The First Backdoor Huatong Pharmaceutical Reorganization in the Supply and Marketing System Meets Small Challenges

 The First Backdoor Huatong Pharmaceutical Reorganization in the Supply and Marketing System Meets Small Challenges

The reason is that the outside world generally regards this transaction as an internal friendship of the supply and marketing cooperative system, and also gradually realizes the securitization of the assets of the supply and marketing cooperatives in Zhejiang Province.

The listed companies in the national supply and marketing cooperative system are more representative, such as Zhongnong Lihua (603970.SH), Huilong (002556.SZ) and Swan (603029.SH), which are controlled by Anhui supply and marketing cooperatives. If the national supply and marketing cooperative system is listed and controlled internally, we are the first one.

On October 10, 21st Century Economic Report participated in the media presentation of Huatong Pharmaceutical (002758.SZ) major asset restructuring. Wang Luping, chairman of Zhejiang Agricultural Co., Ltd., seemed to show the confidence and ambition of the target party.

What kind of changes will this restructuring bring to Huatong pharmaceutical? For zhenong shares, which are newly registered in the capital market, the road will obviously be long.

Internal Friendship of Supply and Marketing Cooperative System

As listed companies Huatong Pharmaceutical and Zhejiang Agricultural Shares are both supply and marketing cooperative enterprises, as an asset restructuring within the supply and marketing system, the transaction has been highly expected by the competent authorities.

According to the draft restructuring on the evening of September 17, Huatong Pharmaceutical intends to issue shares to purchase 100% of Zhennong Holdings, Taian Tai, Xinghe Group, Xinghe Venture Capital and Wang Lupings 16 natural persons (hereinafter referred to as Zhennong Share) with a price of 2.667 billion yuan.

The deal is expected to form a backdoor listing.

In the afternoon, Wang Luping, chairman of Zhejiang Agricultural Co., Ltd., said on the spot of the restructuring meeting, This transaction is the continuation and deepening of the market-oriented integration reform in the supply and marketing cooperative system of Zhejiang Province. It is conducive to relying on the platform of listed companies to build the leading enterprises of the national supply and marketing cooperative system.

In addition, participants also disclosed that the reorganization is the decision-making and arrangement of Zhejiang Provincial Supply and Marketing Co-operatives.

On May 27, 2015, Huatong Pharmaceutical was listed on the SME board of Shenzhen Stock Exchange.

The Zhejiang Agricultural Share, which is to be injected, can be traced back to Zhejiang Agricultural Production Material Company, which was founded in 1952. Zhejiang Agricultural Holdings, a major shareholder, is the platform of Zhejiang Provincial Supply and Marketing Cooperative Union.

In terms of agricultural circulation services, Zhejiang Agricultural Co., Ltd. has established a distribution network including 9 regional distribution centers, 39 county-level distribution centers and nearly 2000 grass-roots agricultural chain outlets in Zhejiang Province. In Beijing, Shanghai, Jiangsu, Anhui, Sichuan, Hainan, Shandong, Shaanxi, Hunan, Liaoning, Jiangxi and Fujian provinces, there are regional companies. u3002

In terms of automobile circulation services, its business includes vehicle sales, maintenance and other integrated services.

Lin Changbin, general manager of Zhejiang Agricultural Stock Company, introduced on the spot, The companys automobile sales started in 1994, and established a department in 1994. In 2000, this department was transformed into an automobile sales group. It is one of the earliest and most exemplary automobile distribution enterprises in Zhejiang Province and even in the whole country.

Zhejiang Agricultural Co., Ltd. has long been prepared to take over Huatong Pharmaceutical Co., Ltd.

Before that, on September 1, Zhejiang Agricultural Holdings signed an equity transfer agreement with Huatong Group, the controlling shareholder of listed companies. 57% of the shares of Huatong Group will be transferred to Zhejiang Agricultural Holdings in accordance with the 719 million yuan consideration agreement. As a result, Zhejiang Agricultural Holdings indirectly controls 26.23% of Huatong Pharmaceutical through Huatong Group, and Zhejiang Provincial Supply and Marketing Co., Ltd. becomes the new actual controller of listed companies.

With this backdoor listing, Zhejiang Agricultural Holdings and its affiliates Xinghe Group and Xinghe Venture Capital will control 44.97% of the shares of listed companies.

Perhaps it is precisely because this reorganization involves a lot, but also led to the uncontrollable episode.

Some trading partners and their spouses and children buy and sell stocks, which seems to be a minor episode, shadowing the asset restructuring.

From the time line, on April 8 this year, Huatong Pharmaceutical Disclosure Announcement said that it was planning to acquire 100% of Zhejiang Agricultural Stock by issuing shares to purchase assets.

Prior to that, on April 4, Huatong Pharmaceutical signed the Intention Agreement on the transfer of equity with Zhennong Holdings and Zhennong Shares.

By April 19, Huatong Pharmaceutical disclosed its plan for issuing shares to purchase assets and related party transactions, and the draft transaction was disclosed on the evening of September 17.

The 21st Century Economic Reporter found that the purchase time of the above natural persons was mainly concentrated in February and early March 2019, which was very close to the time of Huatong Medical Disclosure Planning and Reorganization.

At present, Qiu Huiliang has 54300 shares, Qiu Mengyuan has 59500 shares, Ma Qun has 20000 shares, Shi Jianfeng has 1600 shares, Shi Zufa and his spouse Shi Qiong have 0 shares, Zhang Ruhe has 0 shares, and Shi Yule has 0 shares.

From the point of view of the trend, Huatong Pharmaceuticals stock price rose from the end of February to the middle of April, reaping a trading stop on April 22 and two consecutive days on September 17 and 18.

In fact, its not just these natural people who are caught in this kind of insider trading suspicion.

According to the public data, as an independent financial consultant, Haitong Securities Asset Management Co., Ltd., a wholly-owned subsidiary of Haitong Securities, also sells and sells Huatong Pharmaceutical Stocks frequently, such as Haitong Half-year Rise, Haitong Jiuying No. 3, Haitong Hailan Baoyin, Haitong Hailan Blue Consumption Selection.

After the relevant data were found by self-examination, the above-mentioned natural persons who participated in stock trading said: During the self-examination period, all the gains from my trading in Huatong Pharmaceutical Stock will be owned by Huatong Pharmaceutical after restructuring. Haitong Securities also explained that the above-mentioned fund products mainly adopt quantitative hedging strategy and quantitative model for stock trading.

In reply to the 21st century economic report, Ni Chihang, Secretary of Huatong Pharmaceutical, explained that there are individual counterparties, their relatives and executives who buy and sell company stocks during the self-examination period. They do not know about the companys major asset reorganization before verification, and there is no correlation between their stock trading behavior and the companys major asset reorganization.

The 21st Century Economic Reporter refers to the annual reports of public funds in 2019 and 2018. The institutional investors who hold Huatong Pharmaceutical at the two time nodes are only a few active investment funds, such as Noan Pioneer Mixed Fund and Financial Flux Core. This also makes Huatong Medicine suddenly attracted the attention of Haitong Securities and some related natural persons, which is interesting.

Whether insider trading is involved remains to be verified by regulation. It remains to be seen whether the present situation can bring this reorganization to a successful conclusion. A large investment banker in Beijing said in an interview with our reporter.

Original assets are not difficult

It is worth mentioning that Huatong Pharmaceuticals original assets and business are not disposed of in this restructuring.

This also means that, through various efforts, the asset securitization advantage of the original industry of listed companies will not be abandoned.

According to the 21st century economic reporters, this is different from the previous choice of internal asset restructuring in many regions. Many places are willing to build a brand new platform for listed companies through asset disposal.

The most difficult question is how to integrate Huatong Pharmaceuticals original medical business with the agricultural and automobile circulation business of Zhejiang Agricultural Stock Company. What is the strategic orientation of listed companies after restructuring?

After the completion of this transaction, listed companies will become the main products of Zhejiang Provincial Supply and Marketing Co., Ltd. covering agricultural materials, automobiles, and the integrated service platform of urban-rural integration of Commerce and trade circulation of medicine at the same time. On October 10, Qian Mushui, chairman and general manager of Huatong Pharmaceutical Co., Ltd., said at the restructuring briefing.

Wang Luping, chairman of Zhejiang Agricultural Co., Ltd. further explained that after the reorganization, the existing business of listed companies and related business of Zhejiang Agricultural Co., Ltd. will explore the combination of circulation commodity varieties, the combination of circulation channels and networks, and the mining and sharing of customer data; strengthen the construction of headquarters of listed companies; at the same time, build the business management and control of division of labor and cooperation with the core of agricultural, automotive and pharmaceutical circulation service operators. System.

The draft transaction shows that the core members of Zhejiang Agricultural Stock Company have entered the board of directors of listed companies.

According to the Share Transfer Agreement, most of the seats on the board of directors of listed companies will be nominated and recommended by Zhejiang Agricultural Holdings. The general manager, deputy general manager, chief financial officer and Secretary of Directors recommended by Zhejiang Agricultural Holdings will be appointed after approval by the board of directors. At the board meeting held on September 24, 2019, Huatong Group nominated Wang Luping, Bao Zhonghai, Lin Changbin, Qian Mushui, Liu Wenqi and Jinding as non-independent directors of the Fourth Board of directors.

Some respondents were also concerned that the non-disposal of assets would lead to excessive burden.

From 2016 to 2018, Huatong Pharmaceutical realized revenue of 1.258 billion yuan, 1.369 billion yuan and 1.523 billion yuan respectively, while its net profit attributed to the owner of the parent company was 40.1552 million yuan, 42.0638 million yuan and 34.5633 million yuan respectively, showing a downward trend and falling into a strange circle of income increase.

Zhejiang Agricultural Co., Ltd. is indeed more eye-catching than Huatong Pharmaceutical Co., Ltd.

In the first quarter of 2016, 2017, 2018 and 2019, Zhejiang Agricultural Stock Company realized revenue of 14.596 billion yuan, 18.74 billion yuan, 22.714 billion yuan and 5.468 billion yuan respectively. The net profits attributable to the owner of the parent company were 218 million yuan, 230 million yuan, 255 million yuan and 47.5312 million yuan, respectively.

However, financial data also show that the amount of non-recurring gains and losses of Zhejiang Agricultural Stock Company in these years is relatively large. In 2016, 2017, 2018 and January-March 2019, after deducting the impact of minority shareholdersgains and losses, the non-recurring gains and losses are 41.699 million yuan, 36.6272 million yuan, 55.748 million yuan and 36.989 million yuan, respectively.

After acquiring the controlling rights of listed companies, Zhejiang Provincial Supply and Marketing Co., Ltd. will further integrate the superior resources on the platform of listed companies. This major asset reorganization is one of the important steps of the integration plan, and the follow-up plan will be based on the announcement, Wang Luping said.

Source: Responsible Editor of Economic Report in the 21st Century: Chen Hequn_NB12679