Zhengbang's Redemption: When Pig Enterprises with Huge Losses of 18 Billion Cross Border to Engage in Photovoltaic Industry

The night before dawn is quiet, and Lin Feng has been moving forward in the spring of 2022. Where is the future for Zhengbang Technology (002157. SZ)?

Taking over the reins of his father's leadership, he handed over the money he had earned for 17 years to a company with a scale of tens of billions, which could not even exchange for 500 million commercial bills. Now that Lin Feng has entered the field of new energy, can he redeem Zhengbang Technology before dawn?

'Being rich for three generations' is no longer a curse in the field of pig farming. Former richest man in Henan, Hou Jianfang, saw his fledgling farming and animal husbandry fall at the dawn of the pig cycle. While the stock prices of other pig farming companies soared, Hou Jianfang's pig farm kept howling and the pigs ran out of food.

As a model worker, Hou Jianfang's son Hou Geting has little interest in raising pigs and enjoys playing with luxury cars. Hou Jianfang's 2 million pigs starved to death, Eagle Farm and Animal Husbandry went bankrupt, and Hou Geting suffered various verbal and written attacks.

Like many wealthy second-generation individuals, Lin Feng shoulders the heavy responsibility of promoting the prosperity of his family business. From traceable data, Lin Feng's father Lin Yinsun led Zhengbang Technology to earn 9.97 billion yuan from 2004 to 2020.

In January 2020, Lin Yinsun led Lin Feng and a group of executives to hold a swearing in ceremony for the "Two Hundred Billion" in Jiangxi, shouting "In the era of passionate battles, the momentum is like breaking bamboo, which is Zhengbang". Eight months later, Lin Feng was officially appointed as the chairman of Zhengbang Technology, a listed company. At that time, Zhengbang Technology's output value exceeded 100 billion yuan for the first time.

The bold words were realized, and just as Lin Feng was full of ambition, the pig cycle came. In 2021, Zhengbang Technology had a revenue of 47.7 billion yuan and a net profit loss of 18.8 billion yuan. After 17 years of hard work by Lin Yinsun, Lin Feng suffered a complete loss.

By 2022, Lin Feng had not found a good solution to save Zhengbang Technology, with a revenue of 6.49 billion yuan in the first quarter, a year-on-year decline of over 48%; Net profit loss of 2.433 billion yuan, a year-on-year decline of over 1249%. Finance has further deteriorated, with 542 million commercial bills overdue and unpaid.

How bad is Zhengbang Technology's finance really? At the end of the first quarter of 2022, the total liabilities were 40.69 billion yuan, with a debt ratio of 97.03%. The current liabilities were 28.68 billion yuan, the notes payable and accounts payable were 4.224 billion yuan, and the non current liabilities due within one year were 4.011 billion yuan.

There is not much time left for Lin Feng. The only thing that allows Lin Feng to breathe a sigh of relief is that he still has 3.073 billion yuan in monetary funds on his books. However, 542 million commercial bills are overdue and cannot be redeemed, which may put a question mark on their book currency funds.

The funding chain is a difficult problem for Lin Feng. Zhengbang Technology had a total credit of 25.4 billion yuan in the first quarter, of which 7.1 billion yuan was unused. It means we have already borrowed 18.3 billion yuan from the bank.

In the case of using a large amount of bank loans, the 3.073 billion yuan on Zhengbang Technology's books cannot be used for commercial bill redemption. Is it a special designated fund? Of course, the 7.1 billion credit funds can also cover one-year non current liabilities, but for the 28.6 billion current liabilities, it is a drop in the bucket.

The stock price of Zhengbang Technology has been declining from a historical high of 25.98 yuan to around 7 yuan, with a market value evaporation of over 60 billion yuan. Lin Feng wants to raise funds through the capital market, but it may be difficult to win the favor of investors until the fundamentals improve, after all, there have been cases of starving pigs in Yingying Agriculture and Animal Husbandry.

In April, Zhengbang Group and concerted action parties were liquidated by creditors for 29.18 million shares due to collateral being below the liquidation line. It can be seen that it has become extremely difficult for both Lin Feng and his son to obtain financing through pledge.