Last weekend, the news that Yasui Foods, a leading premade dish, is preparing to go public in Hong Kong went viral as soon as it was announced. The company's listing plan has been resolved by the board of directors, and management has been authorized to begin preparations.

The opening results on Monday were remarkable. A-share investors unkindly sent Yasui a drop off board, leaving a huge gap in the jump.

Investors generally find it difficult to understand Yasui's decision to go public on H shares. The performance of Hong Kong stocks last year and A-shares can be described as bad brother. If the stock price does not perform well after listing, it will even affect the valuation of A-shares.

Investigations are increasing. Since the company went public, several rounds of financing and frequent shareholders' holdings reduction have already scarred shareholders. In this period when confidence is more expensive than gold, Yasui still has to go public in Hong Kong. What kind of medicine does Hululi actually sell?

01

Yasui Foods is mainly engaged in R&D, production and sales of frozen foods such as frozen hot pot ingredients, frozen noodle rice products, and frozen dish products. The hot pot ingredients, frozen products, and prepared dishes industry has been a popular “racetrack” in recent years.

According to the “Top 100 Chinese Prepared Food Manufacturers List” published by Hurun Research Institute in 2023, Yasui Foods ranked first in the TOP10.

In the first three quarters of last year, Yasui Foods achieved operating income of 10.271 billion yuan, an increase of 25.93% over the same period of the previous year; net profit to mother was 1,122 billion yuan, an increase of 62.69% over the same period last year.

But who would have thought that such a high-performing Hakuba stock in the food and beverage consumer industry has too much experience in financing.

Since entering A-shares in '17, Yasui has collected a total of 7.77 billion yuan from the capital market four times.

In February 2017, the initial listing raised 601 million yuan and issued 54.01 million shares. The total investment requirement for the fundraising project was 539 million yuan, so the total amount was exceeded by more than 60 million yuan.

On July 31, 2018, 500 million yuan of convertible bonds were issued, with a total face value of 493 million yuan converted into shares. The number of shares transferred was 13.9443 million shares, accounting for 6.45% of the company's total share capital before the share transfer.

On July 31, 2020, an additional 900 million yuan of convertible bonds were issued, with a total face value of 898 million yuan converted into shares. The number of shares transferred was 7.7497 million shares, accounting for 3.27% of the shares already issued before the conversion.

The most recent round of fundraising occurred in May 2021. Yasui privately issued no more than 5.74 billion yuan, and ultimately raised 5.675 billion yuan.

The company has been listed for less than 7 years, and the average pace of investment is less than 2 years. People who see this may wonder if Yasui's own hematopoietic ability is poor, or if the industry is highly competitive, and Yasui needs repeated investment in construction to maintain his advantage.

But in fact, judging from financial data, the company's hematopoietic capacity is actually very healthy.

In the 7 years since its listing, Yasui has achieved a cumulative net profit of 4.355 billion yuan and earned a net operating cash flow of 5.231 billion yuan. As the scale of revenue grew, there were also more and more cash reserves. The cash held by the company in the third quarter of last year, plus transactional financial assets totaled 6.12 billion yuan, accounting for about 38% of total assets. There is also $522 million in notes receivable and accounts receivable.

In the third quarter, the company still had close to 5 billion dollars in cash, or cash equivalent. In the past two years, it has been increasing by nearly 2 billion dollars. Why can't this much money be used to meet the company's business development needs?

The reason why they are still being called “vampires” by shareholders is that since the company went public, it has scraped more than 7 billion dollars from shareholders, but the dividends have been scarce. Over the years, dividends have been distributed 8 times, for a total of only 1.25 billion yuan.

Of this 1.25 billion yuan, about half of which was taken up by the original shareholders, it is equivalent to saying that over the years, shareholders contributed more than 7 billion dollars, and finally only distributed 630 million yuan. The dividend yield is not as high as interest on bank demand deposits, let alone the price loss caused by the company's increase in stock prices.

From 2017 to 2021, the stock price of Yasui Foods soared more than 20 times.

However, after peaking in 2021, the stock price began to decline. Based on the 2021 high, the stock price fell by nearly 70%.

What has attracted more criticism from investors than “vampires” is that the majority shareholders and executives of the company seize the opportunity of rising stock prices to cash out frequently.

02

After going public, Yasui developed a habit of reducing his holdings while financing.

The top ten shareholders held more than 75% of the shares at the beginning of the listing, but by the third quarter of last year, only 47.68% remained.

According to financial data from Tonghuashun, since the launch of Yasui Foods, shareholders have reduced their holdings and cashed out more than 6.336 billion dollars. Specifically, they can be divided into two groups of people, major shareholders and executives.

The company's controlling shareholder, Fujian Guoli Minsheng Technology Development Co., Ltd., was established in November 2000. Zhang Gaolu, Lu Qiuwen, Dai Yuhan, and Sun Gang are the founding shareholders. Among them, Zhang Gaolu holds 32.93% of the shares. They are both the majority shareholder and actual controller, and indirectly have a large control over Yasui.

Investors should be alert as soon as the actual controller is replaced. In September of last year, Yasui announced that the actual controllers of the company were changed from Zhang Gaolu to Hang Jianying and Lu Qiuwen.

Source: Company announcement

Zhang Gaolu transferred his shares in Guoli Minsheng to her mother Wang Su for 71.5 million yuan, then her mother transferred 28.74% of the shares she had already obtained to her sister Wang Jijuan at a price of 72 million yuan.

The identity of today's actual controller Yasui is even more a mystery.

According to the company's disclosure, Guoli Minsheng is the only company under Hang Jianying's name. It began taking over Guoli Minsheng shares of Zhang Gaolu, Dai Yuhan, and others in September '22 until September of last year, when it became the largest shareholder and actual controller.

Looking only at the company's performance and future growth prospects of the prepared food circuit, there is no explanation for the original actual controller's intention to relinquish control. After reducing holdings several times, the national power and people's livelihood have cashed out more than 3,074 billion dollars.

On the other hand, the company's management is busy “selling and selling” while being responsible for performance growth.

Chairman Liu Mingming cashed out over $1,456 million, general manager and director Zhang Qingmiao cashed out over $934 million, Deputy General Manager Huang Jianlian cashed out over 409 million dollars, and Deputy General Manager Huang Qingsong cashed out over 427 million dollars. These are all original shareholders of the company.

Shareholders on this side have successfully retreated, cashed out in style, raised capital frequently and reduced their holdings, and the company's stock price sank all the way to the bottom.

Since the 2021 high, shareholders of Yasui Foods have reduced their holdings and cashed out by more than 4.654 billion dollars, and the market capitalization has dropped from a high level of 67.235 billion to the current level of 25.41 billion dollars, evaporating 418.25 billion dollars.

The unfolding circuit and the weak performance of the company's stock price made the fund unable to withstand it.

At the end of the third quarter of last year, the fund's shareholding volume of Yasui decreased by 12.92% compared to the previous period, and was heavily encumbered by 248 Yasui funds, a decrease of 47 from the previous period.

03

Yasui, who is on a popular track, is still highly favored by brokerage firms. Last year alone, there were 106 research reports supporting the “buy” or “only increase holdings” view. Last year's results were persuasive enough.

The two-day decline may be due to a “stampede” between institutions, or a repricing based on the company's current level of governance. After all, in a company where major shareholders concentrate on reducing their holdings, it is difficult for shareholders to continue to trust the management's level of operation.

Although it is currently only in the planning stage, Yasui Kamiichi's explanation is not persuasive. H shares were issued to speed up the company's internationalization strategy and overseas business layout, but the details of the internationalization strategy were not carefully explained.

It is clear that the cash flow is good and there is no shortage of money, and they still want to reach out to investors. Some investors believe that Yasui Foods would rather “cut its own value” and go public overseas. Under the current macroeconomic situation and financial market environment, its motives are inevitably questionable.

At the same time, even if it is re-listed, it is difficult to obtain a normal valuation. Until it comes up with more convincing explanations, shareholders can only vote with their feet.

Yasui Foods needs more effort to prove itself to the market. (End of full text)