Behind The Attack And Defense Of "Hengdian Series" With Six A-Shares In Hengdian Group

Located in Hengdian, Zhejiang Province, the "Hengdian film and television city" tries to build a "Chinese film and television dream factory". Behind the big factory dream is a huge private capital, Hengdian Group Holding Co., Ltd. (hereinafter referred to as "Hengdian group").

Hengdian group was founded in 1975 in Hengdian, China, and its business covers more than 150 countries and regions. It has six A-share listed companies, including innova (000795. SZ), Puluo Pharmaceutical (000739. SZ), Hengdian dongci (002056. SZ), Debang lighting (603303. SH), Hengdian film and television (603103. SH), Nanhua Futures (603093. SH), one spanning electronics and electronics, film and television, cultural tourism, medicine and health, and finance The "Hengdian Department" in the four major fields is ready to be published.

The total market value of six A-share companies is no more than 90 billion yuan.

According to the research conducted by the 21st Century Capital Research Institute, "Hengdian Department" is not an enterprise that agitates the capital market because of its "department", especially the "Great Wall System" (Great Wall Film and television, Great Wall animation and Tianmu pharmaceutical), which is also a private capital in Zhejiang Province and holds three A-share companies, In the process of relying on the platform of listed companies to make greater leverage, Hengdian still firmly grasp the labels of "China Hollywood", "world magnetic capital" and "Jiangnan Medicine Valley".

How does "Hengdian Department" hedge against the impact of secondary market and keep the city?

A share meeting of six sub branches of Hengdian Department

From the sprouting of Hengdian silk factory in 1975, the establishment of Hengdian magnetic equipment factory in 1980, the establishment of Yong'an chemical plant and pharmaceutical chemical plant in 1990, and the establishment of Zhejiang Hengdian enterprise group company in Dongyang in July 1990, which became the first township enterprise group approved by the State Council. The business of Hengdian group began slowly. In December 1996, Hengdian group Debang Electronic Co., Ltd. was founded In November, the Hengdian group was formally established and began to emerge.

It can be seen that most of the assets of "Hengdian series" listed companies are built on the basis of industry.

In 2001, Hengdian group fell its first piece in the capital market.

In December of that year, Hengdian group reorganized the assets of Qingdao Dongfang, a holding listed company. It placed 95% equity of Kangyu pharmaceutical, 90% equity of Debang chemical, and operational assets of antibiotic intermediate production line. Its pharmaceutical business was backdoor listed.

Subsequently, Qingdao Dongfang changed its name to Puluo Pharmaceutical (000739. SZ).

In August 2006, Hengdian dongci (002056. SZ) became the first IPO company of Hengdian group and successfully landed in Shenzhen Stock Exchange.

At the end of 2015, Hengdian Group acquired 100% equity of Ganzhou dongci of Hengdian group and neodymium iron boron business related assets held by Zhejiang Hengdian import and Export Co., Ltd. through Taiyuan corundum, which was previously held by Hengdian group, Hengdian group changed its name to yingluohua (000795. SZ), and another asset of Hengdian Group entered the capital market by backdoor.

At this point, the "troika" of Puluo pharmaceutical, Hengdian dongci and yingluohua realized the successful combination in A-share.

Two years later, Hengdian group began to expand its capital market again: at the end of March 2017, Debang lighting (603303. SH), the main lighting product of Hengdian group, landed on the Shanghai Stock Exchange. In October of that year, Hengdian film and television (603103. SH), which is mainly distributed on the line and screened in films, was also listed on the Shanghai Stock Exchange.

At that time, Xu Yongan, chairman of Hengdian group, once said in the company, "by 2020, we will strive to have 6-8 A-share listed companies in the group".

On August 30, 2019, Zhejiang Nanhua futures brokerage Co., Ltd. (now Nanhua futures) acquired by Hengdian Group 20 years ago landed on Shanghai Stock Exchange, becoming the first futures listed company of a shares.

As of 2019: Hengdian group holds 51% of the equity of Puluo pharmaceutical, 50.07% of Hengdian dongci, 49.44% of innova, 68.94% of Debang lighting, 84.77% of Hengdian film and television, and 76.3% of Nanhua futures.

Located in Hengdian, Zhejiang Province, "Hengdian film and television city" is trying to build a "dream factory of Chinese film and television". Photo by Zheng dikun

The 21st Century Capital Research Institute found that Hengdian Group's electrical and electronic plate is mainly developed through Hengdian dongci, innova and deppon lighting. Its products include magnetic materials, micro special motors and electronic lighting. In addition, the pharmaceutical industry covers medical health, Hengdian film and television mainly focuses on film and television culture, Nanhua futures positioning modern services, diversified business direction, and the relationship between the plates This is the common feature of many private capital in Zhejiang.

"The ability of single business to resist industry risks is small, for example, it is easy to be replaced by new industries, or when external industry risk factors occur, it is more harmful to the enterprise. The diversified comprehensive enterprises are less affected by the comprehensive influence of individual industries, which is also the simple truth that "eggs are not put in the same basket." Li Zhiguang, managing partner of Ernst & Young in Zhejiang Province, told the 21st Century Capital Research Institute.

He said, "Zhejiang private enterprises consider splitting up multiple sectors to be listed separately. In addition to increasing financing channels, they can also split the future profitable business segment of the enterprise, which is reflected in the market value of the split listed part. In addition, it is also conducive to the businesses of various sectors to become industry leaders in the subdivided fields, so as to make full use of the resource advantages of enterprises, such as technical advantages, market advantages and management advantages 。”

Management of financial report: who is cash cow?

From the financial report, the debt ratio of each sector of Hengdian group is low, cash flow is sufficient, and the revenue of some enterprises is between 2 billion and 4 billion yuan.

For example, innova is mainly engaged in rare earth permanent magnet materials and products and motor series products. Its wholly-owned subsidiary, innova, is one of the first domestic enterprises to produce NdFeB; its wholly-owned subsidiary Lianyi motor has its main customers in more than 40 countries and regions in Asia, North America and Europe.

In 2019, innova's operating revenue will reach 2.513 billion yuan and net profit will be 143 million yuan, with double-digit growth on average.

Compared with innova, the volume of Hengdian dongci is larger.

As the largest manufacturer of magnetic materials in China, Hengdian dongci has an annual production capacity of 150000 tons of ferrite pre fired materials, 130000 tons of permanent ferrite, 30000 tons of soft ferrite, and 20000 tons of plastic magnetic materials. It has a seat in various categories of magnetic material participants in China.

According to the performance express in 2020, Hengdian dongci achieved a revenue of 8.1 billion yuan, a year-on-year increase of 23.42%, and the net profit attributable to shareholders of the listed company was 1.012 billion yuan, with a year-on-year increase of 46.51%.

Although in 2019, the company acquired 80% equity of Yibin Jinchuan Electronics Co., Ltd. through extensive expansion, its capital operation can be described as very cautious.

According to the annual report of 2019, the short-term loan of Hengdian dongci is 323 million yuan, accounting for 3.8% of the total assets, and the long-term loan is 22.5 million yuan, accounting for 0.26% of the total assets. The short-term and long-term loans are small, and the Book Monetary Fund is 2.877 billion yuan. By the end of the third quarter of 2020, its monetary capital has increased to 4.142 billion yuan.

According to the usual indicators, the governance level of the six listed companies, such as the asset liability ratio, by the end of the third quarter of 2020, the asset liability ratio of Hengdian dongci and Puluo pharmaceutical was about 45%, while the asset liability ratio of innova, deppon lighting and Hengdian film and television were all below 40%.

By the end of the third quarter of 2020, the asset liability ratio of Nanhua futures is as high as 87.01%. However, its book monetary capital is abundant, reaching 8.967 billion yuan.

In this regard, on March 8, the Secretary Office of Nanhua futures explained that it was mainly caused by the company's business characteristics, "the company's futures brokerage business, which has customer margin, and carries out position trading for different futures varieties, should keep the futures security deposit in different futures exchange accounts, so it will be included in the indicators of monetary capital and debt ratio."

In addition, from the perspective of related party transactions, as the core business of innova is rare earth permanent magnetic materials, which are raw materials for permanent magnet products, it intersects with Hengdian dongci, which produces and sells magnetic materials. In 2019, Hengdian dongci disclosed that the amount of daily related party transactions was about 379 million yuan.

"Hengdian" another A-share company, Debang lighting disclosed that in 2019, it carried out related transactions with related parties such as innova, Hengdian dongci, Hengdian film and television, Nanhua futures, etc., including purchasing raw materials and commodities, purchasing fuel and power from related persons, and selling products and commodities to related persons. The actual amount of transactions in 2019 was 535 million yuan, only accounting for 1.4 billion yuan of its current year's revenue (4.244 billion yuan) 2.6%。

Looking at the goodwill index, as of the end of the third quarter of 2020, only PLO pharmaceutical, Hengdian film and television, Nanhua futures had goodwill of RMB 20 million, RMB 15 million and RMB 05 million respectively, and the other three companies did not have goodwill.

These two indicators are relatively small.

In terms of financial management, does "Hengdian Department" have fund collection management?

On March 8, 21st Century Capital Research Institute, as an investor, called the Secretary Office of Debang lighting. The other party explained that "the listed company and Hengdian group are operated independently, and their cash is deposited in different bank accounts". There is no fund collection management situation.

From the performance point of view, based on the revenue and net profit data in 2019, Puluo Pharmaceutical Co., Ltd., the first to land on the capital market, is an outstanding leader among the "Hengdian series" listed companies; however, in 2020, Hengdian dongci will "reverse super", with a revenue scale of 8.1 billion yuan and a net profit of 1.012 billion yuan; in the same year, it is estimated that the revenue of PLO pharmaceutical is 7.85 billion yuan - 7.93 billion yuan, and the net profit is 780 million yuan - 850 million yuan.

By the end of the third quarter of 2020, among the six companies in "Hengdian series", the monetary capital on the book of Nanhua futures was 8.967 billion yuan, that of Hengdian dongci was 4.142 billion yuan, and that of Puluo pharmaceutical was 2.422 billion yuan, all of which were cash cows.

In contrast, the last ranked Hengdian film and television company has a monetary capital of 719 million yuan on its book.

All theaters of Hengdian film and television will be suspended from January 24, 2020, and will gradually resume normal operation after July 20 of the same year, resulting in the first cash loss of Hengdian film and television in 2020, with an estimated loss of 490 million yuan to 450 million yuan.

From 2017 to 2019, the annual net profit of Hengdian film and television has been maintained at about 300 million yuan.

Asset echelon scanning: who will capitalize?

In fact, in addition to the six A-share companies, Hengdian Group's more well-known asset is Hengdian film and television city. It includes Guangzhou Street, Hong Kong Street, Qinwang palace, Qingming Riverside, Ming and Qing Dynasties palace, dreamland and so on. It has 31 large-scale real-life shooting bases and 35 indoor high-tech studios with regional characteristics of the north and the south. It is a "national 5A level tourist attraction".

As early as early as 2004, Hengdian film and television city was established as China's first national film and television industry pilot zone by the State Administration of radio, film and television. In 2020, Hengdian film and television cultural industry cluster was established, becoming the only cultural industry cluster in Zhejiang Province.

According to public reports, in 2019, Hengdian film and television city received 19.18 million Chinese and foreign tourists and 310 film and TV plays.

However, the well-known Hengdian film and television city has not been capitalized at present, and its listing expectation has attracted much attention.

On March 3, some investors asked Hengdian film and television, "have you considered putting Hengdian film and television city into the listed company system and relying on the listing platform to become bigger and stronger?"

In response, the director and Secretary of Hengdian film and television replied, "the company does not know about the plan or plan of injecting relevant assets into the listed company. The company will continue to disclose all major information in a true, accurate, complete and timely manner in accordance with the relevant requirements of information disclosure. "

In fact, Hengdian group has some asset injection action.

For example, on May 16, 2019, innova transferred 66% of the equity of Zhejiang yingluohua Equipment Manufacturing Co., Ltd. under Hengdian group with RMB 133.5 million, which was included in the consolidated statement on August 21 of that year.

Coincidentally, in December 2020, Hengdian film and television purchased 100% equity of Hengdian film and television production Co., Ltd. and Zhejiang Hengdian Film Co., Ltd. with a total of 122 million yuan in cash to increase investment, production and distribution of film and television.

During the reporting period, the two companies produced film and television works such as "chasing dream", "getting home at one point", "winning the championship" and "vajragawa", which achieved good social repercussions. However, affected by the epidemic situation, before the acquisition, the two companies made a total of 90.6175 million yuan of assets impairment reserves and credit impairment reserves according to the actual situation.

This is just the tip of the iceberg of Hengdian assets.

The 21st Century Capital Research Institute has found that Hengdian group has invested in 200 companies (currently there are 86 companies), such as Zhejiang Hengdian import and Export Co., Ltd., Hengdian Group Real Estate Development Co., Ltd., Zhejiang Hengdian film and television property rights trading center Co., Ltd., Hengdian Group Shanghai Industrial Development Co., Ltd.

On the one hand, similar to Huaxi Village, the "first village in China", Hengdian group also has the attribute of "running society": for example, in 1994, Hengdian group founded Hengdian University (the predecessor of Zhejiang Hengdian film and television Vocational College); in 1996, it established Hengdian group rehabilitation hospital (the predecessor of Hengdian Wenrong hospital). In addition, it wholly owned the Dongyang Hengdian water supply Co., Ltd. and Dongyang Hengdian refueling Station Co., Ltd., Dongyang Gas Co., Ltd., Dongyang Hengdian sewage treatment Co., Ltd.

On the other hand, Hengdian group has also set up industries such as finance, aviation and new materials.

In the financial field, in addition to directly holding 5.84% equity of Zheshang Bank (601916. SH), Hengdian group also controls Dongyang Jinniu small loan Co., Ltd., with a direct shareholding ratio of 60%.

According to public information, Jinniu xiaodai was established in 2010, and Hu Tiangao, director and senior vice president of Hengdian group, is the legal representative and chairman of Jinniu xiaodai. Jinniu small loan is mainly engaged in small loan business and small enterprise development, management and financial consulting business in Dongyang City.

Hengdian Group's official wechat platform "watch Hengdian" has published a document, "after 2014, Jinniu small loan has continuously improved the level of risk prevention and control, made clear that in a long period of time, the main task is to prevent and control risks and collect non-performing loans; change the development thinking of striving for scale and speed, reorganize the traditional credit business structure, and adhere to the principle of seeking progress in stability". By the end of 2018, Jinniu small loan company has been able to improve the risk control level The company has issued a total of 12.297 billion yuan of loans, serving 8837 customers.

There is a trace to follow: in October 2020, Tangde film and television (300426. SZ) applied to Jinniu small loan for a loan with a total principal of no more than 100 million yuan, with a term of one year, and the purpose of the loan was daily capital turnover.

In the aviation industry, Hengdian group started to set foot in aviation industry as early as 1995, and established Hengdian aviation sports training school of Zhejiang Province; in 2000, Hengdian group Aviation Industry Co., Ltd. was established; in 2002, Zhejiang Donghua General Aviation Co., Ltd. was acquired; on June 29, 2012, Dongyang Hengdian general airport project was officially launched, with a total investment of about 1 billion yuan.

The latest news is that in 2019, the reconstruction and expansion project of the 1800m runway of Hengdian airport has been successfully approved, and the airport project has been listed in the list of the first batch of private capital investment projects and general airport construction projects in the field of national civil aviation. This means that Hengdian will have the country's first official airport.

In addition, in the field of new materials, Hengdian group has set up Zhejiang Xinna Material Technology Co., Ltd. as a platform for the combination of industry and finance of Hengdian Group's new material industry, and completed the joint-stock reform in September 2019, which is regarded as a listed and cultivated enterprise.

According to the official website, Xinna technology is headquartered in Hengdian Town, Dongyang City, Zhejiang Province. At present, it has 6 subsidiaries and 1 factory directly under it, which are distributed in Hengdian, Zhejiang Province, Zhangping, Fujian Province, Zigong City, Anhui Province, etc.

The 21st Century Capital Research Institute found that Hengdian group also participated in Hangzhou Baipin Technology Co., Ltd. (round a), in which Hengdian group held 20% shares and Zhejiang Hengdian import and Export Co., Ltd. held 60%. According to the public information, Baipin technology is the first clothing brand in China to unite Italian luxury manufacturers and designers; Shanghai Youbao Culture Communication Co., Ltd. (round a), Hengdian group holds 25%; Guoyao quantum Radar Technology Co., Ltd. (angel wheel), Hengdian group holds 17%.

In vitro liquidity measurement, what are the potential risks?

By the end of the third quarter of 2020, Hengdian group had total assets of 89.398 billion yuan, net assets of 32.762 billion yuan, total liabilities of 56.636 billion yuan, operating income of 43.309 billion yuan and net profit of 1.664 billion yuan.

Not long ago, Hengdian Group announced through the official wechat platform "looking at Hengdian" that in 2020, the group's annual revenue would reach 77.883 billion yuan, the total tax revenue would reach 4.572 billion yuan, and the export volume would reach 12.103 billion yuan, up 18.22% year on year.

Wind data shows that the asset liability ratio of Hengdian group is slightly higher than that of "Hengdian series" listed companies with an average asset liability ratio of 40%. From 2016 to the third quarter of 2020, the asset liability ratios of Hengdian group were 62.65%, 59.52%, 56.62%, 58.96% and 63.35%, respectively.

The issuance of bonds is one of the important financing means of Hengdian group, but the scale of open market debt is limited.

The 21st Century Capital Research Institute found that since 2005, it has issued general short-term financing bonds, corporate bonds or general medium-term notes for 16 consecutive years.

At present, there are only two bonds in Hengdian group, which are ultra short-term financing bonds, 20 Hengdian scp003 and 20 Hengdian scp004, which were issued in August and December 2020 respectively, with the issuance scale of 1 billion yuan and less capital pressure.

In the face of Hengdian Group's nearly 90 billion total assets, it is not without potential risks.

At the level of "Hengdian system", in March 2018, as of June 30, 2017, the utilization progress of raised funds of "mioT information system" and "R & D center construction" in 2015 were 1.42% and 18.68% respectively; As of June 30, 2017, the progress of the project "R & D and industrialization of high-performance magnets for new energy vehicle power motors" was slow, such as 3.26% as of June 30, 2017, and no specific reasons were explained. Yingluohua received the administrative supervision measures decision of Shanxi securities regulatory bureau, requiring it to make corrections and record it in the integrity file of securities and futures market.

The latest news is that innova said that in 2015, the company issued shares to purchase assets and raised matching funds of 209 million yuan. As of 2019, 173 million yuan had been used, and 36.1424 million yuan had not been used; in 2016, the company issued shares to purchase assets and raised matching funds of 595 million yuan, up to 2019, it had used 432 million yuan, but not used 163 million yuan.

Coincidentally, in December 2018, Puluo pharmaceutical was questioned that "the production line with an investment of nearly 300 million yuan was shut down without reporting". In this regard, Puluo pharmaceutical subsequently issued an announcement denying the statement of "suspension of production", saying that it was to adjust the development strategy of Anhui Puluo Biotechnology Co., Ltd., and transfer the production line may reduce the net profit loss.

According to the data, from 2015 to 2018, Anhui Puluo biological Co., Ltd. sustained losses, with net profits of - 40 million yuan, - 69 million yuan, - 105 million yuan and 80 million yuan respectively.

At the level of Hengdian group, there were previous media reports that "in 2015, JURU group, a P2P company, took a 20% stake in Zhejiang Hengdian Yuanming New Park Cultural and Creative Industry Development Co., Ltd., jointly completed the development and construction of Yuanming new park night city, and deeply participated in the development and nationwide promotion of Hengdian Yuanming new park water show". The actual controller of JURU group was accused of illegal fund-raising, which made Hengdian Yuanming The new garden is also overshadowed.

However, the 21st Century Capital Research Institute found that Zhejiang Hengdian Yuanming New Park Cultural and Creative Industry Development Co., Ltd. was renamed "Zhejiang Yiqu Cultural Development Co., Ltd." as early as March 2017.

During this period, Zhejiang Hengdian Yuanming New Park Co., Ltd., which holds 40% of the shares, has withdrawn from the list of shareholders. The company is 100% owned by Zhejiang Hengdian Cultural Tourism Group Co., Ltd.

According to public reports, the Yuanming new park of Hengdian started construction with an investment of 30 billion yuan in 2012. Xu Wenrong, founder of Hengdian group, announced that Yuanming new park will be fully opened on July 1, 2019.

One noteworthy detail is that in November 2020, in order to optimize the equity structure, Hengdian group adjusted its equity structure as follows: Dongyang Hengdian Association of economic enterprises (renamed in May 2020, formerly "Hengdian Association of economic enterprises") held 51%, Dongyang Chuangfu chuangxiang Industrial Development Partnership (limited partnership) held 20%, and Dongyang HENGCHUANG Industry Co., Ltd. held 20% The development partnership (limited partnership) holds 19% of the shares, and Hengdian Co., Ltd. holds 10%.

This also makes the follow-up Hengdian capital operation worthy of attention.

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