The continuous loss after the purchase of the new energy premium in the United States

On the evening of May 20th, Mido Energy (600175, SH) issued an announcement saying that it received the “After the Post-Audit Inquiry Letter on the 2017 Annual Report of Midu Energy Co., Ltd.”. In 2017, Mido Energy's revenue was 6.482 billion yuan, up 46.61% year-on-year; net profit attributable to shareholders of listed companies was 57.7891 million yuan, down 61.18% year-on-year; net profit attributable to shareholders of listed companies was 164 million yuan, up year-on-year. 321.62%.

The reporter noted that the Shanghai Stock Exchange's inquiry letter to the annual report of the U.S. Capital Energy 2017 focused on whether there was a related transaction between the acquisition of Delang Energy by the U.S. Capital Energy Sun Company's Deqing Meidu New Energy Technology Partnership (limited partnership). The rationality of high premium and high performance commitment and the impairment of goodwill in the process of acquisition.

High premium successive losses after acquisition

In November 2016, Mido New Energy acquired a 49.597% stake in Shanghai Delangeng power battery Co., Ltd. (referred to as Delangeng) for 397 million yuan, and assessed the value-added rate of 278.58%, forming a goodwill of 192 million yuan. At the same time, the counterparty promised that Delang will have a net profit of no less than 100 million yuan, 125 million yuan and 156 million yuan in 2017~2019. At that time, Midea Energy said that this transaction is beneficial to the company to combine the advantages of new energy into the company's traditional business and enrich the company's business layout.

According to the U.S. energy annual report 2017, the current U.S. energy's main business includes: traditional energy including exploration, development, production and sales of crude oil and natural gas; The new energy business includes the research and development and production of lithium carbonate, cathode materials, and lithium batteries in the upper reaches of the new energy automotive industry chain, and at the same time cultivates industrial applications of graphene emerging materials; Finance and para-finance; Commercial trade and real estate, and service industries.

Among them, the lithium battery production business in the new energy business is mainly operated by Delang. The U.S. energy sector stated that Deloneng's technical strength is at a leading level in the industry. After many years of continuous research and development, its new production line in 2017 put into operation 2600mAh and 3200mAh's 18650 model powered lithium batteries have a high energy density. Can provide more power in the same volume of battery modules, thereby improving the endurance of new energy vehicles. As of the end of 2017, Delang has three production bases in Zhangjiagang, Shanghai and Ningbo, with a total production capacity of 2.5 GWh.

However, judging from the actual operating conditions of Deloneng, the company continued to lose money in 2016 and 2017. The net profit was negative 175,200 yuan and negative 171,013 yuan, respectively.

In this regard, the Shanghai Stock Exchange requires Meidu Energy to disclose whether the listed company’s director Dong Gao and the controlling shareholder are related to the acquisition of Delangeng’s counterparties and related parties, and whether there are other interests in equity, business, assets, credits and debts; It is also necessary to explain the rationality of the previous high-value acquisition, high-performance commitment, and whether there is interest transfer.

The Reasonability of Impairment of Goodwill

In 2017, Delang was able to deduct a non-negative loss of 194.91 million yuan, which was 119 million yuan less than the profit commitment. Medu Energy disclosed in the 2017 annual report that Delang could receive 59.7 million yuan in performance compensation, and Medu Energy will receive all performance compensation. 119 million yuan was included in the off-business income in 2017; In this period, the net profit of the listed company is 578.891 million yuan, and the above performance compensation has a significant impact on the current profit and loss. At the same time, in the case of Delang's performance commitment of 119 million yuan less, Medu Energy only counted 303.624 million yuan in goodwill impairment.

Based on this situation, the Shanghai Stock Exchange asked Medu Energy to disclose the actual performance compensation received by Medu Energy, the subsequent collection arrangements, and the original financial ability to pay performance compensation to gamblers in full. The accounting basis and rationality of the non-operating income of 119 million yuan in 2017 and whether the impairment of goodwill is sufficient, the amount of impairment of goodwill is far less than whether the difference in performance commitment is in accordance with accounting standards.

Mr Gaojianfeng, founder of CIC Capital, said there had been some "SWINDLE restructuring" in the capital markets, where low-value companies were bought at high premiums and the performance of listed companies quickly changed face after buying. Since the two parties reached a performance promise during the previous acquisition process, when the performance was not up to standard, the other party would compensate the listed company according to the promised profit, but in the secondary market, this is asymmetrical to the original purchase transaction. If the target company's profitability and performance commitment are large, it will push up the premium space of the target company and create a very unfavorable situation for secondary market investors.

According to the "Securities Times" report, from May 14 to 19, Shanghai and Shenzhen issued a total of 129 letters of inquiry through open channels, of which 97 letters of inquiry were issued in the annual report, accounting for 75 % of the total.

The Shanghai stock exchange said the annual report review noted that some listed companies in the early merger and restructuring of medium and high valuation, high goodwill, high performance commitments of the "sequelae" began to highlight. Many restructuring company performance commitments are difficult to complete. The high goodwill caused by the high valuation in the early period is faced with huge impairment risks, causing widespread market concern. The next year's report examines nearly 25 % of correspondence involving merger and acquisition restructuring issues. Statistics show that 36 companies have more than 20 % of total assets, and there are even companies that account for more than 50 % of the total assets. Some companies already have major risks. From the perspective of the performance commitment, many companies have just "stepped on the line" of the performance of the target of mergers and acquisitions, and some companies have achieved far less than the promised performance, and the quality of the targeted assets is worrying.

Regarding the problems found in the annual report, the Shanghai Stock Exchange stated that the first time to issue an audit letter of inquiry, according to the different nature of the problem, the impact of the scale, has been dealt with accordingly. For individual companies with outstanding problems and responses to ambiguous content, quickly conduct second inquiries; Companies that disclose insufficient and incomplete information and deliberately conceal true information have been urged to supplement the disclosure and fully disclose risks; Disciplinary proceedings have been initiated against companies that have suffered from performance changes, capital use, and non-compliance guarantees. At present, according to the review of the annual report, more than 40 companies with major risks are planned to be brought to the attention of the Securities and Inspection Bureau or on-site inspection.

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