On July 21, Henan Fenghua Seed announced its decision to terminate its initial public offering plan. Henan Fenghua Seed, one of the important live pig enterprises, terminated its initial public offering plan twice within six years. According to a representative from Henan Fenghua Seed, the decision is based on the failure to meet the business goals in the year of 2018 and 2019. However, Henan Fenghua Seed will consider launching another initial public offering plan in the future if the company makes outstanding achievements.
Henan Fenghua Seed is a pig-breeding enterprise, located in Zhumadian city, Henan province. The enterprise’s main business is to raise and sell live pigs. The company breeds pigs and provides newborn pigs to farmers, and the company also commercially sells pigs to slaughtering companies.
Henan Fenghua Seed started to make an initial public offering plan in 2014, but the listing plan was terminated after a year. In September 2017, the company restarted its initial public offering plan, signing an official agreement with Soochow Securities, but on July 21, 2020, the company terminated the listing plan again.
Henan Fenghua Seed begins to recover from sharp losses due to African swine fever
Data shows that the annual revenue of Henan Fenghua Seed in 2017, 2018 and 2019 was RMB 327 million, RMB 305 million and RMB 184 million, respectively. The net profit attributed to its shareholders in 2017, 2018 and 2019 was RMB 60 million, RMB -2.5 million, and RMB -296 million, which was a decrease of 16.18%, 104.1%, and 11897.9% compared to a year prior.
The pork price hit rock bottom in 2018, which affected the performance of many live pig enterprises. However, in 2019, due to the scarce supply of pigs in many farms, the pork price started to rise sharply. Thus, many pig enterprises gained profits during their second quarter. Most pig enterprises are still in a profitable situation.
Henan Fenghua Seed’s 2019 report shows that due to the African swine fever virus, the number of pigs sold on the market decreased and therefore, the company’s revenue also became low. In addition, there were African swine fever virus outbreaks in other branches, which led to the death of a number of pigs. A representative from Henan Fenghua Seed said that recently many pig farms cannot be used after disinfection. After disinfection, farms should not be used for pig breeding for around one year. Moreover, in some farms owned by Henan Fenghua Seed, many pieces of equipment are starting to degrade, and the company has often opted to rebuild new pig farms.
In fact, Henan Fenghua Seed is not the only live pig enterprise which encountered business problems due to the African swine fever virus. Bashan Livestock Husbandry said in its 2019 report that the revenue in 2019 was RMB 42.2 million, which was a decrease of 3.63% compared to 2018. Bashan Livestock Husbandry had a loss of RMB 20.8 million, a decrease of 289.6% compared to 2018.
Henan Fenghua Seed establishes subsidiary for live pig breeding and selling
In 2019, Henan Fenghua Seed decided to cooperate with large-scale live pig enterprises. On July 3, 2019, Henan Fenghua Seed established a company named Henan Aonong Fenghua Modern Agricultural Development Co., Ltd (Fenghua Modern), with Aonong Biotechnology to start business in pig breeding and selling. The registered capital of Fenghua Modern is RMB 40 million, with Aonong Biotechnology investing RMB 24 million, accounting for 60% of the total registered capital. Henan Fenghua Seed invested RMB 16 million, accounting for 40% of the total registered capital.
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