Shanghai Electric'S Initiative To "Detonate" Major Risks Of Its Subsidiary Company

Shanghai Electric Communication Technology Co., Ltd. (hereinafter referred to as the communication company) suffered major risks due to its subsidiary Shanghai Electric Communication Technology Co., Ltd.

On the evening of May 30, Shanghai Electric issued an announcement saying that the communication company with 40% equity had the risk of uncollectible large accounts receivable. At the same time, the subsidiary also has the risk of insufficient realization of inventory disposal and inability to pay off external loans according to the contract, involving a large amount of money. These situations will bring loss of profit and irrecoverable loan to Shanghai Electric as the controlling shareholder.

The reporter of 21st century economic report noted that for the self exposure of this major risk, Shanghai Electric soon received a supervision letter from the Shanghai Stock Exchange, requiring the company to verify the actual situation of the business development of the communication company as soon as possible and actively rectify.

It is worth mentioning that in addition to Shanghai Electric's stock price limit, electric wind power, another subsidiary of the company listed on the science and technology innovation board, has recently fallen into the mire of continuous stock price decline. Up to the time of publication, the share price of electric wind power fell below 9 yuan, and the price of higher point decreased by one third.

Extreme situation may cause 8.3 billion yuan loss

According to the announcement, four major risks may arise from the explosion of telecommunication companies.

First, the risk of uncollectible accounts receivable of communication companies. As of May 30, the company's accounts receivable amounted to 8.672 billion yuan. Shanghai Electric said that although it has taken a number of measures to collect, there is uncertainty about the amount of accounts receivable.

Combined with the major litigation announcement issued by the company, the main debtors are Beijing Capital Venture Group Co., Ltd. and trading branch (hereinafter referred to as capital venture), Harbin Industrial Investment Group Co., Ltd. (hereinafter referred to as Harbin Industrial Investment), Fushen Industrial Co., Ltd. and Nanjing Changjiang Electronic Information Industry Group Co., Ltd. (hereinafter referred to as Changjiang Electronics), The total payment of Sifang is about 4.463 billion yuan. Specifically, capital venture needs to pay 1.193 billion yuan and liquidated damages to communication companies, Harbin Industrial Investment Co., Ltd. needs to pay 57 million yuan and liquidated damages, Fushen enterprise needs to pay 788 million yuan and liquidated damages, and Changjiang electronics needs to pay 2.089 billion yuan and liquidated damages. In addition, the communication company also filed a lawsuit with Shanghai No.2 Intermediate People's court in April this year, requesting Harbin Industrial investment to pay a total of 336 million yuan and liquidated damages, and applied for property preservation.

Second, the risk of insufficient realization of inventory disposal of communication companies. As of May 30, the company's book inventory balance was 2.230 billion yuan. Shanghai Electric said that due to related business reasons, the subsidiary's inventory may not be fully realized, resulting in large asset impairment losses.

In fact, the above two risks will directly affect the realization of communication companies, and then affect the capital flow.

According to the financial data, the company's operating revenue was 2.984 billion yuan last year, with a net profit of 90 million yuan. The company's profitability was good. However, when the total assets of the company is as high as 10.104 billion yuan, its net assets are only 1.315 billion yuan, and its debt ratio is as high as 87%.

As a company mainly engaged in the production and sales of private network communication products, the sales mode of the communication company is that the customer pays 10% of the advance payment in advance, and the remaining payment is paid in installments according to the agreement after the order is completed and delivered. And this kind of installment payment is the main reason for the large amount of accounts receivable of communication companies.

For this company with high asset liability ratio, if large accounts receivable cannot be recovered, it is very easy to affect its solvency, including the repayment of loans paid by Shanghai Electric as the parent company.

So the two remaining risks are closely related to debt.

According to the announcement, there is also a risk that communication companies will not be able to pay off external loans in accordance with the contract. As of May 30, the company's loan balance with commercial banks was 1.252 billion yuan, and the due repayment dates ranged from June 29, 2021 to February 15, 2022.

What makes people more worried is that the total amount of shareholder loans provided by Shanghai Electric to communication companies is 7.766 billion yuan, and the maturity date of loans varies from November 14, 2021 to May 28, 2022. If the loan can not be repaid in time, and the equity loss caused by the loss of the communication company itself will be superimposed. Under extreme circumstances, Shanghai Electric may lose 8.3 billion yuan of net profit attributable to the parent company.

Share price of subsidiary electric wind power decreased by 30%

Shanghai Electric's share price fell to a limit after it disclosed the major bad news of the communication company. Up to the time of publication, the number of sealed orders exceeded 1.3 million hands, and it is not ruled out that there is the possibility of continued drop limit.

21st century economic reporter noted that in the regulatory letter sent by the Shanghai Stock Exchange, the exchange required Shanghai Electric to "sort out the possible problems in internal control and corporate governance, actively rectify and avoid the recurrence of similar incidents". This means that the investigation of the risk of accounts receivable of its subsidiaries will become the focus of the internal governance work of Shanghai Electric in the near future.

In fact, when the accounts receivable and inventory of the communication company exploded, electric wind power, another important subsidiary of Shanghai Electric, also became the focus of attention.

On May 19 this year, electric wind power landed on the science and technology innovation board, becoming the "first share of state-owned assets split". When announcing the spin off of the wind power business sector for listing last year, Shanghai Electric once stressed that this spin off will help the wind power business sector to become bigger and stronger, and enhance the profitability, market competitiveness and comprehensive advantages of electric wind power.

After the listing of electric wind power, its share price soared to 13 yuan. But as of the time of publication, the company's share price once fell below 9 yuan, a high point of nearly 30%.

Financial data show that the performance of electric wind power has increased significantly in recent two years. In 2020, the company's revenue will exceed 20 billion yuan, with a year-on-year increase of 104.11%; The net profit attributable to shareholders of listed companies was 417 million yuan, up 65.59% year on year. In the first quarter of this year, electric wind power once again doubled its revenue and net profit. However, the 21st century economic reporter noticed that as the leading domestic wind power enterprise, the company's accounts receivable and inventory in recent years have achieved a certain range of growth.

By the end of the first quarter of 2021, the accounts receivable of electric wind power were 5.146 billion yuan, an increase of 11.24% compared with the end of 2020; The inventory balance was 6.607 billion yuan, a significant increase of 42.27% over the end of 2020.

In terms of the composition of accounts receivable, the 21st century economic reporter noted that the aging of electric wind power accounts for more than 68% of the total accounts receivable. However, at the end of 2020, the company's accounts receivable aged from one to two years increased significantly compared with that in 2019.

In addition, compared with the financial situation of other head wind power enterprises, the overall asset liability ratio of electric wind power is relatively high. By the end of the first quarter of 2020, the company's asset liability ratio was 86.13%. Over the same period, the asset liability ratios of Jinfeng technology and Mingyang intelligent were 67.83% and 68.81% respectively.