Financial Services Association, March 18 (Reporters Liu Jian and Wang Ping An) Behind the longest losing pig cycle, pig farming has become a “high-risk” industry, and high debt has become the sword of Damocles for pig companies. Following the previous debt explosion of Aonong Biotech (603363.SH), which was applied for pre-restructuring by creditors, the second-tier Tianbang Food (002124.SZ) may also embark on the path of restructuring.

This evening, Tianbang Foods announced that it intends to apply to the competent People's Court for restructuring and pre-restructuring of the company on the grounds that the company is unable to pay off its maturing debts and clearly lacks solvency, but has restructuring value.

A Financial Services Association reporter noticed that continued losses may be a major factor in Tianbang Food's high debt. The company listed 4.28 million pigs and 4.42 million pigs in 2021 and 2022, respectively. After deducting non-net profit, the losses were 4.905 billion yuan and 1,001 billion yuan, respectively. The loss in two years exceeds the total profit since the company went public.

Furthermore, while the pig farming business is deeply losing money, the company is increasing the construction of the entire industry chain, hoping that industrial transformation will save the difficult situation. In 2022, the first phase of the company's 5 million pig slaughter and deep processing project in Linquan, Anhui was officially put into operation. However, due to factors such as the business is still in the strategic transformation and adjustment stage, capacity utilization needs to be further improved, the company has large reserves, and per capita efficiency needs to be improved, the company's pork products business still lost 167 million yuan in 2022.

Under continuous heavy losses, Tianbang Food's debt pressure is high. By the end of the third quarter of 2023, the company's balance ratio reached 87.03%, ranking third among listed pig companies. The monetary capital on the company's account was 676 million yuan, but short-term loans reached 2,691 million yuan, and long-term loans were 689 million yuan, so the pressure to repay debts is high. “Due to the low market price of the company's pig breeding business in the past three years and occasional disturbances due to the African swine fever epidemic, the company's main business has suffered large losses, and debt repayment pressure continues to increase.” Tianbang Foods also confessed in the announcement.

In fact, behind heavy debt pressure, Tianbang Foods is also constantly seeking financial recovery. Over the recent period, the company has continuously sold shares in Shi Ji Biotech, with a total return capital of over 1.8 billion yuan. Among them, 30% of Shiji Biotech's shares were sold to Tongwei Agriculture for a total of 1.65 billion yuan, and 1.35% of the shares were sold to Jinyu Baoling Biopharmaceutical Company and Yangzhou Youbang Biopharmaceutical Company respectively. Afterwards, on March 11, 0.28% of Shiji Biotech's shares were transferred to Chengdu Xinheng for 15.4 million yuan, and 0.13% of Shiji Biotech's shares were transferred to Hefei Paipongte for 7.15 million yuan.

However, the return of 1.8 billion dollar sellers did not seem to be enough to ease the company's debt pressure. In the end, Tianbang Foods bowed to high debts and embarked on the path of applying for restructuring. Tianbang Foods also confessed in the announcement, “The company has taken the initiative to supplement cash flow through various methods such as selling assets, but the results have not been significant enough. The pressure on the company's short-term debt repayment is still high, the balance ratio continues to rise, and the pressure on cash flow continues to increase. The company is currently unable to pay off its maturing debts and clearly lacks solvency.”

A Finance Association reporter combed through and found that following last year*ST Zhengbang (002157.SZ), Aonong Biotech at the beginning of this year, to Tianbang Foods this time, the three “thunderstorm” pig companies each ranked in the top three of the previously listed pig companies in terms of debt ratio. This does not seem to be a coincidence. “The top priority for highly indebted pig companies is still to reduce leverage, reduce liabilities, and reduce costs. Especially during the critical period of a sluggish cycle, pig companies can only prosper if they survive first.” Earlier, an industry insider told the Financial Federation reporter.