Nongfu Shanquans 9.6-billion dividend of 8.4 billion yuan goes into Zhong Zhuos pocket to borrow money before going public

category:Finance
 Nongfu Shanquans 9.6-billion dividend of 8.4 billion yuan goes into Zhong Zhuos pocket to borrow money before going public


According to the Yangtze Evening News, Nongfu mountain spring announced that the company had received listing guidance more than ten years ago and had been receiving listing guidance, but had no listing plan. Zhong Zhuo, the actual controller of Nongfu mountain spring, once said that the capital market stresses demand and demand, but Nongfu mountain spring has no demand now, so it does not need to be listed.

From 2017 to 2019, the operating revenue of Nongfu mountain spring was 17.491 billion yuan, 20.475 billion yuan and 24.021 billion yuan respectively; the net profit was 3.386 billion yuan, 3.612 billion yuan and 4.954 billion yuan respectively; the net cash generated from operating activities was 4.697 billion yuan, 4.630 billion yuan and 7.472 billion yuan respectively.

The revenue growth of Nongfu mountain spring is far higher than that of Chinas soft drink industry and the global soft drink industry. From 2017 to 2018 and from 2018 to 2019, the operating revenue of Nongfu mountain spring increased by 17.1% and 17.3% respectively over the previous year. According to frost Sullivan report, this growth rate is far higher than the growth rate of 5.0% and 6.6% of Chinas soft drink industry and 2.7% and 3.4% of the global soft drink industry in the same period.

The operating income of the packaged drinking water products of Nongfu mountain spring accounts for more than 50%. From 2017 to 2019, the business income of packaged drinking water products was RMB 10.12 billion, RMB 11.78 billion and RMB 14.346 billion respectively, accounting for 57.9%, 57.5% and 59.7% of the total business income respectively.

In 2017, 2018 and 2019, the sales and distribution expenses of Nongfu spring were 4.89 billion yuan, 5.218 billion yuan and 5.816 billion yuan, respectively. The business income distributed by Nongfu spring through distributors accounted for 95.0%, 94.6% and 94.2% of the total business income.

The main raw material used in the production of the products of Nongfu mountain spring is pet, which is used to produce the bottle body of the products. Pet is the largest component of raw material cost, accounting for 29.0%, 31.9% and 31.6% of sales cost in 2017, 2018 and 2019 respectively, corresponding to 12.7%, 14.9% and 14.1% of total revenue respectively.

In 2017, 2018 and 2019, the total purchases made by the top five suppliers were RMB 1.945 billion, RMB 3.175 billion and RMB 2.917 billion respectively, accounting for 39.9%, 43.0% and 39.3% of the total purchases. Four of the top five suppliers of Nongfu mountain spring are pet suppliers.

From 2017 to 2019, Nongfu mountain spring paid a total dividend of 10.332 billion yuan to shareholders. Among them, in 2017, 2018 and 2019, Nongfu mountain spring respectively paid dividends of RMB 367 million, RMB 367 million and RMB 9598 million to the shareholders of the company.

At the shareholders meeting of the company held in March 2020, Nongfu mountain spring declared a dividend totaling 900 million yuan, including a share dividend of 720 million yuan and a cash dividend of 180 million yuan. The dividends were paid in April 2020.

It is worth noting that from 2017 to 2019, the accumulated net profit of Nongfu mountain spring is 11.952 billion yuan, and the total dividend payout is close to the total net profit of three years.

According to the prospectus, Nongfu mountain springs interest bearing loans soared from 0 at the end of 2018 to 1 billion at the end of 2019, and further increased to 2.25 billion yuan by the end of March 2020, the China Times reported. At the end of 2019, the 1 billion yuan borrowed was used by Nongfu spring to offset the 9.6 billion dividend distributed in 2019. That is to say, before going public, Nongfu Shanquan will not hesitate to increase the repayment pressure of the company with loans, but also pay dividends to local tyrants.

The majority shareholder of Nongfu mountain spring is Zhong Zhuo, who owns 87.4% of the shares. In the past three years, he has received a total of 9.037 billion yuan in dividends. In particular, in the dividend in 2019, Zhong Zhuo alone received 8.39 billion yuan.

According to the investment times, nearly 10 billion yuan of dividend distribution has had an impact on many financial data of Nongfu Shanquan. In 2019, the companys cash, bank balance and structural deposits dropped to 1.083 billion yuan and 200 million yuan respectively. The total current assets decreased to 4.372 billion yuan from 8.841 billion yuan at the end of 2018, and the total current liabilities increased to 7.441 billion yuan from 6.163 billion yuan at the end of 2018.

The solvency of Nongfu mountain spring also weakened. The current ratio and quick ratio decreased from 1.43 and 1.13 at the end of 2018 to 0.59 and 0.35 at the end of 2019, respectively. The asset liability ratio increased from 31.19% at the end of 2018 to 44.47% at the end of 2019.

In addition, from 2017 to 2019, the total utilization rate of the production line of Nongfu mountain spring packaging drinking water products is 46%, 49% and 51%, the total utilization rate of the production line of beverage products is 54%, 52% and 52%, the total utilization rate of the fresh fruit juice line is only 7%, 5% and 3%, and the total utilization rate of the fresh fruit production line is only 7%, 7% and 4%, respectively. Even so, Nongfu mountain spring plans to further expand production capacity.

According to the daily economic news, on April 29, Wantai biology, which was actually controlled by Zhong Zhuo, officially entered the A-share market.

The issuing price of Wantai biology is 8.75 yuan per share, and the sponsor is Guojin securities. The total amount of the raised funds is 382 million yuan, and the net amount of the raised funds after deducting the issuing expenses is 318 million yuan, which are respectively used in the automation technology transformation and international certification project of the chemiluminescent reagent manufacturing system, the improvement and internationalization project of the cervical cancer vaccine quality system, the expansion of the marketing network center Project .

Since the official landing of A-share market on April 29, Wantai biology has harvested 26 wordboards in a row. As of yesterdays close, Wantai biology reported 158.30 yuan, down 0.81%, with a turnover of 838 million yuan and a turnover rate of 12.29%. Compared with the issue price, Wantai bios share price has risen 17.09 times.

The reporter of China economic network sent an interview letter to Nongfu Shanquan on relevant issues. As of the time of publication, no reply had been received.

Nongfu Shanquan to be listed on the Hong Kong stock exchange is expected to raise 1 billion US dollars

According to the prospectus, in September 1996, founder Zhong Zhuo founded the new Anjiang Yangshengtang drinking water Co., Ltd., the predecessor of Nongfu mountain spring in Zhejiang Province, with a registered capital of 20 million yuan. In June 2001, Nongfu mountain spring changed from a limited liability company to Nongfu mountain spring Co., Ltd.. After more than 20 years of development, Nongfu mountain spring has become the leading enterprise of Chinas packaged drinking water and beverage, covering the categories of packaged drinking water, tea beverage, functional beverage and fruit juice beverage.

The controlling shareholders of Nongfu spring are Zhong Zhuo and Yangshengtang, and the actual controller is Zhong Zhuo.

As of the last practical date, Zhong Yu holds about 87.4472% of the total equity of Nongfu mountain spring, including about 17.8634% of the direct equity and about 69.5838% of the indirect equity held through Yangshengtang. Zhong Yu holds 100% of the registered capital of Yangshengtang, including 98.3800% of the direct equity and 1.6200% of the indirect equity held by Hangzhou Youfu through Zhong Yu.

Zhong Zhuo, born in December 1954, Chinese nationality, without permanent residency abroad, college degree. Since 1993, he has worked in Yangshengtang Co., Ltd. and successively held the positions of executive director and general manager, director, chairman, etc.; since 2001, he has served as chairman of nongfushanquan; from 2001 to 2007, he has served as chairman of Wantai Co., Ltd.; since 2007, he has served as chairman of Wantai biology.

The fund raising scale of Nongfu mountain spring is estimated to be US $1 billion, which will be mainly used for continuous brand building, further expanding production capacity, increasing investment in infrastructure capacity building and exploring opportunities in overseas markets.

To be listed in A-share market 12 years ago

As early as may 22, 2008, Nongfu Shanquan signed A-share listing guidance agreement with CITIC Securities. However, ten years later, on December 29, 2018, the coaching agreement was terminated.

According to the report of CITIC Securities Co., Ltd. on terminating the guidance of Nongfu mountain spring Co., Ltd. issued by Zhejiang regulatory bureau of China Banking Regulatory Commission on January 12, 2019, on March 20, 2008, CITIC Securities and Nongfu mountain spring signed the cooperation framework agreement on the initial public offering of shares between Nongfu mountain spring Co., Ltd. and CITIC Securities Co., Ltd. on March 20, 2008 On May 22, 2008, he signed the consultation agreement on the initial public offering of shares between Nongfu mountain spring Co., Ltd. and CITIC Securities Co., Ltd. On December 29, 2018, through friendly consultation, Nongfu Shanquan and CITIC Securities signed the termination agreement of the above counseling agreement.

According to the Yangtze Evening News, Nongfu mountain spring later announced that the company had received listing guidance more than ten years ago and had been receiving listing guidance, but had no listing plan. Zhong has said that the capital market pays attention to demand and demand, but Nongfu mountain spring has no demand now, so it does not need to be listed.

Last years net profit of 4.954 billion yuan was higher than that of the soft drink industry

From 2017 to 2019, the operating revenue of Nongfu mountain spring was 17.491 billion yuan, 20.475 billion yuan and 24.021 billion yuan respectively; the net profit was 3.386 billion yuan, 3.612 billion yuan and 4.954 billion yuan respectively; the net cash generated from operating activities was 4.697 billion yuan, 4.630 billion yuan and 7.472 billion yuan respectively.

According to the prospectus, from 2017 to 2018 and from 2018 to 2019, the operating revenue of Nongfu spring increased by 17.1% and 17.3% respectively compared with the previous year. According to frost Sullivan report, this growth rate is far higher than the growth rate of 5.0% and 6.6% of Chinas soft drink industry and 2.7% and 3.4% of the global soft drink industry in the same period.

In 2017, 2018 and 2019, the net profit margin of nongfushan spring was 19.4%, 17.6% and 20.6% respectively. According to frost Sullivan report, this profit level is far higher than the average profit level of 6.9%, 7.1% and 9.6% of Chinas soft drink industry and the average profit level of 3.9%, 7.6% and 8.5% of the global soft drink industry in the same period.

Last years gross margin of packaged drinking water products was 60.2%

From 2017 to 2019, the gross profit of Nongfu mountain spring was 9.809 billion yuan, 10.921 billion yuan and 13.311 billion yuan respectively, with the gross profit rate of 56.1%, 53.3% and 55.4% respectively. Among them, the gross profit of packaged drinking water products is 6.123 billion yuan, 6.656 billion yuan and 8.633 billion yuan respectively, and the gross profit rates are 60.5%, 56.5% and 60.2% respectively.

In 2019, the gross profit margin of packaged drinking water products increased from 56.5% in 2018 to 60.2% in 2019, mainly because the average purchase price of pet decreased by 12.6% from 8097 yuan / ton in 2018 to 7074 yuan / ton in 2019; and the sales volume of packaged drinking water products packaged by shrink film with lower packaging cost increased faster than that packaged with cartons, The gross profit margin of packaged drinking water products was increased. The increase of gross profit margin was partially offset by the increase of sales proportion of medium and large-scale packaged drinking water products with relatively low gross profit margin.

In 2018, compared with 2017, the gross profit margin of packaged drinking water products decreased from 60.5% in 2017 to 56.5% in 2018, mainly because the average purchase price of pet increased by 26.0% from 6426 yuan / ton in 2017 to 8097 yuan / ton in 2018; and the sales proportion of medium and large-scale packaged drinking water products with relatively low gross profit margin increased.

Last years sales and distribution expenses reached 5.816 billion yuan

In 2017, 2018 and 2019, the sales and distribution expenses of Nongfu spring were 4.89 billion yuan, 5.218 billion yuan and 5.816 billion yuan respectively.

According to the prospectus, Nongfu spring has established a deep-seated national sales network. As of December 31, 2019, Nongfu mountain spring has covered more than 2.37 million terminal retail outlets across the country through 4280 distributors. Nongfu mountain spring cooperates with more than 3800 dealers every year. According to frost Sullivan, Nongfu mountain spring serves about 11% of all terminal retail outlets in China.

In 2017, 2018 and 2019, the operating revenue of Nongfu mountain spring distributed through distributors accounted for 95.0%, 94.6% and 94.2% of the total operating revenue.

The prospectus shows that due to the continuous expansion of business scale, the business capacity of dealers also needs to be improved accordingly. In 2017, 2018 and 2019, Nongfu spring terminated its business relationship with 1325, 995 and 489 dealers respectively. Nongfu Shanquans termination of business relationship with such distributors is mainly due to the following reasons: the distributors breach of the distribution agreement, the distributors poor distribution performance, and the distributors change of business focus or other reasons of its own. Due to the stable and mature quality and business capacity of the dealers, the number of dealers terminated by the dealers decreased year by year during the previous record period. Considering the needs of business development and the number of terminated dealers, in 2017, 2018 and 2019, Nongfu spring hired 884, 960 and 928 dealers respectively.

The main cost is pet

Pet is the largest component of raw material cost, accounting for 29.0%, 31.9% and 31.6% of sales cost in 2017, 2018 and 2019 respectively, corresponding to 12.7%, 14.9% and 14.1% of total revenue respectively.

According to the expectation of pet purchase price, the company strategically reserves more pet inventory when the price is relatively low to ensure the stability of raw material supply, said Nongfu Shanquan. Therefore, in 2017, 2018 and 2019, the average purchase price of pet for Nongfu mountain spring was 6426 yuan / ton, 8097 yuan / ton and 7074 yuan / ton respectively. According to frost Sullivan report, it was lower than the average annual pet price of 7910 yuan / ton, 9572 yuan / ton and 7628 yuan / ton in China.

In 2017, 2018 and 2019, the total purchases made by the top five suppliers were RMB 1.945 billion, RMB 3.175 billion and RMB 2.917 billion respectively, accounting for 39.9%, 43.0% and 39.3% of the total purchases.

Four of the top five suppliers of Nongfu mountain spring are pet suppliers. In 2017, 2018 and 2019, Nongfu mountain spring made purchases of 510 million yuan, 987 million yuan and 1080 million yuan from a single largest supplier, accounting for 10.5%, 13.4% and 13.6% of the total purchases respectively.

It is worth noting that in these three years, the accumulated net profit of Nongfu mountain spring is 11.952 billion yuan, and the total dividend payout is close to the profit of three years.

According to the prospectus, Nongfu mountain springs interest bearing loans soared from 0 at the end of 2018 to 1 billion at the end of 2019, and further increased to 2.25 billion yuan by the end of March 2020, the China Times reported.

At the end of 2019, the 1 billion yuan borrowed was used by Nongfu spring to offset the 9.6 billion dividend distributed in 2019. That is to say, before going public, Nongfu Shanquan will not hesitate to increase the repayment pressure of the company with loans, but also pay dividends to local tyrants.

According to the investment times, nearly 10 billion yuan of dividend distribution has had an impact on many financial data of Nongfu Shanquan. In 2019, the companys cash, bank balance and structural deposits dropped to 1.083 billion yuan and 200 million yuan respectively. The total current assets decreased to 4.372 billion yuan from 8.841 billion yuan at the end of 2018, and the total current liabilities increased to 7.441 billion yuan from 6.163 billion yuan at the end of 2018.

The solvency of Nongfu mountain spring also weakened. The current ratio and quick ratio decreased from 1.43 and 1.13 at the end of 2018 to 0.59 and 0.35 at the end of 2019, respectively. The asset liability ratio increased from 31.19% at the end of 2018 to 44.47% at the end of 2019.

Capacity utilization rate is less than 70%

According to the investment times, from 2017 to 2019, the total utilization rate of the production line of nongfushan spring packaged drinking water products was 46%, 49% and 51%, the total utilization rate of the production line of beverage products was 54%, 52% and 52%, the total utilization rate of the fresh fruit juice line was only 7%, 5% and 3%, and the total utilization rate of the fresh fruit production line was only 7%, 7% and 4%, respectively.

Even so, Nongfu mountain spring plans to further expand production capacity. At present, it is expanding its production plants in Qiandao Lake, Zhejiang Province, Wanlv lake, Guangdong Province and Changbai Mountain, Jilin Province. It is estimated that the annual production capacity will reach 2.086 million tons, 2.263 million tons and 2.027 million tons respectively. However, in 2019, the capacity utilization rates of the three production bases are only 61%, 65% and 44% respectively, and the capacity utilization rates of beverage products are only 60%, 65% and 44% respectively. After the project is completed and put into operation, it is expected that the capacity utilization rate of the three places will be further reduced.

Controlling peoples wealth

In 2019, Zhong was ranked 186th on Forbes 2019 China rich list with 13.79 billion yuan of wealth. According to the Forbes 2020 rich list, Zhongs wealth has increased by $200 million to $2 billion (about 14.1 billion yuan) compared with 2019.

Since the official landing of A-share market on April 29, Wantai biology has harvested 26 wordboards in a row. As of yesterdays close, Wantai biology reported 158.30 yuan, down 0.81%, with a turnover of 838 million yuan and a turnover rate of 12.29%.

According to the data, Zhong Yu directly holds 18.17% of the shares of the listed company, and at the same time holds 56.98% of the shares of the company through the wholly-owned Yangshengtang Co., Ltd. (hereinafter referred to as Yangshengtang).

In addition, the companys core holding platform enterprise is Yangshengtang, which is directly held by Zhong. The remaining 1.62% is held by Hangzhou Youfu, which is wholly-owned by Zhong. The company is mainly engaged in the investment in large health field. By the end of 2018, the total assets of Yangshengtang were 2.877 billion yuan, the net assets were 2.688 billion yuan, and the net profit of that year was 453 million yuan.

According to the data disclosed by Wantai biology, Yangshengtang controls nearly 80 companies, whose business covers beverage and drinking water, leisure food, cosmetics, health care products, medicine and other fields. The first level subsidiaries include Nongfu mountain spring, Yangshengtang Pharmaceutical Co., Ltd., Yangshengtang Zhejiang Food Co., Ltd., Yangshengtang (Anji) intelligent life Co., Ltd., Wantai biology, etc.

The reporter noted that in the equity structure of family members of Yangshengtang, the Zhongzhuo family is the only one. In addition to Wantai biology and nongfushan spring, other companies of the Yangshengtang system are wholly owned by or through Zhongzhuo.

Once listed as dishonest executor

Nongfu mountain spring has also been listed as a historical executor 24 times.

In addition, Nongfu mountain spring was given administrative punishment by the public security branch of West Lake District on September 1, 2018 for violating the computer information system security level protection system.

Source: Wang Xiaowu, editor in charge of China Economic Net_ NF