Right and wrong, its all in the past. Now our main problem is how to save the company. A new executive of Tianshen entertainment admitted in an interview with 21st century economic reporter.
Its not alarmist to use the word rescue. No matter the debt situation or the huge loss, its a barrier. Moreover, before the new management team starts to do something, there are still more problems to be solved.
Extraordinary road of God Entertainment
One month ago, on October 8, Tianshen entertainment just announced the change of its management. Li Chun, Yin chunfen, deputy general manager, and Xiang Weiqing, chief financial officer resigned. At the same time, Xu Dewei served as the general manager of the company, and Guo Baichun, Liu Yuping, he Han and Li Yanfei served as the deputy general manager.
So far, the new management of Tianshen entertainment, which has been in turmoil for more than a year, is officially in place.
The story began at the beginning of the year, and the whole market was shocked by the huge goodwill impairment of Tianshen entertainment.
In January 2019, Tianshen entertainment released a performance correction announcement, which substantially lowered its performance forecast for 2018, and finally expected a net loss of 7.3 billion to 7.8 billion yuan in 2018. In the third quarter report of 2018, Tianshen entertainment also predicted that the companys net profit attributable to the parent in 2018 would range from RMB 0 million to RMB 509 million.
In the sharp contrast, the question also follows.
The core reason for the change in performance is the impairment of goodwill. Due to the decline of the performance of subsidiaries, the company conducts impairment test on the goodwill formed by business combination according to regulations, and it is estimated that the provision for impairment of goodwill is about 4.9 billion yuan.
The final annual report shows that in 2018, the net profit attributable to the parent of Tianshen entertainment was a loss of 7.151 billion yuan.
Founded in March 2010, the backdoor listed company in 2014 ushered in the biggest trust crisis since its listing.
From the perspective of historical evolution, at first, the main business of Tianshen entertainment is the R & D and distribution of web games and mobile games. After listing, Zhu ye, the founder of Tianshen entertainment, has been expanding gradually through M & A. at present, the main business of Tianshen entertainment has been expanded to the game business, mobile application distribution business, advertising and marketing business, and film and television entertainment business.
When the economy goes up, many problems are covered up. The main problem of Tianshen entertainment is that the asset integration is not carried out in time after the merger and acquisition. Light asset companies will develop very fast when the economy is good, but also very unstable. If the management and control is not good, the performance will decline rapidly. The 21st century economic report draws this conclusion from the insiders of Tianshen entertainment.
Although many companies have emerged a large number of M & a sequelae in 2018-2019, which is not an isolated case, but the loss of more than 7 billion yuan is still jaw dropping.
Mergers and acquisitions in recent years have made the market hype atmosphere increasingly strong, and asset bubbles are relatively large. We all have high expectations for the future development and performance prediction of such M & a active companies. In addition, the PE at the time of acquisition is relatively high, which deviates from the book value. Once the economy goes down or the industry stagnates, there will be a huge amount of goodwill impairment. On November 1, an analyst from a large securities firm in Beijing told 21st century economic news.
Now I think that the original radical expansion may have laid the groundwork for todays scene.
As Zhu Ye admitted in an open letter in August, I am wrong.
Zhu Ye pointed out that the wrong problem is that he chose the path of development through the extension of M & A, rather than the endogenous development, to find the real barriers and moats.
Growth is important for companies, but growth based on barriers and moats is most important. Zhu Ye said.
But the cost of the mistake is too high. As of November 1 this year, the share price of Tianshen entertainment has declined by 47.71%. Its market value on November 1 is only 2.57 billion yuan, which is about 94% lower than the market value of more than 40 billion yuan in 2015.
This market value performance, in addition to the current market fair A-share shell value, there is little left.
Self rescue and breakthrough of small shareholders
We believe that the interests of major shareholders are no longer synchronized with those of small shareholders. Although major shareholders still hold shares through high-level pledge, they have doubts. And bring so many negative effects to the company, small shareholders naturally need to help themselves. An executive of the current management of Tianshen entertainment told 21st century economic reporter.
August autumn high wind howled, different shareholders wishes, concentrated outbreak.
On the 15th of that month, the three shareholders of Tianshen entertainment, namely new Co., Ltd., Yihe Yinfeng (Tianjin) Investment Management Co., Ltd. and Shanghai Chengzi Investment Center (limited partnership), requested that the board of directors of Tianshen entertainment hold the fourth extraordinary general meeting of shareholders in 2019.
According to the data at that time, the above three shareholders held 105 million shares of Tianshen entertainment for more than 90 consecutive days, accounting for only 11.22% of the total share capital. Therefore, it has not attracted the attention of many people in the industry.
In the proposal put forward by the three shareholders, it is required to replace all members of the board of directors of the company and elect new non independent directors, independent directors and supervisors of Tianshen entertainment.
For example, the proposal pointed out that the directors Yang Kai, Shi Botao, Yin chunfen, Lin Shuyong, Li Chun and Shen Xuelian failed to fulfill their legal duties of loyalty and diligence, which led to the continuous deterioration of the operation of Tianshen entertainment, the disorder and out of control of corporate governance, huge performance losses, and serious violations of shareholders rights and interests; the illegal behavior of Tianshen entertainment credit under the leadership of the board of directors violated public shares Dongs right to know has a huge negative impact on the companys image in the securities market; the board of directors allows the actual controller and senior executives of the company to engage in illegal acts against the companys interests.
The small and medium shareholders of the company no longer trust the current members of the board of directors. Small and medium shareholders pointed out.
As early as may 2018, Zhu Ye has received the notice of investigation from the CSRC. Due to the suspected violation of securities laws and regulations, the CSRC decided to file a case for investigation.
The risk of pledge of stock right comes with it. In September 2018, all shares of Tianshen entertainment held by Zhu ye have been frozen, and the pledged shares account for 98.94% of its shares.
When the shares held by the major shareholders of the listed company are pledged at a high level, it is difficult for the major shareholders to benefit from a certain increase in the shares, but it is closely related to the interests of the small and medium-sized shareholders. At this time, there are differences between the interests of the major shareholders and the interests of the small shareholders. The small shareholders want to protect their rights and obtain the right to speak at the company level, which is actually a very difficult thing at present. The success of Tianshen Entertainments self rescue is just lucky u3002 After all, the proportion of shares held by major shareholders still has a clear advantage in the voting. One of the top executives of Tianshen entertainment put forward their own thoughts.
A person close to Tianshen entertainment pointed out that Zhu Ye was questioned when the companys operation was in extreme decline, and the operation level has brought negative impact on shareholders. Especially about Zhu ye people in the United States, they are doubted. Until Zhu Ye resigned, the minority shareholders thought that he was no longer on the same front with the minority shareholders.
But Zhu Ye refuted in the open letter, since the listing of Tianshen entertainment, have I ever reduced my holding at a high level, and have I ever made profits by reducing my holding of shares?? For the sake of the companys share price, I have increased the lock-in period time and time again, which you dont have in mind? To save the company now, we need people who understand the existing main business and do incremental business steadfastly. Otherwise, it will only be a game of capital.
The story that followed is well known. Small shareholders blood washed the original board of directors and appointed new management.
In the middle, although Zhu Ye issued an open letter, Li Chun also held a media conference to respond. But still failed to save the hearts of small shareholders.
When the enterprise is doing well, everyone cheers and shouts together. When the enterprise is not doing well, no one gives the corresponding tolerance, instead, Zhu ye should take the responsibility? So I dont think the query against Zhu Ye is true. Li Chun pointed out at the briefing.
New management challenges
A former management executive of Tianshen entertainment told 21st century economic news that he has left the company and no longer pays attention.
Put aside all kinds of disputes, is all the dust settled, and can the new management rest easy?
Now the company has three major problems. The first problem is that there are too many interest bearing debts, including 3.8 billion, including the debts formed by guarantee, trust, bank loans, etc.; the second problem is that the business is shrinking, and the performance in the third quarter of this year continues to decline. The executives told 21st century economic news.
According to the data of the third quarter report, revenue of Tianshen entertainment in the first three quarters was 1.038 billion yuan, down 44.46% year-on-year; net profit attributable to the parent company was 406 million yuan, down 261.61% year-on-year.
At present, we have three points to do: first, how to resolve the debt; second, how to stop the decline of old businesses and stabilize them; and third, how to develop new businesses. The executives said.
According to its analysis, on the one hand, the companys old business declined because of the lack of peoples morale, and the subsidiary felt that it had lost confidence in the parent company just like Chengdu, on the other hand, the capital of the subsidiary company encountered some difficulties.
When I first came here, I also found a lot of disadvantages about the company. Including the quality of personnel, management system and so on. A lot of young people want to do things, but they dont know how to do them, the executive said
It is a common practice for enterprises to activate stock business and seek for incremental window.
At present, the company is relatively stable, with the majority of young people. There was no atmosphere and opportunity to do things before, but now there are. We call on all people and departments to move forward and encourage people to work hard to achieve these three goals through practical measures. Achieve a breakthrough in business. The executives said.
According to the 21st century economic reporter, after the new management moved in, Tianshen entertainment has basically determined the new business direction. This new business is aimed at the outlet of E-sports.
As far as E-sports itself is concerned, the development speed of the industry is relatively fast. Not only has it entered the Asian Games, but many sports associations are also applying for it. In addition, E-sports is the most popular event for young people. Seeing E-sports more often, it has also attracted the attention of the government. One game industry analyst said. We do not have relations with shareholders. As professional managers, we come to the company to work for the companys operation and make the stock price recognized by the market. We hope to make the company solid. When the economy goes up, we can get the bonus brought by the upward wind. When the economy goes down, we can resist the pressure of the adverse wind and stick to it. This is called solid. The executives told 21st century economic news. The formal participation of small and medium-sized shareholders in the corporate governance of listed companies is a start for Tianshen entertainment and a new attempt for the A-share market. How to break through the siege path of Tianshen entertainment in the future remains to be answered in the future financial statements. Source: responsible editor of 21st century economic report: Yang Zeyu
As far as E-sports itself is concerned, the development speed of the industry is relatively fast. Not only has it entered the Asian Games, but many sports associations are also applying for it. In addition, E-sports is the most popular event for young people. Seeing E-sports more often, it has also attracted the attention of the government. One game industry analyst said.
We do not have relations with shareholders. As professional managers, we come to the company to work for the companys operation and make the stock price recognized by the market. We hope to make the company solid. When the economy goes up, we can get the bonus brought by the upward wind. When the economy goes down, we can resist the pressure of the adverse wind and stick to it. This is called solid. The executives told 21st century economic news.