From March last year to now, Dongfang Shenghong has launched three employee stock ownership plans within 15 months. This frequency is very rare among A-share listed companies. What is even more rare is the large average self-raised amount of the company’s employee stock ownership plan.
The average self-raised amount of employees in the second, third and fourth employee stock ownership plans of the company was 551,000 yuan, 1.3189 million yuan and 1.68 million yuan respectively. If an employee participates in all three shareholding plans, then the average payment amount is 3.55 million yuan. Even based on housing prices in Suzhou, where Dongfang Shenghong is located, this amount of money is enough to buy a house of 140 square meters. According to the annual report, the salary of Pang Quanfang, the company’s supervisor and head of the audit and supervision department, in 2022 is 347,900 yuan, which is equivalent to her 10-year salary.
Wang Jun, secretary of the company’s board of directors, joined Dongfang Shenghong at the end of 2019, and participated in the first employee stock ownership plan in 2020 and the other three employee stock ownership plans from 2022 to the present. As an executive, his share of participation is higher than that of ordinary employees, and the total self-raised funds of the four stock ownership plans are 12.5 million yuan. And his salary in 2022 is 1.3555 million yuan. Not only did he put all his salary for three and a half years into the employee stock ownership plan, but he also paid about 8 million yuan out of his own pocket. This is more than that, just in May of this year, Wang Jun also participated in the plan to increase the holdings of executives, increasing his holdings by about 8.8 million yuan.
However, the evaluation of Dongfang Shenghong in the secondary market seems to run counter to the company’s employees’ own optimism about the stock price. On August 31, 2022, the second phase of the employee stock ownership plan of Dongfang Shenghong completed the stock purchase, with an average transaction price of 16.78 yuan per share. On March 15, 2023, the third-phase employee stock ownership plan of Dongfang Shenghong completed the stock purchase, with an average transaction price of 14.57 yuan per share. On May 19, when the company announced the plan to increase the holdings of executives, the stock price was 11.45 yuan per share. Now, the stock price of Dongfang Shenghong is 11.30 yuan per share. The decline in profits and the aggressive expansion under 100 billion debts may all affect the market’s valuation of Dongfang Shenghong.
“The company’s current asset and liability structure is reasonable and healthy, which is in line with the company’s industry and the characteristics of the company’s current rapid development stage. The company has strong financing capabilities, extensive financing channels, and good cooperation with financial institutions. With the company’s major projects being put into production and stable operation , The cash flow of the company’s operating activities will be further improved, providing a sufficient source of capital turnover for the company’s production and operation.” Dongfang Shenghong said in response to the interview letter from the “China Times” reporter.
The first two phases of the three-phase employee stock ownership plan have been locked in within 15 months
In just one year, Dongfang Shenghong launched three employee stock ownership plans.
In March 2022, Oriental Shenghong launched the second phase of the employee stock ownership plan, planning to promote the employee stock ownership plan to no more than 2,958 employees. This phase of the plan plans to raise a total of no more than 3.26 billion yuan, of which employees’ self-raised funds will not exceed 1.63 billion yuan. Based on this calculation, the average self-raised amount of employees is 551,000 yuan.
In November 2022, the company launched the third phase of the employee stock ownership plan, and plans to promote the employee stock ownership plan to no more than 516 employees. The total amount of funds to be raised initially for this phase of the employee stock ownership plan shall not exceed 1.36 billion yuan, of which the self-raised funds of employees shall not exceed 680 million yuan. Based on this calculation, the average self-raised amount of employees is 1.3189 million yuan.
The latest fourth phase of the employee stock ownership plan was launched in June this year. The company plans to raise 640 million yuan from 380 employees to participate in the stock ownership plan, and then enlarge it to 1.28 billion yuan through financing. The average self-raised amount of each employee is 1.68 million yuan.
If an employee participates in all three employee stock ownership plans, then based on the average self-raised amount, he needs to raise 3.55 million yuan. Dongfang Shenghong is headquartered in Suzhou. In May of this year, the average transaction price in the Suzhou property market was 25,724 yuan/㎡, and 3.55 million yuan was equivalent to a 140-square-meter house.
Even for the middle managers of Dongfang Shenghong, this is not a small sum of money. According to the annual report, the salary of Pang Quanfang, the company’s supervisor and head of the audit and supervision department, in 2022 is 347,900 yuan, and 3.55 million yuan is equivalent to her 10-year salary. In fact, Pang Quanfang’s participation was shown in the plans of the second and third employee stock ownership plans, and she raised a total of 2 million yuan to participate, but in the fourth employee stock ownership plan, her name did not appear again.
Wang Jun, secretary of the company’s board of directors, joined Dongfang Shenghong at the end of 2019, and participated in the first employee stock ownership plan in 2020 and the other three employee stock ownership plans from 2022 to the present. As an executive, his share of participation is higher than that of ordinary employees, and the total self-raised funds of the four stock ownership plans are 12.5 million yuan. And his salary in 2022 is 1.3555 million yuan. Not only did he put all his salary for three and a half years into the employee stock ownership plan, but he also paid about 8 million yuan out of his own pocket. This is not enough, just in May of this year, Wang Jun also participated in the plan to increase the holdings of executives, increasing the holdings by about 8.8 million yuan.
Even though the employees have paid their fortunes to the company, the evaluation of Dongfang Shenghong in the secondary market has been falling all the way. On August 31, 2022, the second phase of the employee stock ownership plan of Dongfang Shenghong completed the stock purchase, with an average transaction price of 16.78 yuan per share. On March 15, 2023, the third-phase employee stock ownership plan of Dongfang Shenghong completed the stock purchase, with an average transaction price of 14.57 yuan per share. On May 19, when the company announced the plan to increase the holdings of executives, the stock price was 11.45 yuan per share. Now, the stock price of Dongfang Shenghong is 11.30 yuan per share. The second phase of the employee stock ownership plan fell by more than 30%, and the third phase of the employee stock ownership plan fell by more than 20%.
It is worth noting that in several employee stock ownership plans, there is a “guaranteed bottom” design. The major shareholder, Shenghong Technology, provides a backing guarantee for employees’ self-raised funds and expected returns, and guarantees that the annualized rate of return of employees’ contributions will not be less than 8% based on simple interest. This design is used in many listed companies. If the stock price still cannot recover when the employee stock ownership plan sells the stock, the financial strength of the major shareholder will face a test.
“The total number of participants in the listed company’s employee stock ownership plan this time does not exceed 380, mainly senior managers of the listed company and its subsidiaries, who are the company’s core operating management personnel. New recruits, technicians, and college graduates from prestigious schools are all eligible to participate. The purpose is to further stimulate the enthusiasm of the company’s core management personnel, and at the same time spur the work enthusiasm of new employees.” A related person from Dongfang Shenghong introduced employee stock ownership to the “China Times” reporter Indicate the purpose of the plan.
The person also said that during the three-year period of the employee stock ownership plan, the company will conduct an annual job assessment for employees every year. Only employees with a “good” or higher assessment result can continue to be qualified for the employee stock ownership plan and enjoy the shareholding plan. share. If any assessment year assessment is below “good”, the employee stock ownership plan share will be deducted until the holder’s qualification and all shares are cancelled.
Aggressive expansion under 100 billion debt
Dongfang Shenghong is a listed company under Shenghong Holding Group. It is a leading private petrochemical company. In 2018, Shenghong Technology went public through a backdoor, and merged its subsidiary Guowang Hi-Tech, which is mainly engaged in chemical fiber production business, into Dongfang Shenghong. The listed company actually The controller was changed from Wujiang District State-owned Assets Management Office to Miao Hangen and Zhu Hongmei. After the company completed the reorganization, it changed its name to Dongfang Shenghong. In 2022, Dongfang Shenghong decided to enter the lithium iron phosphate new energy industry chain, entering a year of massive expansion.
At the beginning of this year, Shenghong Holdings Energy Storage Battery Super Factory and New Energy Battery Research Institute signed a contract to settle in Zhangjiagang, with a total investment of 30.6 billion yuan.
On November 29 last year, Hubei Higers New Energy Co., Ltd., a secondary holding subsidiary of Dongfang Shenghong, planned to invest in the construction of supporting raw materials, iron phosphate and lithium iron phosphate new energy projects. The total investment of the project was 18.684 billion yuan, and the construction period was 2 years. At the same time, Jiangsu Shengjing New Materials Co., Ltd., a third-level holding subsidiary, plans to invest nearly 10 billion in the construction of POE and other high-end new material projects, with a total investment of 9.73 billion yuan.
On December 28, 2022, Dongfang Shenghong’s 16 million tons of refining and chemical integration project realized the whole process. The project was constructed with an investment of 67.7 billion yuan by its subsidiary Shenghong Refining and Chemical, setting a new record for the investment scale of China’s single-process refining and chemical project. During the same period, the 20,000-ton/year ultra-high molecular weight polyethylene project of Jiangsu Sailbon Petrochemical Co., Ltd. was successfully put into operation.
The massive expansion has come at the same time as the company’s debt levels have exploded. At the end of 2018, the company’s total liabilities were 13.935 billion yuan. At the end of 2019, the company’s total liabilities were 19.742 billion yuan. At the end of 2020, the company’s total liabilities were 53.186 billion yuan. By the end of 2022, the company’s total liabilities had reached 130.814 billion yuan. From the end of 2018 to the end of 2022, the company’s asset-liability ratios were 40.75%, 56.34%, 64.17%, 77.72%, and 78.56%, respectively, and continued to rise. But the company’s profit levels are declining. According to the 2022 annual report, the company’s operating income was 63.822 billion yuan, a year-on-year increase of 21.13%; however, the net profit attributable to shareholders of listed companies was 548 million yuan, a year-on-year decrease of 88.02%.
Debts have surged and profits have fallen, but the company is investing heavily in expansion. These may all affect the valuation of Dongfang Shenghong in the secondary market. But Dongfang Shenghong herself was very confident. “Due to the company’s good credit, high-quality assets and business, and profitability among the leading enterprises in the industry, the loan projects and uses are in line with the national policy orientation and industrial direction, and strategically meet the national requirements for the direction of high-quality development of enterprises. Therefore, the company’s cooperation The banks are mainly the four major state-owned banks and national policy banks, and the loan interest rates are benchmark or even downward. The company’s current asset-liability structure is reasonable and healthy, which is in line with the characteristics of the company’s industry and the company’s current rapid development stage. The company’s financing ability is strong, Extensive financing channels and good cooperation with financial institutions. For working capital loans, they are all revolving lines, which can make full use of credit resources and carry out turnover according to daily operation needs; for project loans, supplementary repayments will be made through cash flow activities from operating activities. With the stable operation of the company’s major projects, the cash flow of the company’s operating activities will be further improved, providing a sufficient source of capital turnover for the company’s production and operation.” A related person from Dongfang Shenghong told the “China Times” reporter.
(Article source: China Times)
Article source: China Times
Article author: Tao Wei Zhang Zhi
Original title: 3 million yuan per capita?Dongfang Shenghong launched three phases of employee stock ownership plans within 15 months, which is equivalent to the ten-year annual salary of the company’s supervisors
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