As expected, Guangzhou Longqi insisted that accounting treatment was OK and there was no insider trading. But in the time of trust, the company has to admit that there is indeed a problem of untimely disclosure.
The main idea of the reply to the four questions is as follows:
1. Appropriateness of accounting treatment? It used to be right, but now it makes sense.
2. Is it misleading? The difference is that the understanding of the new accounting rules is not thorough enough.
4. Insider trading? No,
Does the land deposit affect the current profit?
After the inventory disappeared incident, the stock price of Guangzhou Langqi was nearly cut off. However, on November 14, a piece of good news appeared out of thin air, but let Guangzhou Langqi trading for two days.
On November 14, Guangzhou Langqi issued a notice on the progress of land acquisition and storage and accounting treatment of Guangzhou headquarters, saying that the company has met the land transfer conditions stipulated in the compensation agreement for the acquisition and storage of state-owned land use rights signed with Guangzhou land development center, and obtained the land transfer confirmation letter of Guangzhou land development center on October 29.
The company is expected to recognize the net amount of land compensation and reward for early land delivery after deducting the expenses of relocation and resettlement compensation for employees and dispatched personnel, house demolition, land leveling, soil pollution investigation and assessment, treatment and repair, etc., as asset disposal income in 2020. According to the previously agreed compensation of 2.156 billion yuan and the reward of 431 million yuan for early land delivery, the company will generate a pre tax profit of about 2.247 billion yuan, which will have a significant impact on the current profit.
What is the concept of 2.247 billion yuan for Guangzhou Langqi? When the 527 million yuan inventory disappeared in the early stage, the market has found that the accumulated net profit of Guangzhou Langqi is less than 500 million yuan since it was listed in 1993. Now, such a sum of land removal funds, for Guangzhou Langqi, is naturally a huge sum of money.
In fact, the news that Guangzhou Langqi is happy to mention the demolition fund is no longer news. The company has disclosed the accounting treatment of the collection and storage funds on December 11, 2019 and may 13, 2020, respectively. The above two announcements said that the accounting treatment of land collection and storage should be carried out in accordance with the No. 3 interpretation of accounting standards for business enterprises, that is, the special accounts payable should be transferred into deferred income, and the accounting treatment should be conducted according to the accounting standards for Business Enterprises No. 16 - government subsidies. If there is any balance in the relocation compensation obtained by the enterprise after deducting the amount transferred into the deferred income, it shall be treated as capital reserve. That is, it does not affect the current profit.
However, according to the updated accounting treatment, if there is no accident, Guangzhou Langqi will turn losses into profits in 2020. Rough estimate, it is estimated that Guangzhou Langqi can achieve a Book profit of more than 1 billion yuan this year (excluding taxes and fees temporarily). However, in the face of such a huge performance contrast, on the evening of October 30, Guangzhou Langqi avoided this important matter in the disclosure of the third quarterly report, and chose the column not applicable when checking the forecast of operating performance in 2020.
The first problem of the concern letter of the exchange is to ask the company to fully demonstrate the basis for accounting treatment of land acquisition and storage, whether it involves the correction of errors in previous years, and whether it conforms to the relevant provisions of the accounting standards for business enterprises?
In todays reply letter, Guangzhou Langqi said that the accounting treatment changes disclosed on November 14 were based on the accounting standards for Business Enterprises No. 16 - government subsidies (Application Guide) (revised in 2018). Through examples, it made clear that if the relocation compensation received by the enterprise is based on the fair value of the land delivered by the enterprise, its essence is the fair price of the corresponding assets by the government The purchase of assets from enterprises is a reciprocal transaction, not a government subsidy. Moreover, case 7-03 in the case analysis on the implementation of accounting standards for business enterprises by listed companies (2020) makes it clear that the relocation compensation received by the enterprise shall be handled in accordance with the general principles of asset disposal unless there is clear evidence that the compensation is significantly higher than the market value of the relocated land, and there are additional policy conditions and use conditions, including government subsidies Reason.
Picture from reply notice
Then, is it possible to mislead investors if the credit risk changes with large difference before and after, and whether the companys accounting treatment and change are cautious? This is the second issue of the exchanges letter of concern.
In the reply letter, the company said that due to two different treatment methods for market cases, the company conducted accounting treatment on land acquisition and storage in accordance with the accounting standards for business enterprises Interpretation No. 3 and referring to relevant market cases in the early stage; the subsequent change of accounting treatment method was also based on repeated study and demonstration of accounting standards and Its Application guide, market cases and case analysis According to the assets disposal, the accounting treatment of land acquisition and storage is more in line with the actual situation of the company. However, in the process of preliminary demonstration, the company did not fully understand the case of accounting standards for Business Enterprises No. 16 - government subsidies (Application Guide) (revised in 2018), and the market case study was not enough, which led to great differences in accounting treatment ideas before and after.
Langqi: it is true that the disclosure is not timely
Question 3 of the letter of concern: according to the announcement, the company has obtained the confirmation letter of land transfer issued by Guangzhou land development center on October 29, asking the company to explain that it failed to fulfill the above disclosure obligations in time, and to verify whether the information disclosure behavior of the company since the third quarter report is not timely and inaccurate.
The company replied that the company failed to make an accurate judgment on the nature of the act of obtaining the confirmation of land transfer, which led to the failure to timely disclose after obtaining the confirmation of land transfer. Instead, it was disclosed at the same time as the accounting treatment instructions, so there was a problem that the disclosure was not timely.
Picture from reply notice
The company also said that in addition to the above-mentioned matters, according to the companys current self-examination results, the company has not found any other untimely and inaccurate information disclosure behavior since the third quarter report.
Source of this article: Yang Bin, editor in charge of Shanghai Securities News_ NF4368