After nearly half a year of pulling with regulation, the order increase plan of feed giant 002311.SZ finally ended in withdrawal. In the refinancing tightened market environment, it is not surprising that Haida Group got this result.

On the evening of September 19, Haida Group announced that based on the progress of the company's stock offering to specific targets, and taking into account factors such as the capital market environment and the company's overall development plan, after full communication and careful analysis with relevant parties, decided to terminate the issue of shares to specific targets and withdraw the relevant application documents.

As early as June this year, the Shenzhen Stock Exchange asked whether Haida Group should clean up the assets of its wholly-owned subsidiary Guangzhou Haiyuan Micro loan Co., Ltd. (hereinafter referred to as "Haiyuan small loan").

In July, Haida Group said that it would take some time to communicate and clean up the microfinance business. In order to do a good job in replying to the inquiry letter, Haida Group applied to suspend the additional review.

But in the end, Haida Group also failed to hand over the inquiry letter, but directly chose to withdraw the IPO application.

Guangdong investment bankers told ID:TradeWind01 that the Shenzhen Stock Exchange's inquiry may point to considerations of potential risks associated with its small loan business.

Combined with the cash flow and fund-raising uses of Haida Group, Haida Group does not seem to be urgent for 1.5 billion yuan.

On the same day that the announcement was terminated, Haida Group just increased its cash management limit for idle funds from 2.5 billion to 3.5 billion, and its monetary funds almost doubled in the first half of the year, reaching 5.586 billion yuan.

ID:TradeWind01 called Haida Group several times to ask whether it would be spun off in the future, but there was no reply as of press time.

Small loan becomes the core of inquiry.

The questions in the inquiry letter of the Shenzhen Stock Exchange are all directed at Haiyuan small loans.

The Shenzhen Stock Exchange requires Haida Group to explain whether other listed companies similar to its main business or whose industrial chain involves feed customers and farmers are comparable; whether other companies provide loans to employees and whether Haida Group should clean up Haiyuan small loans.

In 2017, Haida Group invested 500 million yuan to set up a wholly-owned subsidiary Haiyuan small loan under the call of the development policy of agriculture, rural areas and farmers. In the first half of this year, it invested an additional 510000 yuan in small loans with a book value of 504 million yuan at the end of the period.

This is not an isolated case for feed enterprises to participate in the development of rural finance.

Take the feed industry leader New Hope (00876.SZ) as an example, its parent company New Hope Group has Shanghai Houwo Information Technology Co., Ltd. (hereinafter referred to as "New Hope Financial Services") operating commercial factoring and Internet small loan business to provide "good maintenance loan" products with credit funds for distributors and farmers in the lower reaches of the industrial chain.

The difference between the two is that New Hope Financial Services is the related party of the listed company, not in the listed company, while Haiyuan small loan is in the listed company.

Some Guangdong investment bankers told ID:TradeWind01 that the Shenzhen Stock Exchange may consider whether there is a risk of confusion between Haida Group's refinancing and its small loan companies, "and the small loan business of Haida Group is not directly and necessarily related to its main business. If there is a relevant qualification license or regulatory confirmation, it should not constitute a hindrance."

The Shenzhen Stock Exchange also mentioned in the inquiry whether Haida Group should "clean up" Haiyuan small loans.

Haida Group fixed increase plan encountered obstacles, or with the current refinancing supervision of the further upgrading.

In August, the CSRC said it would "implement a pre-communication mechanism and pay attention to the necessity and timing of financing for large-value refinancing of listed companies in the financial industry or large-cap listed companies in other industries."

Haida Group, which has a market capitalization of about 80 billion yuan, may be among the objects of concern.

As of September 20, the Shanghai Stock Exchange and the Shenzhen Stock Exchange have issued 4 and 20 approvals respectively since September this year, but the two cities have not accepted new refinancing projects. Some people in the Guangdong market told ID:TradeWind01 that there may be signs of suspension when the CSRC accepts refinancing projects.

There seems to be no shortage of money?

From the perspective of cash flow and liabilities, Haida Group is not short of liquidity.

As of the first half of this year, Haida Group had a total of 24.369 billion yuan in current assets, of which 5.586 billion yuan was in hand, an increase of 106.9 percent over the same period last year. In addition, current liabilities totaled 22.419 billion yuan, accounting for the largest proportion of notes and accounts payable with a value of 10.884 billion yuan, an increase of 38.71 percent over the same period last year.

By horizontal comparison, in the first half of this year, the asset-liability ratios of New Hope and 002385.SZ, which ranked first and third in the feed industry, were 71.79% and 60.71%, respectively. By contrast, Haida Group has only 59.63%, 12.16 percentage points lower than the new hope.

From the point of view of the purpose of fund-raising, the increase of 1.5 billion yuan from the actual controller is far from being "necessary." Some people in the Guangdong market told ID:TradeWind01 that the "necessity" of refinancing for fund-raising purposes would also be taken into account by regulation.

According to the fixed increase plan of Haida Group, it plans to issue 33.37 million additional shares to Xue Hua, the controller of the company, at a price of 45.09 yuan per share, with a subscription amount of no more than 1.5 billion yuan, but the fund-raising purpose is only to supplement liquidity.

According to Wind data, Haida Group raised a total of 3.83 billion yuan in the form of convertible bonds and short-term financing bonds for three consecutive years from 2020 to 2022.

By the end of the first half of this year, of the 2.83 billion yuan raised by Haida Group through convertible bonds, 253 million yuan had not yet been put into use.

It is worth mentioning that on the same day that the Haida Group announced the withdrawal and termination of the fixed increase plan, the announcement said that in order to improve the rate of return on capital in the light of changes in the macro financial environment and the company's actual operating conditions, it plans to adjust the amount of cash management using some idle self-owned funds from no more than 2.5 billion yuan to no more than 3.5 billion yuan.

As the periodicity of the feed industry is weaker than that of the aquaculture industry, Haida Group, which accounts for more than 80% of the feed business, was still able to record a double increase in revenue and profit when the original shares of "pig grass" lost 2.8 billion in the first half of the year.

During the reporting period, Haida Group achieved revenue of 52.737 billion yuan, an increase of 13.84% over the same period last year, and a net profit of 1.176 billion yuan, an increase of 14.46% over the same period last year.

In the past three years, Haida Group's CAGR (compound annual growth rate) was as high as 30.05%. According to Meng Weixiao, an analyst at Zheshang Securities, it is predicted that due to the slowdown in the overall growth rate of the feed industry and entering the era of stock competition, the head enterprises will continue to integrate the small and medium-sized production capacity in the industry to benefit the head companies.

This is the main line of development of the feed industry at present. According to the data of the above analysts, the number of feed processing enterprises in China dropped from 15810 at the end of 2006 to 5432 in 2019.

In this process, leading companies continue to increase the scale of acquisitions to build competition barriers. For example, Debao Group, acquired by Haida Group in 2021, is an agricultural and animal husbandry group with a production capacity of more than one million tons, which can be put into production quickly after technological transformation.

In the capital market, since its listing in 2009, the share price of Haida Group has moved strongly, rising from less than 10 billion yuan when it first went public to a peak of nearly 150 billion yuan in 2021.

Haida Group has adjusted since the beginning of this year, closing up 0.19% at 48.02 yuan per share on Sept. 20, with a market capitalization of about 80 billion yuan, down 21.47% for the year.