Financial Services Association, April 20 (Editor Yu Qi Ruoyu) As the 2023 annual report and 2024 quarterly report enter the peak disclosure period, the “stock trading” report cards of listed companies have also become a major highlight. Baida Group announced on Thursday evening that net profit for the first quarter was 36.3012 million yuan, an increase of 940.84% over the previous year, mainly due to a decrease in losses due to changes in the fair value of stocks in the current period. Lanzhou Huanghe, once regarded by the market as “stock trading to support the family,” announced a net loss of 47 million yuan in 2023, and net book income from current securities investment of -29 million yuan. Lan Wei, a semiconductor chip shareholder with a total market capitalization of over 30 billion yuan, said in an annual report disclosed on the evening of April 8 that the net profit loss in 2023 was 357.858 million yuan, mainly due to falling stock prices of Yuneng Technology and Anlu Technology among other illiquid financial assets held by the company, causing changes in fair value to generate net income after tax - 452 million yuan.

While there are profits and losses on the way to trading stocks, listed companies that trade stocks are also going back and forth against the backdrop of increased turbulence in the A-share market this year. Jilin Aodong announced on Tuesday evening that it plans to use no more than 1 billion yuan of idle capital to invest in securities. Meanwhile, Yunnan Baiyao, which is also a pharmaceutical company, said during an investigation by an agency in January that the company had withdrawn from all secondary market securities investments in the third quarter of 2023 and plans to stop investing in secondary market securities in 2024. Analysts pointed out that when a listed company has sufficient capital, “stock trading” can be seen as a way to obtain higher returns, but investing in the secondary market is always only one means of capital management; more still, it is necessary to return to the main business and raise the level of fundamentals.

According to Choice data, as of April 19, after excluding “professional teams” that are mainly or also involved in financial services, a total of 390 A-share listed companies disclosed their securities investments in 2023, with a total amount of about 195.4 billion yuan. In terms of specific amounts, Ningde Times, Shandong Gold, and China Communications Construction participated in the top three securities investment amounts, with 30.907 billion yuan, 12.797 billion yuan, and 9.749 billion yuan, respectively. In addition, Hailuo Cement, C&D Co., Ltd., Juneyao Airlines, Ninghu Expressway, ST Tesco, SAIC Motor Group and Pro-Pharmaceuticals participated in securities investments of more than 4 billion yuan. See the figure below for details:

In terms of the number of securities held, China Communications Construction, Andley, and China Railway Construction ranked in the top three, holding 43, 27, and 23 securities, respectively. In addition, Fosun Pharmaceuticals, Volkswagen, China Railway, Chinese Media, Chongqing Road and Bridge, Guancheng Datong, SAIC Motor Group, C&D, Midea Group, China Merchants Highway, Changyuan Donggu, Shanghai Electric, China Baoan, China Energy Construction, Ningbo Union, Shenyu, BYD, China Zhongye, Bailian Co., Ltd., Jilin Aodong, Dazhong Pharmaceutical, and China's Wuyi also held more than 10 securities in 2023. See the figure below for details:

▌Is Aodong, Jilin, losing more and more “the head” and adding 1 billion dollars to the “big stock trader” Andeli, holding 26 A-shares, to speculate on himself?

On the evening of April 16, Jilin Aodong disclosed its 2023 annual report. The annual revenue for the year was 3.449 billion yuan, up 20.25% year on year; net profit to mother was 1,460 billion yuan, down 18.01% year on year. Regarding the situation where revenue did not increase, some media interviewed relevant company officials and learned that the main reason was the company's long-term equity investment, and the overall profit of the joint venture decreased. As of the end of 2023, the financial assets of Aodong, Jilin were 1,658 million yuan. The change in fair value last year decreased by 111 million yuan, and from 2020 to 2023, Jilin Aodong had four consecutive losses in securities investment, with a total loss of nearly 900 million yuan.

However, at the time the annual report was disclosed, Jilin Aodong announced that it intended to use no more than 1 billion yuan of idle own capital to invest in securities. Tracing the stock trading path in Aodong, Jilin, according to media reports, Jilin Aodong continued to invest more in the A-share market since taking a stake in GF Securities as early as 2004. According to the 2023 annual report, the company holds shares in 6 A-share listed companies: Liaoning Chengda, First Pharmaceutical, Nanjing Pharmaceutical, Yatai Group, SPD Bank, and Ping An of China, as well as shares in three Hong Kong listed companies: Luye Pharmaceutical, Haitong Securities, and Dongyangyang Changjiang Pharmaceutical.

It is worth mentioning that Yunnan Baiyao, which is also a pharmaceutical company, was previously addicted to stock trading and was dubbed the number one “stock god.” However, after losing investment for two consecutive years in 2021 and 2022, Yunnan Baiyao disclosed the “Investor Research Meeting Minutes” on January 17 that the company has withdrawn from all secondary market securities investments and plans not to carry out secondary market securities investment business in 2024.

Looking at it now, it's not just Jilin Aodong among A-share listed companies that are so obsessed with “stock trading.” In terms of the number of securities held, China Communications Construction, Andeley, and China Railway Construction ranked in the top three. If you consider the amount of capital, Andeli, with a total market value of about 15 billion yuan, is unquestionably a “major stock trader.” According to the data, as of the end of 2023, Andley's total investment amount in securities reached 482 million yuan, with a current loss of 347.514 million yuan, while the company's net profit attributable to mother for the current period was 255 million yuan. Specifically, the company holds 26 A-shares, including SMIC, Shaanxi Energy, Youyou Network, BOC Securities, Inspire Information, Yankuang Energy, Onboard CNC, etc.; in addition, the company also invests in many popular ETFs covering agricultural ETFs, brokerage ETFs, and military ETFs.

In the secondary market, Andeley closed up and down on Friday. The biggest cumulative increase in the company's stock price since March 20 reached 121.31%.

▌Stock trading sideline business becomes main business? Net profit soared more than 9 times year-on-year due to a decrease in fair value changes in shares held by Baida Group in Q1. Silan Micro Investment lost 450 million yuan, the first loss in 21 years since listing

It is undeniable that when listed companies gradually increase their securities investment business, the performance will be particularly evident. The 100 retail enterprise with a total market capitalization of 2.6 billion yuan announced after the market on April 18 that in the first quarter of 2024, the company achieved total operating income of 589.345 million yuan, an increase of 4.29%; net profit to mother of 36.3012 million yuan, an increase of 940.84%; after deducting non-net profit of 21.85 million yuan, a year-on-year decrease of 14.89%. According to data, the main business format of the Top 100 Group is department stores. The retail sales performance in the first quarter of this year was under certain pressure, and revenue decreased by 4.27% year on year.

Regarding the sharp increase in net profit in the first quarter, Baida Group stated in an announcement that the main reason was the reduction in losses due to changes in fair value of shares held. According to the secondary market investment information disclosed at the same time, the company transferred all 16 gold and 02 bonds through the secondary market in February this year, recovering the capital of 236.961 million yuan; in March, it transferred a package of stocks (Shanghai and Shenzhen 300 Index tracking), Hong Kong stocks, China CITIC Bank, and the Bank of China to recover 50,2737 million yuan of capital through the secondary market. By the end of the first quarter, the top 100 groups held second-tier market shares of Bank of Hangzhou with a market value of 150 million yuan at the end of the period, and the market value of Jindi Commercial Investment at the end of the period was 126 million yuan, for a total of 276 million yuan.

As the saying goes, “The stock market is risky, so you need to be careful when investing.” On the day before the announcement of the top 100 groups, the former “Northwest Beer King” Lanzhou Huanghe announcement, which was once regarded by the market as “trading stocks to support the family,” achieved revenue of 241 million yuan in 2023, a decrease of 9.47% over the previous year; net loss was 47 million yuan, and losses increased year on year. The company's net income from securities investment for the year was a loss of 294.362 million yuan.

According to data, the Yellow River in Lanzhou is mainly engaged in the production and sale of products such as the “Yellow River” and “Qinghai Lake” double brand series beer and the “Yellow River” series malt. The production and sales of beer and malt account for more than 90% of the total main business. However, in the difficult situation of declining market share and declining production and sales volume, Lanzhou Huanghe started a side business of securities investment in 2010, and successfully invested 109 million yuan in the first year of entering the market through heavy investment in various individual stocks such as Shenzhen Development A and China Unicom. In that year, the company achieved a net profit of 102 million yuan to its mother. However, fluctuations in profits and losses in stock trading also led to instability in the company's performance. From 2015 to 2022, Lanzhou Yellow River's performance showed losses mostly due to losses in securities investment. Some industry insiders confess that the Lanzhou Yellow River is going further and further along the path of stock trading, which not only affects the development of the main business, but also exposes the company to greater operating risks.

Furthermore, semiconductor segment leader Silanwei also faced an embarrassing situation where “stock trading” losses caused its performance to change its face. The annual report was disclosed after the market on April 8. The company achieved operating income of 9.34 billion yuan in 2023, an increase of 12.77% over the previous year; net profit loss attributable to shareholders of the parent company was 35.7858 million yuan, and profit of 1,052 billion yuan for the same period last year. According to the data, 2023 was the first annual loss in the company's history since it went public in 2003. At the same time, the announcement revealed that the main reason for Silanwei's net profit loss attributable to shareholders of the parent company was a drop in the price of Yuneng Technology and Anlu Technology shares in other illiquid financial assets held by the company, resulting in a net loss of 452 million yuan after tax due to changes in fair value.

According to previous media reports, in response to similar claims such as “Silan's small loss, reason: buying chip stocks” on the Internet, Chen Yue, director of Silanwei, wrote that if a company trades marketable securities in the secondary market, it should generally be reported as a transactional financial asset, rather than as other illiquid financial assets. Other non-financial assets held on the company's books are equity assets obtained from the company's long-term equity investment. Since the invested enterprise corresponding to the asset is listed, the company uses an active market price (secondary market share price) at the end of the reporting period to determine its fair value. The shares of Anlu Technology and Yuneng Technology held by the company at the end of the period fall into this situation. There are several reasons for the decline in the company's performance during the reporting period. I hope investors can make rational judgments based on facts.