Core Viewpoint - The recent private placement application by Huisheng Biological has been accepted by the Shenzhen Stock Exchange, but it faces significant criticism regarding the low issuance price and lack of specific investment projects, raising concerns about the interests of minority shareholders [1][2][3]. Company Summary - Huisheng Biological, a veterinary drug company, has been experiencing declining net profits since its IPO in 2020, with net profit dropping from 150 million yuan to a loss of 20.16 million yuan [6]. - The company's revenue has been increasing, but the net profit has been negatively impacted by the cyclical nature of the livestock industry and poor performance of previous investment projects [6][7]. - The company’s gross margin has decreased from 37% to 16.33%, and net margin has fallen from 19.31% to -1.65% due to various factors including declining product prices and rising costs [6]. Financing Details - The private placement will issue shares at a price of 9.19 yuan, significantly lower than the current market price of 20.68 yuan, which is only 44% of the market price [2][3]. - The maximum number of shares to be issued is 26,123,301, which could increase the controlling shareholders' stake to 47.92% [2][3]. - The total amount raised from this financing could reach 250 million yuan, but it is intended solely for replenishing working capital, raising questions about the necessity of the financing [3][4]. Investment Project Performance - Previous investment projects have largely failed to meet expected returns, with three out of five projects from the 2020 IPO not achieving their projected benefits [3][4]. - The company has faced challenges with its production capacity utilization and pricing, particularly in the case of the new products launched [4][6]. Industry Context - The veterinary drug industry is highly cyclical, with demand closely tied to the profitability of livestock farming [7]. - In the first quarter of 2024, Huisheng Biological reported a revenue increase of 92.96% and a net profit increase of 371.23%, attributed to improved cash flow in the livestock sector [7]. - However, the recent decline in pig prices raises uncertainty about whether the industry has truly recovered from its low point [7].