Produced by: Sina Finance Research Institute of Listed Companies

Author: Langtou Diet/Hao Xian

Listed in October 2021 Qingdao Food , has fallen into a stagnant state of performance growth.

The sales volume of the core product biscuits was the same as that of 2018, and the number of dealers remained unchanged for many years. In 2021, the raised investment project was also announced to be postponed recently. Judging from the use of raised funds, the raised funds at the time of listing were 357 million yuan, but now only 8.65 million yuan is used. The remaining funds have always been in the bank for interest.

This can not help asking how these projects were demonstrated during the IPO? Can these projects be completed as planned after two years of delay when sales stagnate all year round and the company lacks initiative?

　　 Qingdao's food performance has stagnated for many years, and the R&D investment is less than 1.7 million yuan

In 2023, Qingdao Food will achieve a revenue of 489 million yuan, down 0.91% year on year; The net profit attributable to the parent company was 86.1074 million yuan, down 5.82% year on year.

In the case of a 0.91% decline in revenue, the rise in raw material prices led to an increase in operating costs, which led to a 1.43% decline in the gross profit margin of the company, which was the main reason why the decline in net profit far exceeded the decline in revenue.

Last year, the sales expense increased by 6.55%, resulting in an increase of 0.27 percentage points in the sales expense rate, but the management expense decreased by 11.72%, so the overall expense rate was the same as that of the previous year. Among the administrative expenses, the biggest impact is on labor costs. Last year, senior executives generally cut salaries, and the total number of employees fell to 536 from 579 last year.

Qingdao Food is a time-honored enterprise in Shandong Province. With Shandong Province as its base, it contributed about 80% of its income in the province. Last year, the income in the province declined by 6.16% year on year. The company's core products are biscuits and peanut butter, accounting for 88% and 8% of the revenue respectively. Last year, the biscuit revenue declined 0.89%, while peanut butter declined 3.15%.

Due to the single product (mainly from biscuits), single market (mainly concentrated in Shandong Province), and the lack of enterprising management, Qingdao Food has long been at a standstill.

From the sales side, the sales of biscuits and peanut butter declined by 2.21% and 5.69% respectively last year. In 2023, the sales of biscuits remained the same as in 2018, while the sales of peanut butter shrank by 38%.

From the perspective of channels, in 2023, there will be 90, 100 and 19 dealers in the province, outside the province and e-commerce. There is little difference from 2019, only 5 and 9 dealers will be added to the platform outside the province and e-commerce respectively. From the perspective of R&D investment, the company's R&D investment in the last two years has not exceeded 1.7 million yuan.

It is precisely because of the "lack of ambition" in channel and product research and development that the performance of Qingdao Food has stagnated.

　　 It is doubtful that the necessity of raising funds by taking interest on the account all the year round through IPO

Different from the stagnation of performance, Qingdao Food is quite active in embracing the capital market.

In 2018, the company was listed on the New Third Board, and in October 2021, it entered the Shenzhen Stock Exchange, raising 357 million yuan for the first time. At that time, it was planned to invest the raised funds into three projects: the reconstruction and expansion project of intelligent chemical plant, the construction project of research and development center, and the marketing network and informatization construction project.

The original construction period of the intelligent chemical plant reconstruction and expansion project is three years. After completion, four biscuit production lines will be added, three of which are calcium milk biscuit production lines, and one is leisure biscuit production line. After all of them reach the capacity, a total of 21840 tons of calcium milk biscuit production capacity and 6240 tons of leisure biscuit production capacity will be added. The company said in the prospectus that the project will further improve the company's product structure while expanding the production scale.

On April 9 of this year, Qingdao Food released the announcement on the delay of the project invested with raised funds, saying that "the market and consumption environment have changed during the construction of the project invested with raised funds. The company will delay the project invested with raised funds from the perspective of protecting the interests of all shareholders and enterprises, in the principle of maximizing benefits, in combination with the current implementation progress of the project invested with raised funds, market changes and other conditions." The three projects were originally put into production on October 31, 2024, but were postponed to October 31, 2026.

For Qingdao Food, whose sales have stagnated for a long time, the necessity of raising funds on the market is not so strong. In 2023, Qingdao Food will produce 30500 tons of biscuits with a capacity of about 32000 tons. If the 28000 tons of raised capacity is put into production, the company's capacity utilization rate will be reduced to about 50%.

In fact, at present, the progress of the reconstruction and expansion project of the intelligent chemical plant is only 1.44%, the construction project of the R&D center has not yet started, and the progress of the marketing network and information construction project is 11.25%. However, only 8.65 million yuan was used for the raised funds, and the remaining funds have been kept in the bank for interest. At present, the interest income after deducting service charges has reached 19.1991 million yuan, and the balance of raised funds is even greater than the original net amount of raised funds.

Only more than 8 million yuan has been invested in two and a half years, which is equivalent to no formal construction. For the reconstruction and expansion project of the intelligent chemical plant, in the delay announcement, Qingdao Food said, "After full demonstration by the company, at this stage, it can temporarily meet the current market demand by upgrading some existing production lines and improving the production efficiency of existing equipment."

How are these projects demonstrated during IPO? Is it reasonable for the raised capital to be kept in the bank for interest? With sales stagnating all year round, can these projects be completed as planned two years later?

　　 What is the significance of cross-border acquisition of Huakun Biology by accumulating large amounts of cash?

By 2023, the book monetary capital of Qingdao Food will be 170 million yuan, and the trading financial assets will reach 762 million yuan, totaling 932 million yuan. Last year, the company realized interest income of 2.4537 million yuan and net investment income of 21.2116 million yuan, while the company's net profit attributable to the parent company was 86.1074 million yuan. Interest and investment income have become an important source of profit.

Qingdao Food, which has a large amount of cash, does not expand its production capacity. In recent years, the dividend payout rate is also relatively low. The dividend payout rate in 2021 and 2022 is below 40%.

At the end of 2023, the company issued an acquisition announcement, intending to participate in the public delisting acquisition of 34% equity of Qingdao Huakun Biotechnology Co., Ltd. (hereinafter referred to as "Huakun Biotechnology"), with a transaction price of 13.0491 million yuan.

Before the acquisition, Qingdao Tourism Investment Ecological Health Care Co., Ltd. (hereinafter referred to as "Tourism Investment Health Care") held 70% of the equity of Huakun Biology, and Qingdao Huanzhou Import and Export Co., Ltd. held 30%.

The actual controller of tourism investment and health care is Qingdao West Coast New Area State owned Assets Management Bureau, which is a member of Qingdao West Coast New Area Marine Holding Group (hereinafter referred to as "the Group"). The Group is one of the two major holding groups in Qingdao West Coast New Area, and most of the bond issuing urban investment enterprises in the New Area are affiliated to the two major holding groups. The actual controller of Qingdao food is Qingdao SASAC. The debt scale of Haikong Group is large, and the sale of equity may also be considered to reduce the debt.

Founded in 2017, Huakun Biology is a small berry deep-processing enterprise, whose main products are dried small berries (dried apples, dried blueberries, dried cranberries, etc.), serving as a supplier for food enterprises. The first phase of the project will be put into production in 2021, and the company will start to generate revenue. The revenue in 2021 and 2022 will be 22.77 million yuan and 51.93 million yuan respectively. From 2021 to 2022, it has been in a loss state, with losses of 15.53 million yuan and 23.35 million yuan respectively. The unaudited revenue and net profit in 2023 will be 54.947 million yuan and 1.9604 million yuan respectively.

From the disclosed financial data, Huakun Biological has a high debt ratio. In 2023, the total assets of Huakun Biology will be 266 million yuan, and the net assets will be 27.8777 million yuan. It is worth mentioning that the seller only committed to the performance in 2025, and promised that the operating income in 2025 would not be less than 133.51 million yuan (excluding trade income), and the net profit attributable to the parent company would not be less than 6.16 million yuan.

For Qingdao Food, whether this transaction is active or passive has once triggered market speculation. What is the significance of the company's cross-border acquisition of a small berry deep processing enterprise?