Original title: Huabao shares received annual report inquiry letter performance continued to decline, the actual controller was placed on file for investigation matters attracting attention
Every reporter: Fan Qianqian Every editor: Wen Duo
On the evening of May 11, Huabao (300741.SZ) received the annual report inquiry letter issued by the Shenzhen Stock Exchange. Huabao’s revenue and gross profit margin have declined for two consecutive years. The Shenzhen Stock Exchange requires the company to explain the reasons and rationality, and whether there is a risk of continued decline in the future.
The reporter of “Daily Economic News” noticed that in terms of sales model, compared with the data disclosed in the prospectus in 2018, Huabao’s operating income under the direct sales model in 2021 will drop significantly compared with that in 2017, and the Shenzhen Stock Exchange also focuses on For other sales models of the company, Huabao shares are required to explain. In the 4 years since its listing, the investment progress of Huabao’s IPO fundraising projects was relatively low, with a maximum of only slightly over 15%. At the same time, the company also changed the purpose of the raised investment funds or postponed it many times. The Shenzhen Stock Exchange required Huabao to explain the reasons and rationality.
From the perspective of the company’s management, at the beginning of this year, the company’s actual controller Zhu Linyao and director Lin Jiayu were both investigated for illegal issues, and the Shenzhen Stock Exchange asked the company to explain whether there were major violations of laws and regulations.
Whether to deliver benefits to major shareholders through cash dividends?
Huabao Co., Ltd. was listed on the Shenzhen Stock Exchange in March 2018. It is mainly engaged in the research and development, production, sales and service of flavors and food ingredients. It is a leading enterprise in the domestic flavor industry. According to the company’s prospectus disclosed in February 2018, its main customers include Yunnan China Tobacco Industry Co., Ltd., Shanghai Tobacco Group Co., Ltd., Bright Dairy Co., Ltd. and other leading enterprises in the industry. The actual controller is the rich woman Zhu Linyao.
On January 24 this year, Huabao disclosed that Zhu Linyao had been placed on file for investigation by the Leiyang City Supervisory Committee for illegal issues. Two days later (26), the company disclosed that Zhu Linyao had been placed under residential surveillance at a designated residence. On January 27, the company also disclosed that Lin Jiayu, the director and son of Zhu Linyao, was also investigated by the Hengyang County Supervisory Committee for illegal issues and had been placed under residential surveillance at a designated residence. Although Huabao shares emphasized in the relevant announcement on the 24th, the above matters will not have a significant impact on the company’s daily production and operation activities. However, the company’s stock price was still affected. The stock price fell by the limit on January 24, and the stock price has been sluggish since then.
In this regard, the Shenzhen Stock Exchange also asked about the latest progress of the above-mentioned cases in the annual report inquiry letter issued on May 11, and asked Huabao to explain: “the latest situation the company has on the specific matters under investigation”, “whether Involving company responsibility” and “Whether the company is suspected of major violations of laws and regulations”.
Huafeng International Investment Holdings (China) Co., Ltd. controlled by Zhu Linyao is the controlling shareholder of Huabao, with a shareholding ratio of 81.1%. From 2018 to 2021, the company’s equity distribution plan is to distribute 40 yuan per 10 shares, 19.8 yuan per 10 shares, 16 yuan per 10 shares, and 13.2 yuan per 10 shares, with a total cash dividend of 5.481 billion yuan. Naturally, most of the dividends of Huabao shares fell into the hands of the controlling shareholder.
In this regard, the Shenzhen Stock Exchange requires the company to explain the reasons and necessity of implementing a high proportion of cash dividends, and whether there is a situation in which benefits are delivered to major shareholders through cash dividends.
In addition, a number of directors and senior management personnel of Huabao Group resigned last year. The Shenzhen Stock Exchange requested the specific reasons for the resignation of the above-mentioned personnel, and the impact on the company’s production and operation, decision-making on major issues, and the effectiveness of internal control.
Multiple Questions Focus on “Other Sales Models”
Judging from the company’s performance, 2021 is the second year in which Huabao’s operating income, net profit, and core product gross profit margin declined. In 2020, Huabao’s operating income and net profit will drop by 4.16% and 4.45% year-on-year, respectively. In 2021, Huabao’s operating income and net profit will drop by 7.31% and 14.9% year-on-year, respectively, and the rate of decline has accelerated.
At the same time, the revenue of the edible flavor business in 2020 and 2021 accounted for 91.23% and 87.81%, respectively, while the gross profit margin of its business fell by 1.95 and 2.71 percentage points year-on-year, respectively.
In this regard, the Shenzhen Stock Exchange requires the company to explain the specific reasons and rationality of the continuous decline in operating income and gross profit margin in the past two years, and whether there is a risk of continued decline in the future.
The reporter of “Daily Economic News” noticed that from the perspective of sales model, Huabao’s sales model includes direct sales and others. According to Huabao’s statement in the annual report, most of the company’s product sales are sold directly to small and medium-sized customers.
Last year, the operating income of Huabao’s direct sales model was 1.192 billion yuan, accounting for 61.42%, and the operating income of other models was 749 million yuan, accounting for 38.58%. Compared with the previous year, the proportion of direct sales model revenue of Huabao shares decreased by 5.7 percentage points.
Compared with the data in 2017, this data fluctuates more. Huabao’s 2018 prospectus disclosed that in 2017, Huabao’s direct sales model accounted for 91.62% of its revenue, while its distribution model accounted for only 5.13% of its revenue.
Shenzhen Stock Exchange asked in the annual report inquiry letter, explaining the reasons for selling through other models, the differences and reasons between the direct sales model and other models in terms of pricing, gross profit margin, return mechanism and credit policy, and the timing of revenue recognition under other models. , The business sector involved, terminal sales, whether there is a sales return, etc.
In addition, the progress of Huabao’s IPO fundraising project is slow. As of the end of last year, the investment progress of Huabao Yingtan Food Flavor and Food Ingredients Production Base Project, Huabao Technology Innovation Center and Supporting Facilities Project, and Huabao Digital Transformation Project were 15.29%, 0.37%, and 5.89% respectively. Previously, Huabao has also changed the purpose of raised funds many times or postponed investment projects. In this regard, the Shenzhen Stock Exchange requires the company to explain the reasons and rationality.
Among other sales models of Huabao, are there other ways besides buyout distribution? Why has the proportion of direct sales model revenue declined significantly in recent years? In this regard, on May 12, “Daily Economic News” called Huabao’s board secretary office, but no one answered the phone.
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