The medical and health giant Baiyunshan (600332.SH, 00874.HK), which owns "Wanglaoji Herbal Tea", unexpectedly suspended the overseas listing of its subsidiary.
Recently, Baiyunshan announced that it will temporarily suspend the promotion of Guangzhou Pharmaceutical Co., Ltd. (referred to as "Guangzhou Pharmaceutical") to issue and list overseas listed foreign shares (H shares).
In this regard, Shen Meng, executive director of Chanson Capital, told a reporter from Changjiang Commercial Daily that the suspension of Guangzhou Pharmaceutical's listing this time is due to the fact that the recent environment of Hong Kong stocks is really bad, and on the other hand, the capital market may have doubts about the growth of the pharmaceutical business sector.
It is worth mentioning that Guangzhou Pharmaceutical, a subsidiary to be split, belongs to the large commercial sector in Baiyunshan’s main business, and its 2019-2021 revenue accounts for 67.68% of Baiyunshan’s total revenue, accounting for a large proportion. However, the average gross profit margin is only 6.58%. At the same time, the debt of the large business sector accounts for 72.29% of the total debt of Baiyun Mountain.
Market Road Interruption
After so much preparatory work, Guangzhou Pharmaceuticals hurriedly "brakes the brakes" before it goes public.
On June 24, Baiyunshan announced that, considering that the validity period of the approval issued by the China Securities Regulatory Commission has expired on June 23, 2022, and the current changes in the capital market in Hong Kong, combined with the development plans of the company and Guangzhou Pharmaceuticals, After careful research, the company and Guangzhou Pharmaceutical have decided to temporarily suspend the work related to the issuance of overseas listed foreign shares by Guangzhou Pharmaceutical.
In an interview with a reporter from Changjiang Commercial Daily, Shen Meng analyzed that the real reasons for the suspension of listing by ordinary companies are nothing more than two, one is that they cannot meet the listing requirements of the Hong Kong Stock Exchange, and the other is that the current market valuation and subscription situation are seriously lower than expected.It is unlikely that Guangzhou Pharmaceuticals, as a state-owned enterprise, cannot meet the listing requirements. Therefore, Guangzhou Pharmaceuticals' suspension of listing should be due to the lack of popularity in the market.
In fact, since the end of 2020, Baiyunshan's board of directors and management have held 3 shareholder meetings, and reviewed and approved the "Guangzhou Pharmaceutical spin-off and listing plan". After the administrative permission of the China Securities Regulatory Commission, on March 31, 2021, Guangzhou Pharmaceutical Submitted an application for issuance and listing to the Hong Kong Stock Exchange.
In July 2021, Guangzhou Pharmaceuticals received the approval document from the China Securities Regulatory Commission. The content of the approval mentioned that Guangzhou Pharmaceuticals will issue no more than about 939 million overseas listed foreign shares, and the financing will be mainly invested in retail businesses, including hospital pharmacies, DTPs. Pharmacy etc.
Zheng Jianxiong, Secretary of the Party Committee and Chairman of Guangzhou Pharmaceuticals, once publicly stated, "We have officially passed the listing hearing of the Hong Kong Stock Exchange, and we can arrange for listing and issuance in the future. It is expected that the listing will be completed within this year (2021)."
At the same time, Baiyunshan has made a series of business resource integration for the listing work.Because Baiyunshan and Guangzhou Pharmaceutical have a certain level of competition in the pharmaceutical wholesale and retail fields, in order to promote the smooth listing of Guangzhou Pharmaceuticals, Baiyunshan has put all its pharmaceutical retail and distribution businesses into Guangzhou Pharmaceuticals.
The specific actions include that Guangzhou Caizhilin Pharmaceutical Co., Ltd. (“Caizhilin Pharmaceutical”), a wholly-owned subsidiary of Baiyunshan, has transferred its 100% equity in Guangzhou Aoma Medical Equipment Co., Ltd. to Guangzhou Pharmaceuticals; Zhilin Pharmaceutical intends to transfer its business department, the drug marketing center and hospital sales department, to Guangzhou Pharmaceutical; Caizhilin Pharmaceutical intends to transfer its 100% equity in Guangzhou Caizhilin Pharmaceutical Chain Co., Ltd. to Guangzhou Pharmaceutical; the company The wholly-owned subsidiary Guangzhou Pharmaceutical Import & Export Co., Ltd. has transferred its sales related business assets of the second department to Guangzhou Pharmaceuticals.
However, while the internal management of Baiyun Mountain was making efforts, the external market was not satisfactory.From the end of 2021 to March 2022, the Hong Kong stock market can be said to be full of sorrows. The Hang Seng Index fell to its lowest point of 18235.48 on March 15. Although it has risen since then, it is still fluctuating and consolidating at a low level, and it will rise by 2.09% on June 24, 2022. to 21719.06 points.
The growth of the large business sector may be doubtful
In addition to the influence of the general environment of the Hong Kong stock market, the lack of popularity mentioned by Shen Meng may also include that the capital market is not optimistic about the growth of the pharmaceutical business.
According to public information, the main business segments of Baiyun Mountain include Great Southern Medicine, Great Health and Great Commerce.Great Southern Medicine is mainly engaged in the research, development, manufacture and sales of Chinese and Western patent medicines, chemical raw materials, natural medicines, biological medicines, and chemical raw materials intermediates; Great Health includes product research and development, production and sales. It is worth mentioning that Baiyun Mountain The "big single product" Wanglaoji herbal tea belongs to this segment; the big business segment includes wholesale, retail and import and export of western medicines, traditional Chinese medicines and medical devices.
The 2021 annual report shows that Baiyunshan achieved revenue of 69.014 billion yuan, a year-on-year increase of 11.9%, and net profit attributable to the parent was 3.720 billion yuan, a year-on-year increase of 27.6%.
In terms of different industries, the revenue of Great Southern Pharmaceutical Industry is 10.789 billion yuan, accounting for 15.63%, the revenue of the big health industry is 10.851 billion yuan, accounting for 15.72%, and the revenue of the large commercial industry is 46.779 billion yuan, accounting for 67.78%. , the largest proportion.
According to the data, as of December 31, 2021, there were 154 pharmaceutical retail outlets in Baiyun Mountain.
It is worth mentioning that although the large commercial sector has many retail outlets and the largest revenue scale, its gross profit margin is pitiful compared to the 44.07% of Da Nan Yao and the 47.34% of Da Health, respectively 6.69% in the past three years. %, 6.64%, and 6.41%, showing a downward trend year by year.
In addition, a reporter from the Changjiang Commercial Daily found that the total liabilities of Baiyun Mountain in 2021 will be 34.791 billion yuan, and the liabilities of Great Southern Medicine, Great Health, and Great Commerce will be 8.332 billion yuan, 4.951 billion yuan, and 25.151 billion yuan respectively. Liabilities amounted to 72.29%.
According to industry insiders, or because of this, the yield and valuation of the big business sector are relatively low, and the purpose of splitting its listing is also to make the valuation of Great Southern Pharma and Great Health more fully considered.
Although the high debt and low gross profit of the large business segment dragged down the performance of Baiyunshan, it is worth noting that its overall financial performance is relatively healthy.
In 2021, Baiyunshan's asset-liability ratio will be as high as 52.62%, but the amount of bills payable and accounts payable will reach 14.733 billion yuan. Only 30.34%.
In addition, the monetary capital of Baiyun Mountain continues to grow, from 18.470 billion yuan at the end of 2019 to 22.377 billion yuan at the end of 2021.As of the end of March 2022, monetary funds reached a record 23.574 billion yuan, accounting for 44.19% of current assets.
In this regard, industry insiders said that there may be three reasons for the sharp rise in monetary funds. First, the occupation of downstream funds led to an increase in the turnover rate of accounts receivable; second, the occupation of upstream funds led to a decrease in the turnover rate of accounts payable; third, fundraising Directly lead to an increase in monetary funds.
Wind data shows that since the private placement of 7.886 billion yuan in August 2016, Baiyun Mountain has not raised funds since 2017.
The financial report data shows that in 2021, the turnover rate of accounts receivable will be 5.93 times, an increase from 5.57 times in the previous year, indicating that the right to speak to the downstream has been strengthened; while the turnover rate of accounts payable is 4.68, which is higher than that of 4.36 in the previous year. The increase shows that its right to speak to upstream suppliers has weakened.
However, over a long period of time, Baiyunshan's accounts payable turnover rate has been declining, from 10.7 times in 2013 to 5.15 times in 2017, and then continued to decline to 4.68.The continuous enhancement of the right to speak means that it can use more upstream and downstream funds.
