On the evening of July 8, Xinbang Pharmaceutical announced that Shanghai New Century Rating had put the company on the rating watch list. At present, the company’s main rating is AA.

In the news, Xinbang Pharmaceutical announced on July 7 that the company had received a notice from Harbin Yuheng Group, the concerted action person of Tibet Yuxi, the controlling shareholder. Yuheng Group received the Civil Ruling of Harbin Intermediate People’s Court in Heilongjiang Province, and the court ruled that the creditors of Yuheng Group had accepted the bankruptcy reorganization application of Yuheng Group.

The actual controller of Yuheng Group is Zhu Jiman, who previously became the richest man in Heilongjiang with a wealth of 10.5 billion yuan. Since 2018, the "Yuheng Department" it controlled has fallen into a financial crisis. At present, Yuheng Group controls two listed companies, Xinbang Pharmaceutical and Yuheng Pharmaceutical.

Now, both Xinbang Pharmaceutical and Yuheng Pharmaceutical are facing greater possibility of changes in their controlling rights in the future. From the operational point of view, both listed companies are facing the problem of declining performance.

The former richest company in Heilongjiang Province was repeatedly passively reduced its holdings after being filed for bankruptcy.

On July 8, due to the bankruptcy filed by Yuheng Group, Shanghai New Century Rating listed Xinbang Pharmaceutical with a debt ratio of 52% on the credit watch list.

　

The data shows that at present, the controlling shareholder of Xinbang Pharmaceutical is Tibet Yuxi, which holds 359 million shares of Xinbang Pharmaceutical, accounting for 21.52% of the total share capital of Xinbang Pharmaceutical. Yuheng Group holds 100% equity of Tibet Yuxi and is the concerted action of Tibet Yuxi.

At present, all the shares of Xinbang Pharmaceutical held by Tibet Yuxi have been pledged and frozen by the judiciary. Xinbang Pharmaceutical said that the company is different from Yuheng Group and Tibet Yuxi, and they are independent in business, personnel, assets, institutions and finance. The bankruptcy reorganization of Yuheng Group will not affect the normal operation of the company. Up to now, the company’s production and operation conditions are normal.

Yuheng Group is a Harbin enterprise whose actual controller is Zhu Jiman. In 2017, Zhu Jiman and Bai Lihui were ranked 349th on the Hurun Report with a wealth of 10.5 billion yuan, and they are also the richest people in Harbin.

　

At that time, the most important company in Zhu Jiman’s hands was Yuheng Pharmaceutical. As of July 3, 2020, Yuheng Group held 700 million shares of Yuheng Pharmaceutical, accounting for 32.18% of the company’s total share capital, of which 94.64% had been pledged.

Yuheng Group has been in debt crisis for a long time. In February 2018, the equity of Yuheng Pharmaceutical pledged by Zhu Jiman exploded, and there was a passive reduction at that time.

Since then, the situation of Yuheng Department is even more precarious, and the shares of Yuheng Pharmaceutical held by Heng Group have been put on the judicial auction platform for many times. On July 1, Yuheng Pharmaceutical announced that the equity of Yuheng Pharmaceutical, which Guotai Junan bid through judicial auction in May this year, has been transferred.

On July 7, Yuheng Pharmaceutical announced that the creditors of Yuheng Group applied to Harbin Intermediate People’s Court of Heilongjiang Province for bankruptcy and reorganization of Yuheng Group on the grounds that Yuheng Group could not pay off its debts due and its assets were insufficient to pay off all its debts. The Intermediate People’s Court of Harbin City, Heilongjiang Province accepted the case and ruled as follows: Accept the application of creditors of Yuheng Group for bankruptcy reorganization.

It is worth noting that the transfer of part of the equity of Yuheng Pharmaceutical, which was planned by Yuheng Group for nearly two years, has also been terminated.

According to the announcement of Yuheng Pharmaceutical Co., Ltd., Yuheng Group planned to transfer its 15% equity of Yuheng Pharmaceutical Co., Ltd. in August, 2018. Eventually, due to debt default and judicial freezing of the company’s shares, the share transfer was not successfully implemented. After friendly negotiation between Yuheng Group and the counterparty, the parties signed a Termination Agreement on July 6, 2020, agreeing to terminate the Share Transfer Agreement and related agreements signed on August 17, 2018.

Yuheng Pharmaceutical suffered a huge loss of 2.6 billion last year, and the growth of Xinbang Pharmaceutical declined significantly.

While Yuheng Group was filed for bankruptcy, the operating conditions of Yuheng Pharmaceutical and Xinbang Pharmaceutical actually declined in different ways.

The data shows that Yuheng Pharmaceutical’s net profit declined for three consecutive years. In 2019, its operating income fell by 7.8% year-on-year, with a loss of 2.655 billion yuan. By the end of 2019, Yuheng Pharmaceutical had total assets of 6.4 billion yuan, total liabilities of 4.8 billion yuan and asset-liability ratio of 75%. By the end of 2018, Yuheng Pharmaceutical’s asset-liability ratio was 53%.

In the 2019 annual report of Yuheng Pharmaceutical, it is bluntly stated that "the aging of existing products, shrinking market share and insufficient follow-up reserve products are all unavoidable problems before us."

Yuheng Pharmaceutical proposed at that time to consolidate the traditional pharmaceutical business in 2020, promote the reform of marketing system and focus on building CMO platform. Since the beginning of this year, Yuheng Pharmaceutical has accelerated the disposal of its assets, and the investment income from the disposal of Aonuo Pharmaceutical’s equity in the first quarter was 790 million yuan.

The data shows that in the first quarter of 2020, Yuheng Pharmaceutical’s total operating income was 581 million yuan, down -53.86% year-on-year, and its net profit was 659 million yuan, up 670% year-on-year.

On the other hand, Xinbang Pharmaceutical, a listed company, lost money in the first quarter of this year. Wind data shows that the year-on-year growth rates of operating income of Xinbang Pharmaceutical in 2017, 2018, 2019 and the first quarter of 2020 were 16.3%, 9.63%, 1.14% and -20.22% respectively.

　

From 2017 to the first quarter of 2020, Xinbang Pharmaceutical’s operating income increased year-on-year.

Affected by the COVID-19 epidemic, Xinbang Pharmaceutical was at a loss in the first quarter of this year. During the reporting period, the company’s operating income was 1.246 billion yuan, and the net profit attributable to shareholders of listed companies was 13.016 million yuan, down 121.06% year-on-year. Xinbang Pharmaceutical said that during the reporting period, due to the epidemic, sales revenue decreased compared with the same period of last year, and fixed expenses did not decrease compared with the same period of last year.

For Xinbang Pharmaceutical and Yuheng Pharmaceutical, the bankruptcy of Yuheng Group will also involve the possibility of changes in the actual controller of the company. Both of the above companies said that there is also uncertainty whether the bankruptcy and reorganization of Yuheng Group will lead to changes in the actual control rights of the company.

As of the close of July 8, Yuheng Pharmaceutical’s stock has increased by 22.44% this year, and Xinbang Pharmaceutical’s stock has decreased by 7.8% this year. The total market value of the two companies corresponds to 8.155 billion yuan and 8.069 billion yuan respectively.

Beijing News Shell Finance Reporter Li Yunqi Editor Xu Chaoproofread Lin Zhao