Great Wall Animation was questioned twice by the Shenzhen Stock Exchange on nine major issues related to asset sales

Recently, Great Wall Animation has successively disclosed plans for mergers and acquisitions and sales of major assets, hoping to win two cultural industry targets and divest coking assets with serious losses. The reporter noticed that after these two plans were released, they aroused great attention from the capital circle. The Shenzhen Stock Exchange issued inquiry letters twice, asking Great Wall Animation to explain the many existing problems.

Original title: Great Wall Animation was questioned twice by the Shenzhen Stock Exchange and many questions need to explain

the former "Sichuan Shengda". Although the company has been labeled as an animation, its operating performance is still dominated by traditional coking. Since February this year, Great Wall Animation has suspended trading for nearly five months in order to complete transformation. The main work during this period is to buy assets and dump burdens.

Nine major problems in selling assets

It is reported that Shengda Coking is mainly engaged in operating businesses such as raw coal mining and dressing, coke and its series products, and external leasing of lime production lines. In recent years, against the background of national industrial structural adjustment, the coking industry has suffered a serious overcapacity. Restricted by insufficient demand from downstream industries, Shengda Coking's performance continued to suffer serious losses, which had a significant adverse impact on the performance of Great Wall Animation. At present, Shengda Coking's 600,000-ton coke production line and its affiliated production systems have stopped production.

In this context, in mid-July, Great Wall Animation launched another critical step in its transformation. The company plans to sell its 99.8% stake in Shengda Coking through public listing. After the transaction is completed, Great Wall Animation will completely withdraw from the coking industry and completely transform into an animation cultural enterprise. According to the major asset sales plan, the corresponding value of Shengda Coking's 99.8% equity interest is 164 million yuan. The final transaction price and counterparty are subject to the public listing results on the Zhejiang Stock Exchange.

Immediately, the Shenzhen Stock Exchange conducted a post-event review of the above plan, and just a few days later, the exchange sent an inquiry letter to Great Wall Animation on July 18. The reporter noted that the Shenzhen Stock Exchange mainly raised nine major issues about the divestiture of Great Wall Animation. The focus was on whether the actual controller of the listed company participated in the auction, the sale of the target accounts payable, and the specific impact on the listed company. Great Wall Animation needs to explain the specific details of these issues.

According to the plan, Shengda Coking has other payables of 60.69 million yuan to listed companies. The Shenzhen Stock Exchange asked Great Wall Animation to explain Shengda Coking's solution measures and payment arrangements. At present, 18 properties and 1 land use right owned by Shengda Coking have been mortgaged to Agricultural Bank to provide mortgage guarantee for Great Wall Animation's 10 million yuan working capital loan from the bank. The listed company needs to explain whether the mortgage guarantee continues to exist after Shengda Coking is sold., and if it is necessary to release the guarantee, the impact on Great Wall Animation.

It is worth noting that after Shengda Coking shut down its coking production line, a certain amount of expenses will be required for related land restoration. Shengda Coking's management has calculated and evaluated that it has accrued an estimated liability of 88.5 million yuan for this matter. In fact, if the actual situation changes in the future, there is a risk that land restoration costs may need to continue to increase. Faced with this variable, Great Wall Animation also needs to explain the ultimate recipients of land restoration costs and the impact of the increase in actual costs on listed companies.

Although Great Wall Animation has embarked on the road of transformation in the past two years, the reporter found that its traditional businesses such as coking still account for more than 50% of its operating performance all year round. From 2013 to May 2016, Shengda Coking achieved operating income of 636 million yuan, 399 million yuan, 206 million yuan and 65.89 million yuan respectively every year, and achieved net profits of 19.01 million yuan, 10.21 million yuan,-39.83 million yuan and-116 million yuan respectively. It is not difficult to see from the data that during the above-mentioned reporting period, the operating income and profit of Great Wall Animation's sales target showed a significant downward trend, and this is also the focus of the exchange, and listed companies need to explain the relevant reasons.

In addition, the Shenzhen Stock Exchange also required Great Wall Animation to clarify whether the actual controller of the listed company and its related parties participated in the auction for asset sales and listing. At the same time, Great Wall Animation should supplement the disclosure of the structural chart of Shengda Coking's subsidiary, supplement the production and operation of Panzhihua Coking, and supplement the evaluation process, relevant parameter selection and basis for the transaction target. In response to this series of issues, Great Wall Animation needs to make a written explanation and submit the relevant explanation materials to the Company Management Department of the Shenzhen Stock Exchange before July 20.

M & A assets were also questioned.

Since Great Wall Group entered Great Wall Animation in 2014, the company has acquired seven animation industry companies through cash acquisitions, gradually transforming from a coking enterprise to a cultural enterprise, and initially forming an animation business covering animation design and production., animation games, creative tourism and toy sales.

On June 30, 2016, Great Wall Animation released a major asset reorganization plan, planning to spend 700 million yuan to acquire 100% equity of Lingjing Technology and 100% equity of Mini World, and plans to further enrich and improve the animation culture industry chain. According to the latest revision of the acquisition draft, the transaction prices of 100% equity of Lingjing Technology and Mini World are 508 million yuan and 200 million yuan respectively, and their assessed value-added rates have reached an astonishing 411% and 23570% respectively.

Data shows that Lingjing Technology is a high-tech enterprise engaged in multimedia display and digital experience. It focuses on multimedia display and digital experience products and comprehensive solutions based on virtual reality technology, and focuses on serving museums, science and technology museums, planning halls, and cultural theme parks, tourist attractions and other application areas. The mini world is a miniature version of the city built in accordance with the real society and a quality education base that provides professional experience for young people. Great Wall Animation stated that after the merger is completed, building an animation theme park with the theme of the company's original animation image in the mini world can effectively extend the audience of the company's original animation image and strengthen the stickiness of the original animation image.

In terms of performance alone, Lingjing Technology's operating income in 2015 was 114 million yuan, its net profit was 10.5468 million yuan, and it lost nearly 20 million yuan in the first quarter of 2016; however, Lingjing Technology promised that the net profit from 2016 to 2018 will not be less than 35 million yuan, 43.75 million yuan and 54.69 million yuan respectively. In contrast, Mini World's operating performance showed a loss, with operating income of 13.59 million yuan and net profit of-2.0829 million yuan; Mini World's performance commitment is that it will achieve net profits of no less than 17 million yuan, 22.1 million yuan and 28.73 million yuan respectively from 2016 to 2018. There is no doubt that compared with the current operating performance during the recent reporting period, the performance commitments of these two major M & A targets are surprisingly high.

This M & A plan also attracted the attention of the Shenzhen Stock Exchange. On July 7, it issued its first inquiry letter to Great Wall Animation, asking the company to discuss many issues such as the higher value-added rate of the underlying assets, operating status and performance commitment mechanism. explain.

The reporter also noted that Lingjing Technology once held a 30% stake in Xi'an Qinyang Tourism Development Co., Ltd.(hereinafter referred to as Xi'an Qinyang), and Xi'an Qinyang was Lingjing Technology's largest customer in 2015, accounting for Lingjing Technology's sales revenue. 35.95%; from January to March 2016, Lingjing Technology also recognized an investment income of 13.5 million yuan due to the disposal of long-term equity investments. In response, the Shenzhen Stock Exchange's inquiry letter requested that Lingjing Technology's profit model be re-disclosed and the stability of the company's net profit after deduction of non-profit should be explained. Combined with Lingjing Technology's specific on-hand orders, tracked projects and contract amounts, the rationality of the operating income forecast under the income method evaluation is explained.

Editor: yvette