"Dishonesty" And "Credit Obtaining" Of Garden Biology

Huayuan Group, located in Huayuan village, Nanma Town, Dongyang City, Zhejiang Province, ranks among the top 500 private enterprises in China in 2020.

As a representative of the biomedical industry of Huayuan Group, Huayuan bio (300401. SZ), which landed on the gem in October 2014, has become one of the largest vitamin D3 production and export enterprises in the world.

With "garden" brand vitamin D3 leading the industry, the performance of garden biology has been explosive growth since its listing.

In the five years from 2015 to 2019, its net profit increased from 12.07 million yuan to 344 million yuan.

Compared with those listed companies whose performance "changed face", garden biology can be called a rare "white horse stock".

As of May 11, the total market value of garden biology was less than 7.5 billion yuan, and the closing price was only 13.31 yuan.

Compared with the issue price of 7.01 yuan, it has not even doubled.

In 2020, the revenue and net profit of garden biology, which was selected as the small giant enterprise of national level "specialized, special and new", both declined, of which the revenue was 615 million yuan, a year-on-year decrease of 14.41%; The net profit attributable to the parent company was 272 million yuan, down 20.79% year on year.

In this regard, Huayuan bio explained that the sales volume and average price of vitamin D3 products in the reporting period decreased compared with the previous year, resulting in a decline in revenue and net profit.

A series of problems followed.

Can the performance of "white horse stock" which has always been optimistic about be sustained?

Since its listing in 2014, garden biology has put forward two fixed increase plans in 2016 and 2019. What is the progress of its raised investment projects?

How far is the garden biology, which has established the strategy of "building a complete upstream and downstream industrial chain of vitamin D3" at the beginning of its establishment?

With "garden" brand vitamin D3 leading the industry, the performance of garden biology has been explosive growth since its listing. Photo by Gan Jun

Subdivide the dragon head, the story is lonely?

From the perspective of the core products of garden biology, they are mainly divided into three categories: cholesterol, vitamin D3 and 25 hydroxyvitamin D3. Among them, lanolin cholesterol (NF grade cholesterol) with a purity of more than 95% is the main raw material for the production of vitamin D3, and low content cholesterol is used in shrimp feed. On July 1, 2020, the new national standard of vitamin D3 was implemented, and lanolin cholesterol became the only legal raw material for the production of vitamin D3. In addition, 25 hydroxyvitamin D3 not only has all the functions of ordinary vitamin D3, but also has some unique functions. 25 hydroxyvitamin D3 has the trend of replacing ordinary vitamin D3.

Vitamin D3 is widely used in feed additives, food additives, nutrition and health products, medicine and other fields, and its application scope and market demand are expanding day by day.

There is no doubt about the leading position of garden biology: at present, garden biology is the only enterprise in China to produce 25 hydroxyvitamin D3 products and NF cholesterol products on a large scale.

From the industry point of view, the global vitamin D3 manufacturers are mainly jindawei (002626. SZ), XinHeCheng (002001. SZ), Zhejiang Pharmaceutical (600216. SH), Taizhou Haisheng, Weishi biology, Shandong Tonghui, and Tianxin pharmaceutical.

In addition, there are overseas DSM, India's diesman and other manufacturers, but in terms of products, each has its own focus.

Its main products include vitamin E, vitamin A and ethoxylate, which are mainly used as feed additives, health products and raw materials; Jindawei is mainly engaged in raw materials of food nutrition fortifier industry and health food terminal products. Its main products include coenzyme Q10, VA, VD3, microalgae DHA, plant ARA, etc; Zhejiang medicine is mainly engaged in life nutrition products, pharmaceutical manufacturing products and pharmaceutical commerce, and its main products include synthetic vitamin E series, vitamin a series, natural vitamin E series, etc.

According to the statistics of Boya Hexun, in terms of output, the production of vitamin D3 in garden biology will reach 2000 tons in 2019, which is twice the output of XinHeCheng, the second largest in the industry. The output of XinHeCheng is 1000 tons.

In addition, the annual output of jindawei, Taizhou Haisheng and Zhejiang medicine was 900 tons, 650 tons and 300 tons respectively.

Vitamin D3 products belong to the vitamin industry development has a certain periodicity. The time point and duration of its peaks and troughs are affected by many factors, such as domestic and foreign macroeconomic environment and industry self adjustment, which make the industry capacity increase and decrease and product prices rise and fall. When the prosperity of the industry is high, product prices continue to rise, new market entrants increase, and the industry begins to expand production.

After a period of development, due to overcapacity, the price of products dropped, and fierce competition led to the elimination of some enterprises with relatively high production costs and poor competitiveness by the market, shut down and turn around, and the industry was integrated again, gradually ushering in a new round of peaks and cycle.

With the improvement of national environmental protection and safety requirements, some small-scale production enterprises stop production or reduce production under the pressure of environmental protection and cost, and gradually withdraw from the market.

Affected by the relationship between supply and demand, the price of vitamin D3 also fluctuated: the 21st Century Capital Research Institute sorted out the public data and found that the price fluctuation range of vitamin D3 was 40-600 yuan / kg.

Vitamin D3 experienced three large price fluctuations in the history from August 2009 to October 2010, December 2010 to November 2012, and August 2013 to December 2013. In June 2009, the lowest price was 40 yuan / kg, and in November 2018, the highest price reached 600 yuan / kg, with an increase of 1400%.

In addition, according to the announcement of garden biology's reply to the inquiry letter of Shenzhen Stock Exchange in 2019, as of May 18, 2020, the market price (including tax) of domestic vitamin D3 reached 280 yuan / kg, which was 166.67% higher than 105 yuan / kg in early March 2020, an obvious increase.

However, at this stage, the share price of garden biology is also weak.

According to the 21st Century Capital Research Institute, at present, feed grade vitamin D3 is still the largest revenue source of garden biology.

In reply to investors' questions on April 26, Huayuan bio also mentioned that "the price of feed grade vitamin D3 products is affected by various factors such as supply and demand, and the price shows certain volatility. What the enterprise pursues is the balance of production and marketing and the maximization of interests. After Jinxi science and technology park is put into operation, the company's dominant products lanolin cholesterol and 25 hydroxy VD3 will be greatly expanded, and the proportion of feed grade VD3 in the company's revenue will gradually decrease. "

In addition to the overall performance decline in 2020, the performance of garden biology in the first quarter of 2021 has not been recognized by investors.

In the first quarter of 2021, the revenue was 159 million yuan, with a year-on-year increase of 17.39%, and the net profit was 91.4204 million yuan, with a year-on-year increase of 48.85%. At the performance exchange meeting, many investors asked, "what are the reasons for the failure of the above data in the first quarter of 2021 to reach the data of the same period in 2019 or 2018?"

In this regard, Huayuan bio explained, "the main reason is that in the first quarter of 2019 and 2018, the feed grade VD3 price is running at a high level, which greatly drives the company's revenue and profits. In addition, the main project to undertake Xiasha production capacity will be put into operation in Jinxi science and Technology Park in November 2020. The project still has trial production stage, and it will take some time for the capacity scale to release. In addition, the export proportion of the company will basically remain above 70%. Affected by the epidemic situation in 2020, the export proportion will decline

Why has the project been changed many times?

The Xiasha production capacity mentioned by Huayuan biology is a factory located in Xiasha, Hangzhou, which mainly produces feed grade vitamin D3, refined lanolin, etc., which is one of its original two production bases. However, on November 11, 2020, Huayuan biology, located in the south area of Jinxi science and Technology Park in Jinhua economic and Technological Development Zone, was put into trial production, undertaking the main production capacity of Xiasha factory; In December 2020, Xiasha factory has been shut down, and Huayuan biological said that its production base will gradually move to Jinxi science and technology park.

Under the premise of high price sensitivity and profit dominated by supply and demand, new capacity and capacity digestion have become the key to the performance growth of garden biology.

Since the listing of garden biology, it has taken several fixed increase fund raising to expand production capacity.

However, what is intriguing is that the project raised and invested has changed again and again.

When it was first listed in October 2014, garden biology publicly issued 22.7 million shares with a par value of 1 yuan per share and an issue price of 7.01 yuan per share. After deducting the relevant issuance expenses, the actual raised capital was 130 million yuan, which was invested in the "comprehensive utilization of lanolin project" and "annual output of 100 tons of feed grade 25 hydroxyvitamin D3 project".

In addition, increased capital for Xiasha biological research and development center transformation project was terminated.

In 2016, garden biology put forward a fixed increase plan, centering on the development strategy of "building a complete upstream and downstream industrial chain of vitamin D3", the total amount of fund to be raised is no more than 422 million yuan, and the actual raised fund is 407 million yuan, which will be used for the three projects of "core premix project", "annual output of 4000 tons of environmental rodenticide project" and "garden biology research and Development Center Project".

In January 2018, the three projects used the raised funds to replace part of the initial investment funds of about 49.6587 million yuan. From then on, up to the first half of 2018, there was no change in the implementation location, implementation subject and implementation mode of the project.

The turning point took place in the second half of the year.

On July 30, 2018, Huayuan biology decided to change the implementation location of the above three projects from the Garden Industrial Zone in Nanma Town, Dongyang City, to Jinhua Economic and Technological Development Zone, and the implementation subject was changed from the company to the subsidiary Zhejiang garden Nutrition Technology Co., Ltd. (hereinafter referred to as "Garden nutrition"), which was deliberated and approved by the first extraordinary general meeting of shareholders in 2018 on August 15, 2018.

In May 2019, garden biology decided to change the use of part of the raised funds.

This time, the remaining raised funds of "core premix project" and "environmental rodenticide project with an annual output of 4000 tons" were changed to "180 tons of 7-dehydrocholesterol project" (using raised funds of 80 million yuan) and "750 tons of feed grade VD3 oil agent project" (using raised funds of 83.5 million yuan).

In this regard, garden biology explained that "since the establishment of garden Biology (Jinxi) science and Technology Park in March 2018, due to the large amount of investment in Jinxi science and Technology Park project, the construction projects in the park will be invested in stages according to the priority of the project". In contrast, the company's management believes that the market development of core premix and environmental rodenticide products still needs some time, There is a risk that the expected benefits can not be realized in the short term.

As a matter of fact, as of the end of April 2019, the accumulated investment in the "4000 tons of environmental rodenticide project" has reached 20.919 million yuan, accounting for only 24.85% of the total investment.

In addition, 777200 yuan has been invested in the "core premix project", accounting for 0.94% of the total investment, and the project progress is almost negligible.

According to the announcement, the total investment of the "garden biology research and Development Center Project" has been greatly expanded from 145 million yuan to 251 million yuan, and the amount of funds to be raised will be increased from 142 million yuan to 237 million yuan.

However, the economic benefits of the R & D center project seem to be less direct.

In the previous feasibility analysis report (Revised Version) of the fixed increase fund-raising, Huayuan biology described the project as: "the R & D center project does not directly produce products, and the income of this project consists of indirect income and direct income: after the completion of the project, the indirect income will enter the market through the development of new products, and the product quality will be improved through the technical transformation of existing products, Reducing production costs and speeding up the industrialization of scientific research achievements; Direct income provides technical guidance and transfer to the outside world. "

In December 2019, Huayuan bio put forward a new fixed increase plan, which was completed in July 2020. It issued 71.719 million shares in private, with a subscription price of 12.68 yuan per share and a raised capital of 909 million yuan. After deducting the relevant issuance expenses, the raised capital was 897 million yuan, It will be used in "1200 tons of lanolin cholesterol and 8000 tons of refined lanolin project", "15.6 tons of 25 hydroxyvitamin D3 crystallization project", "40.5 tons of n-sterol production project", "26 tons of 25 hydroxyvitamin D3 original project", "3600 tons of feed grade VD3 powder and 540 tons of food grade VD3 powder project".

According to the assumption of garden biology, the construction of the above projects will further expand the production capacity of the company's existing products and enrich the product structure of the company.

By August 7, 2020, garden biology will use 700 million yuan of the raised funds to increase the capital of its wholly-owned subsidiary garden nutrition. After the completion of this capital increase, the registered capital of garden nutrition will increase to 1 billion yuan.

Investors are a little pleased that as of 2020, there is no change in the investment project of raised funds in garden biology.

In the annual report of 2020, garden biology has great expectations for Jinxi science and Technology Park, where the above-mentioned projects are located. "Jinxi science and technology park will integrate the company's more than 20 years of R & D and equipment accumulation, combine with the global market demand, adopt the most advanced automatic control technology, and build a highly digital and intelligent factory. The project of Jinxi science and Technology Park East area is planned to be completed and put into operation before the end of 2021. "

What is the purpose of introducing state-owned strategic investors?

The real controller of garden biology is Shao Qinxiang family, which holds 97% shares of Zhejiang Xiangyun Technology Co., Ltd. (hereinafter referred to as "Xiangyun technology") through its 100% holding garden group. According to the annual report of 2020, Xiangyun technology, the controlling shareholder, directly holds 31.2% of the shares of the listed company.

By January 2021, Xiangyun technology's shareholding ratio decreased from 31.2% (172 million shares) to 26.2% (144 million shares), which was due to a share transfer.

On January 18, this year, Xiangyun technology signed a share transfer agreement with Shanghai nuoti Asset Management Co., Ltd. (hereinafter referred to as "Shanghai nuoti"), transferring 5% of the shares (27.5505 million shares) to Shanghai nuoti Asset Management Co., Ltd. - Hefei Zhongan Haitong equity investment fund partnership (limited partnership) at a total price of 368 million yuan.

Through the ownership structure, we can see that Shanghai Nuo tie has local state-owned assets background.

According to the announcement, the largest shareholder of Shanghai nuoti railway is Anhui railway development fund Co., Ltd., with a shareholding of 35%; The second largest shareholder is Shanghai Gefei Asset Management Co., Ltd., holding 30%; The third largest shareholder is Ningbo Puxin enterprise management partnership (limited partnership), with a shareholding of 25%; The fourth largest shareholder is Shanghai Yu'an Investment Group Co., Ltd., holding 10%.

According to the public information, the actual controllers of the largest shareholder and the fourth largest shareholder of Shanghai Nuo rail are Anhui Investment Group Holding Co., Ltd. under the state owned assets supervision and Administration Commission of Anhui Province.

As for the share transfer, Huayuan Bio said that it was beneficial for Xiangyun technology to reduce its leverage and capital demand, introduce strategic investors and optimize the company's equity structure. However, the other side of the coin was that Huayuan bio made it clear when replying to investors' questions that "Shanghai nuoti, the second shareholder of the company, does not participate in the operation and management of the company".

As a matter of fact, the high pledge rate of the controlling shareholders of garden biology has a track to follow.

Before the above share transfer, as of March 20, 2019, the shares of listed companies held by Xiangyun technology had been pledged totaling 126 million shares, accounting for 72.76% of its shares; As of March 3 this year, Xiangyun technology has pledged 98.57 million shares of listed companies, accounting for 68.27% of the total.

The change of senior staff also happened quietly. In February this year, Huayuan biology held a general election of the board of directors, and Shao Xujun was elected as the chairman of the sixth board of directors of the company.

According to the articles of association, the chairman of the board of directors is the legal representative of the company. The legal representative of the company was also changed to Shao Xujun.

Previously, the chairman of garden biology was Shao Junfang, the daughter of Shao Qinxiang.

In addition, as of the end of 2020, Shao Qinxiang, founder of garden biology, is still a director of the company.

However, garden biology is only the tip of the iceberg of Shao Qinxiang's numerous industries.

The 21st Century Capital Research Institute inquired about the public information and learned that Huayuan Group has a huge industrial chain covering biomedical industry, basic materials and machinery manufacturing industry, mahogany furniture and wood products manufacturing, construction and real estate, traditional and educational industry, tourism, commerce and film and television culture.

Among them, in the biomedical industry, in addition to garden biology, it also holds Huayuan Pharmaceutical Co., Ltd., which has completed the joint-stock transformation, and its leading product xinnaojian tablet is the exclusive production in China and the national protected variety of traditional Chinese medicine.

The basic materials and machinery manufacturing industry involves Huayuan Copper Co., Ltd., Huayuan new energy Co., Ltd., Huayuan new material Co., Ltd., Huayuan Jinbo company; The mahogany furniture industry is mainly Dongyang garden mahogany furniture development Co., Ltd., which has built one of the largest professional markets of mahogany furniture in the world, garden mahogany furniture city, one of the largest precious timber trading centers in China; At present, the construction real estate industry involves the garden construction group and garden Jianda real estate; The traditional and educational industries involve enterprises such as huayuantian hospital, Laotang Ham Company, ecological agriculture company, Gujian garden company, Huayuan middle school, garden kindergarten, Huayuan foreign language school

According to the description on the official website of Huayuan Group, "by 2020, Huayuan Group will achieve a revenue of 32 billion yuan" and "Huayuan new materials, Huayuan Jinbo and Huayuan Pharmaceutical have also carried out shareholding system transformation and strive to be listed.".

Four "failed" reduction plans of directors and executives

In sharp contrast to the introduction of state-owned strategic investors, since June 1, 2018, the directors and senior managers of garden biology have put forward joint reduction plans for five times in a row, of which four of them have expired, but they have not actually reduced their holdings. The reasons are intriguing.

For example, on June 1, 2018, directors Ma Huanzheng, Liu Jiangang, Yu Quanheng, senior executives Qian Guoping, Liu Xiaoping, and senior executives Zhou Hongren issued a pre disclosure announcement on reducing their holdings. They plan to reduce their shares by centralized bidding or block trading within six months, which will not exceed 0.46% of the total share capital of the company.

Until December 25, 2018, the term of the reduction plan expired, and the above directors and executives did not reduce the corresponding shares.

On March 26, 2019, Shao Junfang, Ma Huanzheng, Liu Jiangang and Yu Quanheng, senior executives Qian Guoping, Liu Xiaoping, and Zhou Hongren, senior executives of garden biology, issued a pre disclosure announcement of reducing their holdings. They hold 5.64% of the shares of garden biology. They plan to reduce their shares by centralized bidding or block trading within six months, which will not exceed 1.23% of the total share capital of the company.

By October 17, 2019, the term of the reduction plan expired, and the above directors and executives did not reduce the shares of the company as scheduled.

On October 25, 2019, the directors and senior executives of Huayuan biological Co., Ltd. put forward the reduction plan again. However, as of May 15, 2020, the duration of the reduction plan expired, and the above directors and executives gave up the reduction plan again.

One day later, on May 16, 2020, Huayuan bio quickly released a pre disclosure announcement on the reduction of shares held by some directors and senior executives. Directors Shao Junfang, Ma Huanzheng, Liu Jiangang, Qian Guoping, Yu Quanheng, senior manager Liu Xiaoping, and senior executive Zhou Hongren plan to reduce their shareholding in the company within six months, The total reduction in the form of centralized bidding or block trading shall not exceed 1.43% of the total share capital of the company after excluding the repurchased shares.

As of December 4, 2020, the term of the reduction plan has expired. In the same way, the above directors and executives once again "broke faith" and did not reduce the shares of the company.

At the same time, in the announcement, the above-mentioned directors and executives also disclosed the plan to reduce the company's shares in the next period by means of centralized bidding or block trading, which will not exceed 1.24% of the total share capital of the company after excluding the repurchased shares.

The latest news is that as of March 28, 2021, more than half of the time has been reduced, and the above directors and executives have not actually reduced the shares of the company.

An intriguing detail is that, on the eve of the above directors and senior executives' selling of the reduction plan in 2018, the stock price of Huayuan bio reached a historical high of 25.46 yuan / share in recent three years. However, after the relevant news was put out, the trend of the secondary market was not as good as expected: Although the share price had a short-term temporary rise, for example, on June 11, 2018, its share price reached a regional high of 23.98 yuan / share, Another example is that from March 26, 2019 to June 20, 2019, its stock price once rose to the regional high of 21.65 yuan / share, but in the long run, it has been hovering at the low level of 10-15 yuan / share.

"It shows that the company's share price may not be a particularly suitable reduction range in terms of the secondary market." A person concerned about the secondary market pointed out.

In addition, there are few institutions to investigate garden biology.

According to the public information, garden biology disclosed a record of investor relations activities in 2018, 2019, 2020 and 2021. The latest institutional survey was in December 2020, half a year ago. It received on-site visits from Cathay Pacific Fund, Wanjia fund and Huatai Securities.

On May 7, 21st Century Capital Research Institute called Huayuan biology as an investor to inquire about its market performance. A person from the Securities Affairs Department of the other side said, "the company has become a global leader in the vitamin D3 segmentation industry, but the industry is too subdivided, and the topic may not be so popular in recent years."

As for the topic of market concern - whether garden biology will expand the downstream medical and health care product field, the person said, "the company has products used in health care products and food additives, mainly sold as intermediates to other companies."

Garden biology is quite clear about its future planning, trying to "create a complete upstream and downstream industrial chain of vitamin D3". Based on vitamin D3 products, it develops cholesterol and refined lanolin in the upstream raw materials, and gradually enters the field of cosmetics raw materials. In terms of downstream application, 25 hydroxyvitamin D3 and environmental rodenticide are introduced into the high-end field of vitamin D3; In the future, full active vitamin D3 and its analogues will be developed to enter the market of health care products.

However, how far is the goal of "vitamin D3 whole industry chain" and how to give investors more confidence seems to need more time to answer.