Looking at the quality of the farming model through Zhengbang

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Summary: Through Zhengbang, we can draw the following conclusion: the farmer + company cooperation model expands rapidly when the industry is pro-cyclical, but the probability of collapse when the industry is counter-cyclical is also several times higher than self-propagation.

At the bottom of every pig cycle, there is a listed company that goes bankrupt and delists. The last time was Young Eagle Farming and Animal Husbandry. This time everyone turned their attention to Zhengbang Technology. Zhengbang lost a total of 18.8 billion in 2021, New Hope lost 9.5 billion last year, and Wen’s lost 13.5 billion last year, but Wen’s and New Hope still have more than 10 billion in cash in their accounts, and Zhengbang has only more than 3 billion in their accounts. .

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The most important thing is that the huge loss last year and the loss in the first quarter of this year have caused Zhengbang’s undistributed profits to continue to decrease, and the owner’s equity and net assets are about to become negative. Once no new capital enters, Zhengbang will face bankruptcy and liquidation ( At present, it is known that Jiangxi Province has invested 15 billion state-owned capital. At present, Zhengbang also sells the feed factory to Dabeinong, but according to the forecast in the semi-annual report, it should not be sold in the first half of the year. In July this year, a reporter from the Financial Associated Press found that there were many surrogate farmers who would rather starve pigs than feed them. The reason behind this is that Zhengbang’s capital chain is broken and cannot provide feed to farmers. Combining these signs, the image of Zhengbang gradually faded in my mind – a company + farmer’s pig-raising enterprise, its own management is poor + its positioning is chaotic (there are self-propagation and self-support, and there are companies + farmers, and this year’s management It is actually said that self-propagation and self-support make more money?) The break in the capital chain further strengthens the impact of the pig cycle on enterprises. Next, I would like to see from the annual report whether my impressions are in line.

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As can be seen from the 2019 annual report and the 2020 annual report, the company has transformed from the previous production and sales of feed, live pigs, veterinary drugs and pesticides to feed, pig raising, and veterinary drugs, among which the pesticide business has been divested. The feed business mainly provides pig feed, poultry feed and a small amount of aquatic feed and ruminant feed. The product structure is mainly full-price feed, and premix and concentrate products have also formed a certain scale. Feed products are mainly used for farmers to feed livestock, poultry, fish and shrimp and other aquatic products, providing necessary nutrients for the growth of livestock, poultry and aquatic products; the main products of the pig breeding business include piglets and fat pigs. The company sells fat pig products as Mainly, fat pig products are mainly sold to wholesalers, meat joint factories and meat food processing factories for slaughtering and deep processing, and piglet products for export account for a small proportion. The main products of the veterinary drug business are veterinary drugs for pigs and poultry. The company mainly independently develops, produces and sells veterinary drugs, mixed feed additives, pre-mixed feed additives and other products. Veterinary medicinal products are mainly used for the prevention, treatment, diagnosis of animal diseases or the purposeful regulation of animal physiology

Zhengbang believes that the “feed-veterinary medicine-pig breeding” business constitutes a complete agricultural and animal husbandry industry chain , forming a strategic development pattern in which the upstream and downstream of the industry chain are highly correlated and mutually supportive. In fact, for the farming model of farmers + companies, I think it is no problem. After all, your company wants to provide farmers with pigs + feed + vaccines, so the natural cost of your own production will be lower. This is also reflected in the 2020 annual report. The gross profit of Zhengbang’s pig farming business is 27%, which is higher than the 23% gross profit. New Hope, both of them are feed + pig raising, and they are both mixed feeds, so the comparability is relatively strong. The feed business is divided into: dealer model, pig farm direct sales model and pig farm custody model, the first two are well understood , The pig farm trusteeship model means that the company signs a trusteeship agreement with a large-scale pig farm. The direct sales model is that the company provides in-depth breeding technical services to large-scale farmers, and directly provides feed product supply. From the perspective of the annual report, distribution is supplemented, mainly direct sales . and hosting

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What I am more curious about is that Zhengbang has a small business, food business. I first saw this business in the revenue structure, but there is no explanation below, so I searched and found that there is a small word at the very front – operation Prepackaged food and then gone. The strangest thing is that there is no gross profit margin in the business of Zhengbang’s annual report. I have to look for a comparison of operating costs below. I don’t know if I don’t find it. Hey, food business, what is the gross profit margin? 2.1%, directly bored me.

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I went to the official website to check the food business of Zhengbang, just this picture, have you ever eaten the above? I haven’t seen it anyway. But the revenue of 800 million yuan and the gross profit of 2.1% are really excessive.

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From the annual reports of 2018, 19, 20, and 21, it can be seen that Zhengbang used to be mainly engaged in feed. When the super pig cycle in 2019 came, it adjusted its strategy to focus on pig raising and cut the feed business. It has also reached its peak, deducting 6 billion non-profits. I have to admit that the management strategy is still very clever. When I take advantage of the trend, I take the express train of the pig cycle, but I choose the farmer + company model. This model expands very quickly in the early stage, because you don’t need to build a factory, but directly provide piglets to farmers, and then provide feed and vaccines on a regular basis. There are few problems in the pro-cyclical period, but what about the counter-cyclical? The price of pork fell back to 10 yuan per kilogram in less than a year. The company made a loss once it collected pigs. After that, there was no cash flow for the loss. The company didn’t even have the money to buy feed. No more. Now Zhengbang is still busy clearing farmers and owes a lot of money on behalf of the family. I don’t know how to solve it later.

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At present, Zhengbang is frantically cleaning up its assets and selling everything that should be sold. Several feed mills have yet to be sold, and the food business is handed over to the group.

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Let me tell you my opinion: At present, the net assets of Zhengbang are at risk, but the country has a pork bottom policy, and there are sows and breeding sows indicators in various places, so local governments will be busy saving those pig companies that are going bankrupt, and Zhengbang is going to go bankrupt. Likelihood will decrease. (Currently, Zhengbang has a credit line of 8 billion yuan, and the debt of 18.8 billion yuan that is about to expire may have to be extended. Because of the policy above, the bank will not take out the loans of the loss-making pig enterprises. This year, the bank is too difficult, and it is real estate and pig. of).

Zhengbang also signed a smart energy project this year. I thought that Zhengbang would raise new energy pigs. As a result, I found this paragraph in the inquiry letter: Financing through green bonds and other methods, good guy, under the banner of new energy, we will use the funds of new energy to make up for the gap in raising pigs, right? (Just kidding, this should be It’s pig companies catering to carbon neutral development, but I feel like something that Zhengbang can do)

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At present, Zhengbang is still losing money in the second quarter, but the loss has narrowed to about 2 billion. If it sells the feed factory, it can make up for the 2 billion, but it seems that something has gone wrong on the farmer’s side. He dragged the farmers’ wages and ran away Well, I don’t know how to solve it later. In general, Zhengbang should not die. After all, the government is behind it, but it has only forced the banks and taxpayers like us to take care of poorly managed companies. As for whether you have a chance, I can only tell you that the odds are very high. If you want to bet that Zhengbang will not die, and the follow-up Jingjin business focuses on the success of raising pigs, I estimate that at least 50 billion will be no problem, but the probability very low. Not to mention whether you can turn over in Zhengbang, how can you PK with a low-cost madman like Mu Yuan after turning over? The management of Zhengbang does have a strategic vision, but they have not considered the risks at all. In fact, the cooperative farmers of the eagle farming and animal husbandry in the last pig cycle had a big problem. The super pig cycle still chooses company + farmer expansion. Hey, I don’t know if there is a problem with the management’s character or the strategy.

# Investment Alchemy Season in 2022# #Today’s topic# @雪ball creator center @Today’s topic $ Muyuan Shares (SZ002714)$ $ Zhengbang Technology (SZ002157)$ $New Hope (SZ000876)$

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