Huasheng shares: After deducting the net profit, the company will continue to sell assets for ten years.

On April 12, Huasheng (600156) 2017 annual report was officially released. At the same time that the company's performance turned from profit to loss in 2017, Huasheng shares also suffered from the negative pressure of negative net profit after ten consecutive years. . In fact, under the background of the continued sluggishness of the two main businesses of textile production and trading business, Huasheng also added a new medical machinery business in 2013 to seek “new birth”.

After deducting the net profit, the company lost 10 years

As the listed company's annual report disclosure entered an intensive period, Huasheng shares also handed over the 2017 performance transcript on April 12. However, the data shows that Huasheng's performance in 2017 is not satisfactory.

Specifically, Huasheng shares did not increase their income in 2017. Among them, in terms of operating income, Huasheng shares achieved an amount of approximately 712 million yuan during the reporting period, a year-on-year increase of 20.11%. However, Huasheng's net profit attributable to the same period of the year was a large loss, with a loss of approximately 86.57 million yuan. Compared with the net profit attributable to Huasheng Shares in 2016 of approximately 9.48 million yuan, it turned from profit to loss. In addition, in terms of net profit after deduction, Huasheng shares realized a loss of about 110 million yuan. Compared with the net profit after deduction of RMB 84.93 million realized in 2016, the amount of deductible net profit loss realized by Huasheng Shares in 2017 further increased.

According to the 2017 annual report, Huasheng is mainly engaged in the production and export of ramie textiles. The main products are ramie, linen, hemp yarn, fabrics and garments, containing hemp career apparel, home textiles, industrial textiles and modern pharmaceutical equipment. Regarding the reasons for the company's performance loss, Huasheng shares analyzed from the main business income, the company's textile industry with the increase in raw material costs and labor costs, the reduction of sales orders, the gross profit margin of textile products continued to decline, and the losses remained high. In addition, the company's pharmaceutical machinery revenue shrinks, the cost is high, the recovery of goods is difficult, and the loss is serious.

It is worth mentioning that after reviewing the annual report of Huasheng Shares, the Beijing Business Daily reporter found that since the 2008-2016 nine years, the company's net profit after deduction was a loss. This also means that Huasheng's net profit after deducting the vesting in the tenth consecutive year in 2017 is negative.

According to Xu Xiaoheng, a senior investment and financing expert, the net profit after deduction of non-deductibles can better reflect the development of a company's main business. If the company's deducted net profit after deduction is a loss for many years, it indicates the company's main business development. Not too optimistic.

Judging from the gross profit margin of the company's main business in recent years, it has shown a certain downward trend. Among them, due to the weak market environment in 2017, the company's main business income in 2017 increased by 20.56% over the previous year, and the main business cost also increased by 25.66%. Affected by factors such as the increase in the cost of the main business compared with the main business income, the gross profit margin decreased by 4.09% compared with 2016.

Remaining by selling assets

Although Huasheng’s net profit after deduction for a decade has been negative, the net profit attributable to the company during the same period is positive except for 2014 and 2017, and this is frequently sold by the company. It doesn't matter.

In recent years, for example, in October 2013, the company's controlling subsidiary, Hunan Huasheng Dongting Ma Industry Co., Ltd. (hereinafter referred to as “Dongting Company”), was listed on the Hunan Provincial United Assets and Equity Exchange. The company (hereinafter referred to as “Huayi Company”) has 80% equity and the listing price is 455 million yuan. According to the information, Huayi Company is mainly engaged in real estate development and operation. On October 23, 2013, the company's controlling shareholder Hunan Huasheng Group Co., Ltd. (renamed Hunan Huasheng Group Co., Ltd. in 2017) and Dongting Company transferred 80% equity of Huayi Company to Baode Company for 455 million yuan. The transfer increased the company's net profit for the year of 155 million yuan (unaudited). The data shows that in 2013, Huasheng's net profit attributable to the company was approximately RMB 79.2 million, and the corresponding net profit after deduction was approximately RMB -117 million.

In 2015, Huasheng shares managed to turn losses into profits by disposing of idle assets. In 2016, relying on government compensation for demolition and disposal of the shares held by Xiangcai Securities, Huasheng shares achieved a positive net profit attributable in 2016. Specifically, in 2016, Hunan Huasheng Zhuzhou Cedar Co., Ltd., a subsidiary of the company, received compensation for the demolition of Zhuzhou Government of approximately 91,179,100 yuan. In addition, the company will hold 7 million shares of Xiangcai Securities (which has been listed on the New Third Board) (accounting for 0.22% of the total share capital of Xiangcai Securities, accounting for 9.55% of the equity held by the company), at a price of 4.24 yuan per share. To the company's controlling shareholder Hunan Huasheng Group, the total transaction amounted to RMB 29.68 million. The investment income confirmed by this item (affecting the amount of profit before tax) is about 28.284 million yuan.

In the announcement of the 2017 results pre-loss issued by Huasheng, Huasheng shares mentioned that the company received a total of 120 million yuan in revenue from the two non-operating matters of asset disposal and disposal of financial assets in 2016. The data shows that in 2016, Huasheng shares achieved a net profit of 9.48 million yuan, and the net profit after deduction was about -82.29 million yuan.

Insufficient new business

In order to reverse the performance decline, Huasheng shares also added a medical machinery business in 2013 (after the business name of the pharmaceutical machinery business in 2014) to seek new profit growth points. However, the business suffered consecutive losses in 2016 and 2017.

It is understood that Huasheng shares were originally named Yi Xintai and were listed in May 1998. According to the relevant research report, due to the difficulty in forming a core business due to the bundled listed assets, and the reform is not complete, Huasheng shares restructured in 2004 to replace the diversified assets such as Yixintai, Dongma and Vinylon. The right to use Huasheng Industry and Trade and 10 plots in Zhuzhou City was placed. Since then, Huasheng has completed the equity acquisition of Minjiang Dongting Shida Ma Textile Co., Ltd. (hereinafter referred to as “Qijiang Shida”), and has controlled four companies to operate the two main businesses of foreign trade export and hemp textile processing.

However, the company's two main businesses gradually became sluggish. In 2008-2012, Huasheng shares achieved a negative net profit after deduction. In this context, the company also began to plan "self-help." On December 10, 2012, Huasheng Co., Ltd. signed an asset swap agreement with Hunan Huasheng Group Co., Ltd., the controlling shareholder of the company. Huasheng shares a 90% stake in Shenzhen Huashunda Industrial Co., Ltd., a holding subsidiary, and 99% of Qijiang Shida. The equity and holding subsidiary Huasheng Industry and Trade was replaced by a 51% stake in Hunan Huiyi Pharmaceutical Machinery Co., Ltd. held by some real estate, property and controlling shareholders in Shenzhen.

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According to the 2012 annual report, according to the industry, the company's main business is textile production and trade. By 2013, the medical machinery business was added to the annual report of Huasheng. In that year, the medical machinery business contributed nearly 42.66 million yuan in profits to Huasheng, and its gross profit margin reached 47.87%. It is worth mentioning that after consulting the data of the annual reports in recent years, the Beijing Business Daily reporter found that the gross profit margin of the company's new medical machinery business, except for the year-on-year growth in 2015, was in a year-on-year decline in other years, and after 2016. The business began to suffer losses. The data shows that from 2014 to 2017, the gross profit margin of pharmaceutical machinery business was 28.67%, 37.18%, -31.72%, -47.55%.

It should be pointed out that in 2016, Huasheng's main business added new real estate business. The data shows that the gross profit margin of the company's real estate sales business in 2017 was 28.04%, which was an increase from 2016. However, its revenue declined by nearly 100% year-on-year. In this regard, Huasheng shares admitted that the main business of the company's real estate business has actually ended in 2016.

At the same time that the newly added business has become weak, the company's two main businesses have not seen a significant improvement in recent years. The data shows that in 2015-2017, the gross profit margin of the company's textile production business was 11.67%, -0.54%, and -13.89%, respectively, which was in a state of decline. During the same period, the gross profit margin of the trading business (in 2017, the international trading business) was in a volatile state, which was 2.04%, 3.41% and 2.34% respectively.