7 billion fund raising is a cover for the development of Shuanghui, which is to increase encircle money?

category:Finance
 7 billion fund raising is a cover for the development of Shuanghui, which is to increase encircle money?


Upstream where layout is not needed

The 7 billion yuan fixed increase plan of Shuanghui development mainly involves five construction projects. Among them, forty-three point two 100 million yuan for the construction of broiler and pig breeding projects; Three point six Billion yuan for pig slaughtering and upgrading of the production line of conditioning products; Two point seven Hundred million yuan is used for upgrading meat products processing line; Seven point five The remaining 1.3 billion yuan will be used to supplement working capital.

It can be found that the planned investment amount of laying out broiler and pig breeding is the largest in this fixed increase plan. Among them, the broiler breeding project plans to use the raised funds thirty-three point three Hundred million yuan, the pig breeding project plans to use the raised funds Nine point nine Billion yuan.

Since the second half of 2018, affected by African swine fever, pork prices have skyrocketed. The demand for chicken substitutes has also increased, and the prices of related products have also increased significantly. As a result, the gross profit margin of Shuanghui development meat products decreased. In 2019, the gross profit rate of high-temperature meat products developed by Shuanghui is 30.05% , down year on year one point five two Percentage points. The gross profit margin of low-temperature meat products is 25.59% , down year on year two point four nine Percentage points.

At present, the upstream aquaculture scale of Shuanghui is not large. Its productive biological assets are also declining year by year, with only 54 million yuan in 2019, down year on year 17.67% u3002 Wanzhou International, parent company of Shuanghui Development Holding Co., Ltduff08 0288.HK uff09According to the segment revenue data of, the aquaculture business of Shuanghui development in 2019 is only about $20 million (internal transactions are not offset). Operating profit is a loss of $13 million. The main reason for the loss is the small scale of cultivation.

In fact, Shuanghui has always relied on imports to develop meat raw materials, but this is also its unique advantage. The reason is that the parent company of Shuanghui development also wholly controls Smithfield food company, the largest meat processing enterprise in the United States (hereinafter referred to as Smithfield). Due to the lower price of pork and chicken in the United States, the cost of meat in Shuanghui development is equal to the sum of the price of meat, tariff and transportation fee in the United States. Shuanghui development will allocate pork between different regions according to the price difference between China and the United States. The larger the price difference, the more profitable the company will be. In 2019, about fifty-eight point seven Billion yuan, more than double the import of split meat in 2018. In the first quarter of 2020, the meat import of Shuanghui development increased to 3 billion year-on-year, and it is expected that the meat import volume will increase substantially in the whole year. It can be seen that the purchase cost of Shuanghuis meat development is not limited by the insufficient cultivation capacity.

Although Shuanghui development also has a certain proportion of outsourcing, once the price rises too much, the company will increase the amount of pork imported from the United States to earn more price difference. In the future, if China and the United States are allowed to eliminate the additional tariff, the import pork tax can be reduced from 63% to 33%, which will further expand the price gap.

Photo source: Wanzhou International Annual Report

Replenish current cash? But Shuanghui is not short of money

Shuanghui development said that in the past few years, its business has grown rapidly and its debt level has also improved. Therefore, it has decided to use 1.3 billion capital raised to meet the needs of daily business development and reduce the asset liability ratio.

But is Shuanghui really short of money?

Although the debt ratio of Shuanghui development has increased in recent years, it has not affected the solvency. As of the first quarter of this year, the current ratio and quick ratio of Shuanghui development are respectively one point five seven and zero point eight five , the epidemic did not have a significant impact on the company.

In 2019, Shuanghui development realized operating revenue six hundred and three point four eight Billion yuan, year-on-year growth 23.43% , the fastest growth rate since 2010. Net profit attributable to parent realized in the same period fifty-four point three eight Billion yuan, year-on-year growth 10.7% u3002 In the first quarter of this year, Shuanghuis operating revenue increased 46.94% , net profit growth 13.65% , showing an accelerated growth trend.

Book cash of Shuanghui development as of the first quarter report fifty-three point three Billion yuan. All of these questions the need for 1.3 billion yuan to replenish liquidity.

It is worth noting that the dividend plan of Shuanghui development in the next three years will be released together with the fixed increase plan.

Then, if this fixed increase meeting is held, will the construction of various projects of Shuanghui development in the future belong to major capital expenditure? In the dividend plan of this Shuanghui development, the company said: in the next three years, the company will actively adopt the cash method to distribute profits. Under the condition of complying with the provisions of relevant laws and regulations, the articles of association and cash dividend, the companys annual profits distributed in cash shall not be less than 30% of the distributable profits realized in the current year. Does this indicate that the high dividend ratio of Shuanghui in the past will decrease? In addition, if the non-public offering is completed, Wanzhou International, the controlling shareholder of Shuanghui Development Co., Ltduff08 0288.HK uff09The shares of 73.41% Diluted to 66.74% about. It is worth noting whether Wanzhou International will increase its holdings of some stocks of double exchange through fixed increase. Source: editor in charge of interface news: Yang Bin_ NF4368

Then, if this fixed increase meeting is held, will the construction of various projects of Shuanghui development in the future belong to major capital expenditure? In the dividend plan of this Shuanghui development, the company said: in the next three years, the company will actively adopt the cash method to distribute profits. Under the condition of complying with the provisions of relevant laws and regulations, the articles of association and cash dividend, the companys annual profits distributed in cash shall not be less than 30% of the distributable profits realized in the current year. Does this indicate that the high dividend ratio of Shuanghui in the past will decrease?

In addition, if the non-public offering is completed, Wanzhou International, the controlling shareholder of Shuanghui Development Co., Ltduff08 0288.HK uff09The shares of 73.41% Diluted to 66.74% about. It is worth noting whether Wanzhou International will increase its holdings of some stocks of double exchange through fixed increase.