the capacity utilization rate of the company's enzyme products in 2019 fell by 6.45% year-on-year, mainly due to the fact that, on the one hand, due to the impact of African swine fever and other factors, the decline in enzyme sales led to a decrease in production, on the other hand, affected by factors such as technological upgrading, the company's main products were heat-resistant to phytase and xylanase cans to improve enzyme activity, fermentation efficiency was improved, and fermentation batches were reduced. The company's micro-ecological preparation capacity utilization rate is not high, mainly because the existing fermentation equipment specifications are small, the production cost is high, and some micro-ecological preparation products do not have market competitive advantages, and it is urgent to transform and upgrade.
In the case of unsaturated production capacity, how does the digestion capacity of New HUM YANG's new capacity match the market demand?
<h3>The actual controller, Zhan Zhichun, paid bribes</h3>
As of the date of signing of the prospectus, the actual controller of Xinhuayang is Zhan Zhichun, his daughter ZHAN YIYANG, and the two control a total of 50.76% of The voting rights of Xinhuayang. It is worth noting that Zhan Zhichun was suspected of paying bribes of 92,880 yuan to Sun Yue, a former public official of the Hubei Provincial Development and Reform Commission, from 2009 to 2014, and 340,000 yuan to Wang Dongxi, a former public official of the Wuhan Municipal Science and Technology Bureau, from 2010 to 2012.
In the above-mentioned cases, Zhan Zhichun was involved in a relatively small amount of money, the circumstances were minor, and he took the initiative to cooperate with the procuratorial organs in investigating the case, and neither Zhan Zhichun nor Xinhua Yang was held criminally responsible; Sun Yue had committed the crime of abuse of power and bribery, and Wang Dongxi had already made an effective judgment and pursued criminal responsibility by the people's court for committing the crime of embezzlement and bribery, and the case had been closed.
Another case related to Zhan Zhichun is related to the bribery case of Sun Yue, a former department-level cadre of the Hubei Provincial Development and Reform Commission. According to the Zaoyang Municipal People's Procuratorate's Case Handling Instructions issued on January 25, 2016, in September 2014, the Zaoyang Municipal People's Procuratorate was under the designated jurisdiction of the Hubei Provincial People's Procuratorate and the Xiangyang Municipal People's Procuratorate to file and investigate the case of criminal suspect Sun Yue (formerly a department-level cadre of the Hubei Provincial Development and Reform Commission) suspected of abuse of power and bribery. The investigation was concluded in April 2015 and prosecuted in January 2016.
It is reported that in the handling of the case, it was found that Zhan Zhichun, chairman and legal representative of Wuhan Xinhuayang Biological Co., Ltd., had bribed with the criminal suspect Sun Yue in the process of declaring the project for the benefit of the company. However, zhan Zhichun was able to actively cooperate with the procuratorial organs to clarify the problems after the case was involved, and his attitude was honest; and the amount involved in the case was not large, the circumstances were minor, and it had not yet constituted a crime.
Therefore, the Zaoyang Municipal People's Procuratorate decided not to file a case against Zhan Zhichun and not to pursue him.