Investor Network Cai Jun
In March this year, Yunnan Baiyao Group Co., Ltd. (hereinafter referred to as "Yunnan Baiyao", 000538.SZ) announced that Chairman Wang Minghui resigned for personal reasons.
According to the structure, Yunnan Baiyao had Chairman Wang Minghui and Co-Chairman Chen Fashu, both of whom were over 60 years old. According to the data, Wang Minghui has been chairman of the company since 2004. During this period, the company continued to grow and successfully reached the peak through the toothpaste brand.
The departure of Wang Minghui represents Yunnan Baiyao to enter a new chapter. At present, the CEO will act as chairman, after which the company will convene a board of directors to complete the election of the new chairman. Before resigning, the company's "demining" and new business were carried out at the same time. "demining" includes clearing stocks and dealing with acquisition targets, and the new business is looking for new growth points outside toothpaste.
Stock liquidation plan
Loss in stock speculation is one of the problems that Yunnan Baiyao has been criticized.
In the first three quarters of 2022, the fair value change income of Yunnan Baiyao was-751 million yuan, which was still in a state of loss. But fortunately, the loss has gradually narrowed, mainly due to changes in the net value of securities and fund units held. The index of the company in the same period in 2021 is-1.555 billion yuan.
Losses narrowed, mainly due to the liquidation of Yunnan Baiyao shares.
Compared with the 2021 report and the 2022 semi-annual report, Yunnan Baiyao cleared Tencent, Hengrui Pharmaceutical, Yili shares and other stocks. As of the first half of 2022, the company also holds 4 stocks and 6 bond funds.
In terms of stocks, Yunnan Baiyao holds Jacob Research Pharmaceutical (02633.HK), Jianbi Miao (02161.HK), Chinese Antibody (03681.HK), XIAOMI Group (01810.HK). Among them, the company invests the largest XIAOMI Group, with an initial investment cost of 1.632 billion yuan and a book value of 1.28 billion yuan as of the first half of 2022.
In fact, during the reporting period, Yunnan Baiyao only gained profits from holding Jacobson's scientific research pharmaceuticals, and the rest were losses. In spite of this, the company still sold Chinese antibody shares for 3.904 million yuan. In the second half of 2022, the share price of China Antibody rebounded, while the share price of XIAOMI Group fell significantly from July to October, and then slowly entered the recovery channel.
For the future, at the institutional research meeting in January 2022, Yunnan Baiyao made it clear that "it will gradually reduce its positions and will not continue to increase its holdings." The company continued to emphasize this point when it was surveyed in February.
It is worth noting that in April 2022, Yunnan Baiyao subscribed for the fixed increase stock of Shanghai Pharmaceutical at 16.87 yuan per share, the amount reached 10.91 billion yuan, with a lock-up period of three years. As of March 9, Shanghai Pharmaceutical reported 19.93 yuan per share.
With this increase, the meaning of industrial cooperation between the two sides is even stronger. In the first half of 2022, the wholesale and retail income of Yunnan Baiyao was 11.013 billion yuan, accounting for 61.13% of the operating income, down 9.82% from the same period last year. Shanghai Pharmaceutical is also mainly engaged in the wholesale circulation of pharmaceutical equipment, and the company has become the second largest shareholder after the increase.
In August 2022, Yunnan Baiyao announced that it had nominated co-chairman Chen Fashu, CEO Dong Ming and Chief Financial Officer Ma Jia as candidates for non-executive directors, executive directors and supervisors of Shanghai Pharmaceutical respectively. In February this year, the company said that the proposal still needs to be submitted to the general meeting of Shanghai Pharmaceutical shareholders for consideration.
The acquisition of Bandung Holdings leads to more than 100 million impairment.
The stock speculation risk of Yunnan Baiyao is well known, and goodwill and credit risk are also worthy of attention.
In the first three quarters of 2022, the net profit of Yunnan Baiyao belonging to shareholders of listed companies was 804 million yuan, down 5.94% from the same period last year; the asset impairment loss was-623 million yuan, mainly for the impairment of goodwill; and the credit impairment loss was-713 million yuan. Mainly "based on the principle of financial prudence to calculate credit impairment losses to subsidiaries within the scope of the current consolidated statements".
The subsidiary company is mainly Hong Kong Bandung Holdings Group Co., Ltd. (hereinafter referred to as "Bandung Holdings", 00030.HK). Bandung Holdings is acquired by a comprehensive offer from Yunnan Baiyao, mainly engaged in cooking oil, sugar, personal care, cosmetics trade, lending and other businesses. Before the acquisition, Bandung Holdings was held by Zhou Hong, Fang Ke and other two natural persons, both of whom emigrated from the mainland to Hong Kong, China, and started in textile, consumer electronics and other industries.
In the first half of 2022, the goodwill of Yunnan Baiyao to Bandung Holdings reached 645 million yuan, compared with 561 million yuan in the same period. During the reporting period, the net profit of Bandung Holdings was-573 million yuan. The company specifically mentioned in its semi-annual report that Bandung Holdings had defaulted on a number of borrowers in its lending business. In January 2022, Bandung Holdings announced a net provision for credit losses of about 90 million Hong Kong dollars (80 million yuan).
The reason for the original acquisition, Yunnan Baiyao is planning to build a global industrial platform, but the resulting risk is not limited to the impairment of goodwill.
According to the semiannual report of 2022, the largest portion of credit impairment losses comes from prepayment impairment losses. During the reporting period, the company's credit impairment loss was-670 million yuan, of which the prepaid impairment loss was-315 million yuan.
It is worth noting that Bandung Industrial Trading (Hong Kong) Co., Ltd., owned by Bandung Holdings, is the largest advance creditor, that is, the unpaid party. The account age of the enterprise is one to two years, and the debtors owed are all foreign enterprises, totaling 119 million yuan.
From goodwill impairment to credit impairment losses, Bandung Holdings dragged down Yunnan Baiyao's financial data. In this regard, the company disclosed that "with a highly cautious and rigorous attitude to carry out the financial consolidation of Bandung Holdings, completed the restructuring of the company's governance structure and management team."
Layout new growth curve
Before Wang Minghui left office, the company laid out new products and a second growth curve.
In the first half of 2022, the industrial product income of Yunnan Baiyao was 6.958 billion yuan, up 1.96% from the same period last year, accounting for 38.62% of the operating income. This section covers pharmaceuticals, health products and other business departments. Among them, the core product of the Health products Division is toothpaste, which contributes more than 90% of the income all the year round.
Having large items to support the income of the business department is both happiness and annoyance. As of the first half of 2022, the market share of Yunnan Baiyao toothpaste has firmly occupied the leading position in the industry, so the room for improvement is relatively small. The company said that during the reporting period, through the listing of new toothpaste, the market share increased by 0.9 percentage points to 24.8% compared with the end of 2021.
The growth space of market share is narrow, Yunnan Baiyao has turned its attention to the shampoo series and launched the brand "Yangyuanqing". This series focuses on oil control, anti-stripping, hair care, etc., and has been arranged in an all-round way both online and offline.
In a survey conducted in February this year, Yunnan Baiyao said that during the Singles' Day holiday in 2022, Yangyuanqing "ranked first in the Tmall domestic anti-detachment track", with sales exceeding 150 million yuan on that day.
Not only that, Yunnan Baiyao has repeatedly said on various occasions that medical beauty, oral care and new retail health services are the company's second growth curve.
Up to now, Yunnan Baiyao has opened medical and beauty clinics in Shanghai and Yunnan, and plans to open them in Beijing. The clinic has established strategic cooperation with the Medical Department of Peking University to develop skin care products. In terms of oral care, the company released the brand Tooth ToothTalk flagship product-"Tooth Magic Box" Oral Intelligence Care Integrated Box in the second half of 2022.
"the new business is beginning to show its edge, driving the engine of the second growth curve forward at full speed," Yunnan Baiyao said of the second growth curve. However, judging from the specific figures in the financial report, the future of these new businesses is worth watching. (produced by thinking Finance) ■