The confrontation between Hengan International, which is full of love, Anle, and Seven Degrees, and Bonitas, a short-selling institution, have become hot spots in recent days.
The short-selling agency Bonitas issued a short report, saying that Hengan Group was “debt-stricken. Since 2005, it has fabricated a net income of 11 billion yuan, and the stock value is close to zero.†The two sides refuted each other and attracted greater attention from the capital market.
In two days, Hengan International's market value evaporated from 6.7 billion Hong Kong dollars. On the 13th, Hengan International's turnover reached 2.124 billion Hong Kong dollars, the third largest transaction amount of Hong Kong stocks, second only to Tencent and CCB.
Hollowing mechanism VS Hengan International
Things are developing like this: December 12
The short-selling agency Bonitas issued a short report, saying that Hengan Group was “debt-laden. Since 2005, it has fabricated a net income of RMB 11 billion, and the stock value is close to zero.†Due to the news, Hengan International announced the suspension of trading at 10:47 am. The stock price fell 5.7% on the day.
There are 3 specific points:
1. Forged sanitary napkin business profitability.
At a level of only 15% of competitors' operating profit margins, Hengan's business generated a 51% operating profit margin in the first half of 2018.
2. Forged bank deposits.
Hengan International continued to rely heavily on short-term loans when it recorded large net profits and had large bank deposits. Therefore, the real reason for its recent increase in debt is because the cash reported by Hengan is false.
3. Profit through connected transactions.
Hengan borrowed from third parties to realize excess dividends and traded with non-disclosed related parties to build and operate a non-core property in Hengan in Fujian.
Hengan International shares fell 5.7%, suspended.
Affected by this news, Hengan International once fell nearly 9%, after which the company was suspended at 10:47 in the morning, and all structural products related to the company also temporarily stopped trading. Before the suspension, it was quoted at HK$57.05. The stock price fell 5.7% on the day, and the latest total market value was HK$68.8 billion.
Hengan International subsequently responded to the accusation in the first time: Since the listing, the company has strictly complied with the rules of the Stock Exchange and disclosed relevant information in a timely, open and transparent manner. Relying on SAP and other management systems, it implements real-time monitoring and tracking of financial data such as sales and profits. It is audited by an authoritative international auditing agency such as the Certified Public Accountant every year. There is no financial data fraud.
And responded to five major questions, including:
1. Return on assets and operating profit of the fiction sanitary napkin business
Hengan International announced that the company has been engaged in sanitary napkin business since 1985. Over the years, benefiting from the company's early history of operating in the sanitary napkin market and in the sanitary napkin market, the company has gradually established consumer groups and distribution channels. In addition, it also benefits from a variety of categories, from basic ("Anle" brand) to high-end quality ("seven space") of various sanitary napkin products to occupy various market channels, thereby increasing market penetration.
Obtaining market research reports from well-known experts in the industry, the company still ranked first in China's sanitary napkin sales in 2017 and the first half of 2018, accounting for about 27% of the relevant market share, about 8% higher than the second-ranked market share. . Years of operating history have also provided better bargaining power for companies and suppliers to negotiate prices.
2. False transactions: the allegations are malicious and unfounded
The Company's subsidiaries in Hong Kong, Macau, China and Mainland China are not subsidiaries of Hengan China and are used to purchase raw materials and production, and these subsidiaries will inevitably be associated with other subsidiaries of the Group ( Including the subsidiaries of Hengan China to conduct transactions, thus forming intra-group transactions between them, and these transactions are real transactions.
These internal transactions and related balance sheet items such as accounts receivable and accounts payable are offset in the Group's consolidated accounts and do not distort or exaggerate the Group's overall financial position.
3. Debt and the balance of fictitious bank deposits
All bank balances (including time deposits) are able to provide supporting documentation and consider the allegations of fictitious bank balances to be completely incorrect. Dividends of 60% of the net profit each year "is an indirect justification for the company's strong cash position and liquidity."
Bonitas further refuted: Hengan's response to avoiding evasiveness is light, and the response to the profitability of the sanitary napkin business is a lie.
Hengan International also responded: unfounded and malicious interpretation. Consider taking legal action against Bonitas.
At this point, Hengan International shares fell 3.68% yesterday, with a turnover of 2.124 billion Hong Kong dollars, the third largest transaction amount of Hong Kong stocks, second only to Tencent and CCB.
In two days, Hengan International's market value fell from HK$73 billion to HK$66.3 billion, evaporating HK$6.7 billion.
Half-year report revenue exceeds 10 billion
Founded in 1985, Hengan is China's largest family daily necessities company. Its brand of heart, seven degrees of space, An Erle, etc. are all well-loved and familiar brands of Chinese families. On December 8, 1998, Hengan International was listed on the Hong Kong Stock Exchange. On June 7, 2011, Hengan International entered the Hong Kong Hang Seng Index constituent stocks.
Hengan owns three Chinese well-known trademarks such as Anerle, Xinxiangyin and Anerle. The market share of women's sanitary napkins, baby diapers and household papers is among the top in the domestic market. Introduced in the official website: In recent years, Hengan has introduced the world's advanced production equipment, and simultaneously promoted the capacity expansion of six major tissue paper base paper bases in Fujian Jinjiang, Hunan Changde, Shandong Weifang, Chongqing, Anhui Wuhu and Xinjiang Changji, and the production capacity of household paper. The scale is at the forefront of the industry.
Hengan Group has acquired listed companies in Malaysia in recent years, invested in Indonesia, Russia and other countries, and invested in bio-pulp projects in Finland to further extend the industrial chain and layout of the international market.
In 2017, Hengan completed sales of 19.8 billion yuan and realized a profit of 3.8 billion yuan. In the first half of 2018, the company's performance reached 10.1 billion yuan, a year-on-year increase of 16.3%. The semi-annual report shows that in the first half of this year, Hengtian Group's unaudited operating income was 10.137 billion yuan, up 16.3% year-on-year; operating profit was 2.682 billion yuan, up 2.5% year-on-year. The company said on its official website that “Hangan International has maintained a healthy and sustainable development since its 20th anniversary.â€
The founder of Hengan International Group once said in an interview with the media that “Heng’an has been doing business for so many years, and there has been no growth in one year and no profit in one year.â€
The short-selling this time has made Hengan International face the biggest crisis since its listing. The 2-day market value evaporated by HK$6.7 billion. Can Hengan survive this crisis safely? Let us wait and see.
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