In September 2011, LianJian optoelectronics, which is mainly engaged in the construction of outdoor LED display products, was listed on the gem. However, in the second year of listing, the company appeared the phenomenon of increasing revenue without increasing profit, and the stock price performance was also obviously unsatisfactory. In this context, the company decided to move forward to the marketing and communication service industry. Since 2013, it has acquired a number of advertising and public relations companies at one go.
On the surface, the continuous acquisition of advertising and public relations companies has indeed led to a rapid growth in the revenue of LianJian optoelectronics Co., Ltd., which has increased from 586 million yuan in 2013 to 4.05 billion yuan at the end of 2018. However, it is regrettable that the old problem of no increase in revenue and no increase in profit still remains unchanged. Apart from a substantial increase of about six times in 2014 compared with 2013, the performance of LianJian optoelectronics Co., Ltd. has increased rapidly from 2014 to 2017 With the continuous and rapid growth of revenue, the net profit basically maintained between 128 million yuan and 257 million yuan. In 2018, the company also accrued 2.7 billion yuan of goodwill impairment provision for 11 subsidiaries acquired before this, resulting in a huge loss of 2.887 billion yuan in that year.
However, in addition to the huge loss of performance, the company has also been subject to relevant administrative penalties and disciplinary sanctions due to the acquisition of the subsidiarys inflated operating income and profits. According to the companys announcement, from 2014 to 2016, the subsidiarys time-sharing media falsely increased the operating revenue by making up the advertising business revenue and confirming the advertising business revenue in different periods, with a total of 61787000 yuan of falsely increased operating revenue and 60472500 yuan of falsely increased profit. As a result, the relevant personnel have been punished for 5 or 3 years prohibition of entering the securities market. In addition, COSCO media, a subsidiary, also increased its net profit by 10.6247 million yuan in 2016, and accurately focused its net profit by 7.0763 million yuan in 2016. These behaviors are all caused by the poor management of the subsidiary company of LianJian optoelectronics Co., Ltd. The inaccurate recognition of part of the companys revenue and cost resulted in the retroactive adjustment of the companys financial report from 2014 to 2016. The net profit from 2014 to 2016 decreased by 5.4871 million yuan, 61.3846 million yuan and 144.3513 million yuan respectively.
Obviously, many fraudulent behaviors of subsidiaries directly led to significant errors in the financial data of jcec from 2014 to 2016. In addition, due to significant differences between the 2017 annual performance forecast, performance express and actual performance of jcec and not corrected in time, jcec and related personnel were publicly condemned and criticized by the regulatory level respectively.
Major shareholders are also locked in because of M & A
The analysis of the existing problems of the listed companies is obviously closely related to the blind cross-border M & A of the listed companies before, and it is the blind M & A of the listed companies before that, which not only imprison a large number of investors, but also the major shareholders.
Data shows that from 2013 to 2015, due to the continuous cross-border M & A of LianJian optoelectronics, the share price of listed companies has soared, with the highest increase even exceeding 12 times. Although there is no necessary connection among acquisition, merger, stock price rise and stock pledge on the surface, they can boost each other in practice. According to the basic principle of increasing revenue but not increasing profit of LianJian Optoelectronics in that year, it is unable to attract more funds to buy. However, in the hot period of media sector, it is obviously attractive to enter the advertising business to buy a large number of advertising and public relations companies. With the rise of stock price, the pledge of stock rights becomes easier to implement. In this logic, listed companies can acquire funds through pledge and then carry out the next round of acquisition. In theory, as long as the stock price does not fall, the capital chain will not break, and the game will continue. In fact, Liu Hujun, the controlling shareholder and actual controller of LianJian optoelectronics, did the same. In the continuous acquisition and pledge, the listed company acquired a number of advertising and public relations companies, and promoted the stock price to continue to rise. According to the latest pledge data, Liu Hujuns share pledge ratio has reached 100%, and Xiong Jinyu, the concerted actor, holds 99.98%.
However, the problem is that the stock price of the company suddenly fell after the stock price reached the highest value after listing in mid June 2015, which made the originally seemingly solid relationship between the three no longer firm. The continuous decline of the stock price not only made many investors trapped, but also caused the bursting crisis of stock pledge of Liu Hujun, a major shareholder. In July 2019, LianJian optoelectronics issued a notice that Mr. Liu Hujun, the controlling shareholder and the actual controller, has been passively reduced due to the overdue pledge of the companys shares held by himself, and the total number of shares passively reduced this time is 7.6099 million shares.
In addition to the short position crisis, due to the overdue pledge and failure to renew the loan in the stock pledge financing, as well as the companys dispute over the liability for Securities Misrepresentation, part of the shares held by Liu Hujun, the controlling shareholder, and Xiong Jinyu, the person acting in concert with Liu Hujun, were also judicially frozen, totaling 46.6326 million shares.
Unexpected loss caused by returning to main business
According to the 2018 annual report of LianJian optoelectronics, the net profit of the year was RMB 2.887 billion. For this huge loss, the company said in the annual report that the company has carried out a comprehensive goodwill impairment test on the asset groups formed by each asset group, and carried out goodwill impairment treatment on the asset groups triggering goodwill impairment. The provision for goodwill impairment during the reporting period is 2.73 billion yuan, resulting in a huge loss during the reporting period.. However, it should be noted that the asset group with goodwill impairment mentioned here is exactly the target of large-scale public relations acquisition of Listed Companies in the past few years.
According to the data, as of December 31, 2018, the original book value of the goodwill of LianJian optoelectronic Co., Ltd. was up to 4.638 billion yuan, while the provision for impairment of goodwill in 2018 was 2.732 billion yuan, thus the accumulative provision for impairment of goodwill reached 3.527 billion yuan, and the net value of goodwill in the consolidated financial statements was 1.111 billion yuan. From the perspective of data proportion, the net value of goodwill of RMB 1.11 billion still accounts for 23.87% of the total assets of RMB 4.655 billion of CSCEC at the end of 2018, and the proportion is still not low.
As for the reasons for the huge goodwill impairment in 2018, LianJian optoelectronics said that there was a certain gap between the completion of the business performance of some merger and acquisition subsidiaries and the promised performance at the time of acquisition, which led to the goodwill impairment signs. Therefore, 11 previously acquired subsidiaries respectively accrued the goodwill impairment reserves of 120 million to 440 million yuan. Although the reason is very sufficient, the provision for impairment of goodwill with such a large area and high amount is obviously a slap in the face of the statement that it is conducive to improving the existing business scale and profitability level of the listed company put forward by the listed company at the time of acquisition.
It should be noted that in sharp contrast to the statements of realizing industrial extension, synergistic effect and complementary advantages in the original acquisition plan, the current joint construction optoelectronics implements the strategic layout of appropriately contracting and focusing on the main business, and for this strategic layout, the company has paid a loss again price.
On December 13, 2019, LianJian photoelectricity disclosed the announcement about the plan of litigation and settlement to be reached with the original shareholders of the subsidiary, and planned to sell 100% of the shares of Shanghai Litang Marketing Management Co., Ltd. (referred to as Litang marketing) and Shanxi HUAHAN Culture Communication Co., Ltd. (referred to as Huahan culture) acquired previously to the original counterparty. When acquiring 100% equity of Litang marketing and Huahan culture respectively, the transaction consideration was 496 million yuan and 364 million yuan respectively, while the sale price was only 41 million yuan and 42 million yuan.
Among them, the loan principal and interest of LianJian optoelectronics and its subsidiary Shenzhen Lianyungang Outdoor Advertising Co., Ltd. (hereinafter referred to as Shenzhen Lianyungang) are exempted by LiDang marketing, and the total dividend agreed not to be returned is 48.75 million yuan. The original shareholders of LiDang marketing agreed not to be returned to pay 347.9871 million yuan (corresponding to 15064127 shares) and 14.188 million yuan in cash compensation Yuan.
In addition, LianJian Optronics transferred 100% of its equity in Litang marketing to Xiao Lianqi, Litang Huizhi and Bofeng, the original shareholders of Litang marketing, at a price of 40.76 million yuan, and no longer required Litang marketing to pay the dividend in 2017. At the time of purchasing 100% stock rights of Litang marketing, the transaction price was 496 million yuan (including cash consideration of 145 million yuan; share consideration of 351 million yuan, corresponding to the number of shares issued was 15064127 shares). After eliminating the exempted loan principal and interest, as well as the dividend, share compensation and cash compensation that do not need to be returned, even if LianJian photoelectric received 40 million 760 thousand yuan For consideration, there is still about 82.0612 million yuan that can no longer be recovered.
The loss is more than that. The 100% equity of Litang marketing was transferred to the original shareholders of Litang marketing at a price of 40.76 million yuan. On the surface, some income was obtained and stop loss was made in time. In fact, the unaudited net assets of Litang marketing on November 30, 2019 were still 91.2910 million yuan, compared with 97.5819 million yuan at the end of 2018. Compared with the net assets, the transaction price is a big discount to the original shareholders of LiDang marketing, which actually constitutes a loss of the listed company.
Similarly, the same problem occurred when LianJian optoelectronics disposed 100% equity of Shanxi HUAHAN Culture Communication Co., Ltd. (referred to as Huahan culture).
At the beginning, the transaction price of 100% equity of Huahan culture was RMB 364 million (including cash consideration of RMB 189.28 million and share consideration of RMB 174.72 million, corresponding to the number of shares issued of 7498587). Now, the total amount payable for the buyback of 100% equity of Huahan culture by former shareholders of Huahan culture is RMB 150 million, excluding the buyback and cancellation of 7498587 shares, in fact LianJian optoelectronics still has 39.28 million yuan in consideration, which has not been recovered. Not only that, the 150 million yuan cant be received at one time, but is paid by installments in cash or real estate mortgage by Fengguang infinite and Hanchuang century. The first 30 million yuan will be paid within 3 months after the final equity transfer agreement is signed and takes effect, and the rest will be paid in four years, with an annual payment of 30 million yuan. The payment period is up to 4 years, and the collection risk cannot be ignored. Source: Yang Qian, editor in charge of stock market red weekly
At the beginning, the transaction price of 100% equity of Huahan culture was RMB 364 million (including cash consideration of RMB 189.28 million and share consideration of RMB 174.72 million, corresponding to the number of shares issued of 7498587). Now, the total amount payable for the buyback of 100% equity of Huahan culture by former shareholders of Huahan culture is RMB 150 million, excluding the buyback and cancellation of 7498587 shares, in fact LianJian optoelectronics still has 39.28 million yuan in consideration, which has not been recovered.
Not only that, the 150 million yuan cant be received at one time, but is paid by installments in cash or real estate mortgage by Fengguang infinite and Hanchuang century. The first 30 million yuan will be paid within 3 months after the final equity transfer agreement is signed and takes effect, and the rest will be paid in four years, with an annual payment of 30 million yuan. The payment period is up to 4 years, and the collection risk cannot be ignored.