Oriental Yuhong: lightly on the brakes | crossing the border

2022-05-14 0 By

Li Li from Leju Financial Research Institute “Look up and look at the universe, the sun, the moon and the stars!”This is what Li Weiguo, chairman of Oriental Yuhong (002271.SZ), said in his 2022 New Year message.Since its listing in 2008, Oriental Yuhong has spent 5 years and its market value has exceeded 10 billion yuan. By January 6, 2021, its market value has exceeded 100 billion yuan.In April 2021, Oriental Yuhong completed a private increase of 8 billion yuan, which was once robbed by institutions.In 2021, Revenue and net profit of Oriental Yuhong increased by nearly 50% and 23.50% respectively, according to the latest performance bulletin.However, there are hidden worries behind the growth of performance. The profit growth rate continues to slow down, the gross margin falls significantly, the operating cash flow is negative, and the receivables are too high.According to the 2021 performance report, during the reporting period, Oriental Yuhong achieved a total operating revenue of 31.892 billion yuan, up 46.76% compared with the same period last year;Operating profit of 5.094 billion yuan, up 21.20% from the same period last year;Total profit of 5.107 billion yuan, 22.90% increase over the same period last year;Net profit attributable to shareholders of listed companies reached 4.185 billion yuan, up 23.50% from the same period last year.Revenue, net profit double growth, however, performance growth is slowing down significantly.In terms of revenue, from 2016 to 2021, the operating revenue of Oriental Yuhong is 7 billion yuan, 10.293 billion yuan, 14.046 billion yuan, 18.154 billion yuan and 21.730 billion yuan respectively, with year-on-year growth of 31.98%, 47.04%, 36.46%, 29.25% and 19.70%.Since 2017, the growth rate has gradually slowed down.From the perspective of net profit, from 2016 to 2020, the net profit of Oriental Yuhong rose from 1.029 billion yuan to 4.185 billion Yuan in 2021, while the growth rate decreased from 40.97% to 23.50% in 2021.This year the real estate regulation is gradually stricter, building materials industry as a supplier of real estate industry, accounts receivable risk is particularly worth paying attention to.It is understood that in the third quarter of 2021, Oriental Yuhong’s notes receivable, accounts receivable and prepayments increased substantially, and even the ending balance of other receivables increased by more than 10 times.In terms of amount, Oriental Yuhong’s receivables reached 10.9 billion yuan, nearly half of its revenue in the first three quarters, and prepayments reached 1.258 billion yuan.From 2017 to 2021, the operating cash flow of Oriental Yuhong in the third quarter is -671 million yuan, -531 million yuan, -2.048 billion yuan, -908 million yuan and -6.284 billion yuan, respectively. It can be seen that the operating cash flow outflow in the third quarter of 2021 exceeds the sum of the previous four years, which is the peak in all years.Behind the performance growth of fundraising expansion, Oriental Yuhong is inseparable from its scale expansion, and the fund raising for expansion is a major concern.In April 2021, Oriental Yuhong completed a new round of private placement with a price of 45.50 yuan per share, 176 million shares issued, and a total capital raised of 8 billion yuan.The fundraising, more attention is paid to the war investment shareholders, the issuance object is finally determined to be 13, among which hillhouse Capital through its two institutions received a total of 1.6 billion yuan, JPMorgan received 1 billion yuan, Ruiyuan Fund received 300 million yuan, UBSAG received 443 million yuan.All the other institutions belong to the first-line sequence.It is understood that the raised amount is mainly used for project upgrading, production base construction and supplementary working capital.In addition to the rmb8bn private placement, Oriental Yuhong has raised funds several times since its listing in 2008.Oriental Yuhong has raised about 37.159 billion yuan since its listing, according to Wind.In the past years, the direct financing was about 229 million yuan in 2008, about 472 million yuan in 2011, about 150 million yuan in 2012, about 1.273 billion yuan in 2014 and about 1.84 billion yuan in 2017.In addition to raising capital and expanding production, Oriental Yuhong has also been increasing foreign investment.Recently, Oriental Yuhong newly invested guizhou Oriental Yuhong Building Materials Technology Co., LTD., which was established on August 5, 2021 with a registered capital of 50 million yuan, is 100% held by Oriental Yuhong.This year alone, Oriental Yuhong has invested 17 times to set up subsidiaries with a total investment of about 1.4 billion yuan, Leju Finance learned.In addition, according to the semi-annual report, Oriental Yuhong disclosed 20 projects of foreign investment, construction, production, R&D and headquarters base, among which only 1 project was established and constructed during 2017-2018, and the rest projects were established during 2020-2021, and 8 projects were established in 2021.On January 14, 2022, Oriental Yuhong announced that it signed the Project Investment Agreement with the People’s Government of Minqing County, Fuzhou city, Fujian Province, which stipulates that Oriental Yuhong plans to invest 1.2 billion YUAN in the construction of Oriental Yuhong Fuzhou Green Building Materials Production Base project and Fujian Regional headquarters project in Minqing County, Fuzhou City, Fujian Province.In fact, Since the second half of 2020, Oriental Yuhong has invested a lot, with a total investment of more than 35 billion yuan, driving up its market value with a roaring momentum.The personage inside course of study points out, so big expend, it is to reduce raw material to rise in price risk.According to Oriental Yuhong’s 2020 annual report, raw materials account for more than 86% of the operating costs of waterproof rolling materials and waterproof coatings.Second, high-speed expansion needs to increase the national layout.Waterproof building materials industry has a certain regional characteristics, at present, it has investment in north China, East China, northeast China, central China, South China, northwest China, southwest And other regions.But in addition to repeatedly raising funds to fund expansion, Li seems to like investing in property companies.Invested in two listed real estate companies within one year, with a total investment of about HK $139 million.The two cornerstone investors of Jingjiaye, a real estate company that rang the bell on November 10, 2021, were Keltic and Glodon.The beneficial owner behind Keltic is Li Weiguo.Through Keltic, Mr Li bought 80,652,000 shares, or 5.5% of the issued shares, at an issue price of HK $8.28, at a total cost of HK $66.781,600.In fact, this is not the first time for Li Weiguo to invest in a real estate company. At the ipo of New Hope Service, which was listed in May 2021, Li Weiguo invested HK $72.3 million to hold 2.4% equity of New Hope Service at the issue price of HK $3.8, becoming one of the six cornerstone investors of New Hope Service.Despite rising revenues and net profits, Oriental Yuhong’s gross margins are falling.According to the 2021 semi-annual report, the overall gross margin of Oriental Yuhong was 31.61%, down 8.21 percentage points from the same period last year.Subdivision, waterproof coil, waterproof coating gross margin of 33.06%, 34.73%, down 9.33% and 9.38% respectively.In response, Oriental Yuhong said that due to the implementation of new accounting standards, transportation and handling fees adjusted to the operating cost accounting, resulting in an increase in operating costs.Excluding the impact, gross margin was 34.67%, down 5.15 percentage points from a year ago.In the first half of 2021, the operating cost of Oriental Yuhong was 9.731 billion yuan, an increase of 84.11% year-on-year.In the composition of operating costs, selling expenses were 1.067 billion yuan, up 15.16% from the same period last year, and administrative expenses were 785 million yuan, up 25.72% from the same period last year.More importantly, The net cash flow of Oriental Yuhong was -3.491 billion yuan, 871.43% lower than the same period last year. This was due to the increase in procurement expenses caused by the sharp rise in raw material prices. In order to mitigate future cost increases, the company also increased the reserve of raw materials, which put pressure on the capital chain.Executives and institutions have also reduced their holdings over the past year.Vice Chairman Xu Limin also reduced his holdings. From April 8, 2021, he held 92.2693 million shares, which became 87.2693 million shares on June 30, a decrease of 5 million shares. From April 8 to June 30, Oriental Yuhong’s stock price reached 48.75 yuan at the lowest, which means that he realized at least 244 million yuan of cash.According to public data, as of June 30, 2021, Ruiyuan Growth value hybrid fund reduced its holdings of Oriental Yuhong 1,027,200 shares;Central Huijin Asset Management Co., Ltd. withdrew from the list of the top ten tradable shareholders, which means that it reduced its holdings of Oriental Yuhong by at least 19.6517 million shares.Bocom Schroder’s two funds are out of the ten current shareholders.In fact, in 2020, The number of institutions holding Oriental Yuhong was 665, and in 2021, the number of institutions holding Oriental Yuhong will be 181, a decrease of 484 in one year.Article source: Leju Finance Research Institute