Plum Bio's huge acquisition of Ipin Bio has many problems.

Plum Bio (600873) on January 13 issued the "Issuance of shares and cash to purchase assets and raise supporting funds report", the plan is to be targeted to issue 660 million shares at a price of 4.73 yuan / share, plus 700 million yuan in cash to buy all shares of Ipin Bio, thus calculating the price of Ipone Bio as high as 3.831 billion yuanHowever, it is impressive that the acquired target, Ipsin Bio, has posted huge losses on net profit in the first seven months of 2013 and 2014, and is still able to value it at a 106 per cent premium to its book net assets under such conditions3Wkthen, Meihua Bio with 3.8 billion yuan to buy such a large loss of non-listed companies, is not the "wrong head" is not? It is important to know that the total market value of Lotus MSG (600186), a listed company with a lower loss in the first half of 2014 than Epin Bio, was only 5 billion yuan, which also contains the value of the indescribable "shell resources"3Wknot only that, Ipin Bio's own operating information and financial data also have a lot of doubts3WkIppin bio-gross margin significantly higher 3Wkthe first thing that attracted attention was the gross margin of Ipin Bio, which significantly outstripped other companies in the same industryTaking the company's highest revenue contribution of MSG products as an example, revenue in the first seven months of 2014 was RMB695 million, while carrying forward production costs amounted to RMB637 million, which calculates the gross margin of MSG products of Ipin Bio 8.35%However, in contrast, the old qualified MSG production listed company Lotus MSG, regardless of the scale of production or brand awareness is not lost in Theipin biology, but lotus MSG PRODUCTs in the first half of 2014 gross margin is only 4.48%, almost half of TheiPh3Wkif the difference in sales net interest rate, will be affected by different companies cost control efficiency and other complex factors, difficult to compare simply, but the comparison of gross margin is relatively pure, after all, MSG products are popular products, sales price is not like liquor as much influenced by the brand, different manufacturers face the terminal market price should be about the sameIf Ipin bio can achieve nearly double the gross margin of the industry's leading companies, in theory, either it can either purchase relatively low-cost corn raw materials, or pay workers significantly less than the same industry companies lead to lower labor costs, but these assumptions are almost impossible in a transparent market environment3Wk, therefore, Ipin Bio, which is much higher than other companies in the same industry gross margin is very questionable, not to mention a detailed analysis of the company's high gross margin causes are really strange3Wk the bizarre drop in the unit cost of the acquisition 3Wk According to information about The Main Business of Ivey Bio disclosed in the acquisition report, the main raw materials purchased by the company relate only to corn and coal, and the prices of the two main raw materials increased by varying degrees in the first seven months of 2014 3Wk The first thing that is confusing is that coal prices fell sharply in 2014, compared with the market environment in 2013, which is well known as the industry context However, the average price of coal purchased by Ipsin bio in the first seven months of 2014 was even higher than in 2013, and being a coal supplier to Ispin bio was a "lucky" thing, almost "ironing out the cycle" Of course, this is not the main problem 3Wk has been analyzed in the previous article, the company's main business costs, that is, product production costs, related to material costs, labor costs and manufacturing costs Among them, labor cost and manufacturing cost have some rigidity, under the condition of substantial increase in output, will be affected by the scale effect, resulting in the decrease of the unit labor cost and unit manufacturing cost 3Wk but in the case of Ipsin, actual production in the first seven months of 2014, compared with the full-year level of 2013, did show a small increase, but the overall growth rate of no more than 20%, which does not lead to a significant change in the scale effect, which means that the company's main products unit labor costs and unit manufacturing costs will not be significantly reduced 3Wk at the same time, The cost of Ipin biological raw materials also showed a small upward trend, then in a reasonable financial logic, even if there is no increase in the production cost of products unit, at least should not exist in the unit production costs significantly reduced space 3Wk but in fact, according to the product sales and cost carry-over data disclosed in the acquisition report, it can be estimated that all product lines of Ispin bio in the first seven months of 2014 have seen varying degrees of decline in unit production costs, of which MSG products unit cost decreased by about 15%, compound fertilizer unit production costs are reduced by more than 20% 3Wk such cost reduction, in the main raw material procurement prices all show a small increase in the conditions of The Ipon bio, is really a big surprise, so how can the company do to keep costs out of the economic scale and raw material price constraints?3Wk regardless of the reality, the strange drop in the cost of production per unit of Ipsin Bio's main products has indeed brought benefits to the company In the first seven months of 2014, the company's average sales price for its main products fell significantly, according to the acquisition report Revenue contribution was only slightly less than the price of MSG's lysine products, and there was a decline of more than 20% 3Wk In the operating environment of a sharp decline in product market prices and a rise in the price of major raw materials, The combined gross margin of Ipin Bio remains at 12.11%, a slight decline from 13.95% in 2013 The change in cost data, which is completely out of line with financial logic, created a stable margin that was higher than that of the industry's leading company before the acquisition of Epin Bio, which in turn created the company's seemingly bright profitability 3Wk but the key question is, how credible is the data information that violates the basic business logic and financial principles?3Wk a large number of inventory and fly 3Wk to see the production and sales data disclosed by Ispin bio, comprehensive look at the cumulative production of various product lines during the reporting period, are greater than the cumulative sales volume, then the excess of the natural part should form the inventory of finished goods balance, and correspondingly reflected in the inventory - inventory commodity account balance That is, even if we assume that Ipsin does not have any inventory of finished goods at the end of 2011 (which is clearly an unusual extreme assumption), the cumulative inventory balance by the end of July 2014 should not be smaller than the balance of newly increased finished products for the two years and the first period 3Wk The weighted average method of accounting for its inventory, which results in the company's unit production cost of finished goods in stock being between the previous year's cost and the most recent cost, but closer to the most recent cost amount;3Wk but the key issue is that even if we adopt such unit price criteria, we cannot confirm the reasonableness of the ibin biostock financial data 3Wk only the two most important products, MSG and lysine, are measured only, the cumulative balance of these two products in the reporting period of 157,000 tons and 419,000 tons of finished products, the first seven months of 2014 unit production costs were 5764.31 yuan / ton and 5034.82 yuan / ton, the balance of these two products corresponding to the inventory book value of up to 301.4586 million yuan This does not take into account the cumulative balance of other products of Ipin Bio, as well as the inventory of finished goods that may already exist by the end of 2011 3Wk However, according to the data disclosed in the audit report, the inventory-inventory commodity account balance of Ipin Bio as of the end of July 2014 was only 275 million yuan, significantly lower than the minimum inventory amount of both MSG and lysine as measured earlier 3Wk How should the doubts in TheIper Biostock Data be explained? Is the production disclosed in the production and marketing information artificially watered? This is all of which is worth paying attention to 3Wk the hidden concerns behind the abnormally high rate of asset acquisition 3Wk According to the information disclosed in the acquisition report, the production capacity of the main products such as Isoline, susine, MSG in the first seven months of 2014, compared with 2013, did not increase, is completely consistent However, during the same period, the fixed asset investment of Ipin Biological stake was very large, and the original value of machinery and equipment included in the original value of fixed assets also increased by 878 million yuan in the first seven months of 2014, a significant increase of 50% 3Wk For production-oriented enterprises such as Ipone Bio, fixed asset investment in machinery and equipment is usually used for the production of main products, so the substantial increase in the balance of such assets should correspond to the increase in product capacity, but Ipin Bio is clearly contrary to this business common sense 3Wk is not only that, from the acquisition report disclosed the new rate of the main equipment of Theipin biological information, the new equipment accounted for the vast majority, in the disclosure of 28 major equipment, completely not yet started to use as many as 11 items;3Wk wonderwhying why not reflect the change in capacity of Ipin bioproducts in such a large number of new equipment purchases? If the company is for the machine and equipment fixed assets centralized replacement, then the replacement time is also too centralized? This will fully affect the continuity of normal production and operation, and is by no means the way a continuous operating company may adopt The 3Wk is more like a "sewage treatment kit", which is also a device that has hardly been activated However, Ipin biology has been the main products include MSG, according to public information, MSG is glutamate fermentation, in the production process needs to constantly put a lot of production bacteria into the inside of the nutrients, there are many other functions of chemical substances, so the production process produced a lot of waste liquid, and the chemical composition of waste liquid is very complex, if these waste liquid is not treated or even poorly treated, will cause serious environmental pollution, is strictly prohibited emissions 3Wk and as far as Ipin biological, before there was no "sewage treatment complete equipment", the company is how to deal with the production of wastewater, how to discharge external?3Wk and as the bidder for this acquisition, Meihua Group, is not without a loss, the company as early as 2009 because of the pollution of groundwater issues by CCTV "Focus Interview" column exposed So is there a similar problem of pollution discharged from the outside world by Ispin bio? All these have given the company's operations a great danger, very worrying 3Wk major product revenue data contradicting 3Wk finally look at the 2013 sales data, for the new tryptophan products in 2014, which is also the highest unit price of Ippin Bio,000 products, in the first seven months of 2014 total production and total sales were exactly the same, are 0.06 million tons According to the audit report, the operating income realized by the product in the first seven months of 2014 was RMB49,414,200 3Wk at the same time, however, according to the acquisition report disclosed in the Ipin biological products sales unit price information, the first seven months of 2014 the average price of tryptophan sales of 86,405.12 million yuan / ton, then converted to 0.06 million tons of sales above, the corresponding operating income should be 51.8431 million yuan This is 2.4289 million yuan or 4.92 percent more than the actual sales revenue realized by Ipping Bio products, so how is the revenue difference of millions of dollars generated?3Wk comprehensive analysis can find that the large amount of ibin biological financial data significantly deviated from the normal business logic and financial accounting logic, and even no lack of contradictions, which make people doubt the accuracy of the company's disclosure of information, which is mixed with a large number of artificial whitewashing? It's worth the attention of investors 3Wk Meihua Bio (600873) on January 13 issued the "Issuance of shares and cash to purchase assets and raise supporting funds report", it is planned to issue 660 million shares at a price of 4.73 yuan per share, plus 700 million yuan in cash to buy all shares of Ipon Bio, thus calculating the price of Ipone Bio up to 3.831 billion yuan However, it is impressive that the acquired target, Ipsin Bio, has posted huge losses on net profit in the first seven months of 2013 and 2014, and is still able to value it at a 106 per cent premium to its book net assets under such conditions 3Wk then, Meihua Bio with 3.8 billion yuan to buy such a large loss of non-listed companies, is not the "wrong head" is not? It is important to know that the total market value of Lotus MSG (600186), a listed company with a lower loss in the first half of 2014 than Epin Bio, was only 5 billion yuan, which also contains the value of the indescribable "shell resources" 3Wk not only that, Ipin Bio's own operating information and financial data also have a lot of doubts 3Wk Ippin bio-gross margin significantly higher 3Wk the first thing that attracted attention was the gross margin of Ipin Bio, which significantly outstripped other companies in the same industry Taking the company's highest revenue contribution of MSG products as an example, revenue in the first seven months of 2014 was RMB695 million, while carrying forward production costs amounted to RMB637 million, which calculates the gross margin of MSG products of Ipin Bio 8.35% However, in contrast, the old qualified MSG production listed company Lotus MSG, regardless of the scale of production or brand awareness is not lost in Theipin biology, but lotus MSG PRODUCTs in the first half of 2014 gross margin is only 4.48%, almost half of TheiPh 3Wk if the difference in sales net interest rate, will be affected by different companies cost control efficiency and other complex factors, difficult to compare simply, but the comparison of gross margin is relatively pure, after all, MSG products are popular products, sales price is not like liquor as much influenced by the brand, different manufacturers face the terminal market price should be about the same If Ipin bio can get nearly double the gross margin of the industry's leading companies, in theory, it will be able to purchase rather cheap corn raw materials.