Xinke Materials purchased 875 million yuan in fantasy factory and added to the film and television industry's "double high" acquisition was questioned

recently, Xinke Materials has launched another attack in overweight film and television, and its subsidiary plans to acquire a 70% stake in Fantasy Factory. However, the acquisition was questioned by the Shanghai Stock Exchange because of its high premium and high commitment, which also added some uncertainty to the company's film and television business.

original title: Xinke material transformation film and television has been repeatedly "blocked"

Xinke material, which is transformed into film and television due to poor performance in traditional industries, has not improved significantly after the acquisition of a film and television company. Now Xinke material plans to increase the size of film and television again, but it has been questioned by the Shanghai Stock Exchange because of the acquisition of "Shuanggao", which has also added a lot of difficulties to the transformation of Xinke material.

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< However, the acquisition was questioned by the Shanghai Stock Exchange because of its high premium and high commitment, which also added some uncertainty to the company's film and television business.

on February 15th, Xinke material announced that Xi'an Mengzhou, a wholly owned subsidiary of the company, plans to transfer a 70 per cent stake in Fantasy Factory for 875 million yuan. After the completion of the transaction, Fantasy Factory will become the holding subsidiary of Xi'an Mengzhou. In the transaction, the other party also made a more eye-catching performance commitment. The other party promised that the net profit after deduction from 2017 to 2019 would be no less than 100 million yuan, 130 million yuan and 169 million yuan, respectively.

it is worth noting that the net worth of the underlying company is not high, but the valuation in this transaction is very expensive. In addition, compared with the performance commitments made by the other parties, Fantasy Factory's performance in recent years does not seem to be outstanding. Data show that the Dream Factory, which is mainly engaged in the investment, production, distribution and derivative development of film and television works, had total assets of about 137 million yuan and owners' equity of 94.1915 million yuan on December 31, 2016. As of December 31, 2016, the total equity of DreamWorks shareholders was valued at 1.32 billion yuan, with an estimated value-added rate of about 1301.6%. In the end, the two sides of the transaction plan to price the 100% stake in Fantasy Factory at 1.25 billion yuan. However, Fantasy Factory only achieved an operating income of 11.4678 million yuan in 2015, a loss of 19.1528 million yuan, and a net profit of 37.2138 million yuan and an operating income of 90.6841 million yuan in 2016. In other words, in 2016, DreamWorks is just beginning to turn a profit.

this "double high" acquisition has not only aroused doubts among investors, but also attracted the attention of the Shanghai Stock Exchange. To this end, the Shanghai Stock Exchange requires the company to explain the above two aspects to explain the specific subjects, basis and rationality of the asset evaluation and appreciation of the successful bid. At the same time, it explains the operating income and net profit of the underlying assets in 2016, the main reasons for turning losses into profits, and the reasons and rationality for the explosive growth of the underlying assets during the profit forecast period.

< strong > the addition plan just failed not long ago < / strong >

in fact, Xinke material has not been very smooth in the transformation of film and television. Not long ago, Xinke material had planned to acquire an American film and television company, but it ended in failure, which was undoubtedly a negative blow to Xinke material.

on November 14, 2016, Xinke released a major asset purchase plan, saying that the company plans to use its subsidiary company, Wotaiji Capital, set up in Hong Kong, as the main body of the acquisition, to acquire Midnight Investments L.P, the target independent Hollywood film and television production company, in cash. 80% of the capital contribution rights and interests, with an estimated value of about 2.388 billion yuan. Xinke material said that after the completion of the acquisition, the company will add overseas film and television business, which will have an important impact on the company's film and television works reserve and the expansion of the business scale.

it is worth mentioning that the amount of this acquisition is a huge acquisition relative to the company's monetary funds. Data show that as of the end of the third quarter of 2016, the company's book currency fund balance was only 580 million yuan, compared with about 2.388 billion yuan in cash payment, Xinke material's monetary funds are obviously not ample. At that time, Xinke material also said that some of the funds would come from the financing of third-party financial institutions. However, as of June 30, 2016, the asset-liability ratio of Xinke Materials was 32.72%. In other words, after the completion of this transaction, the company's total assets and liabilities will increase significantly, and the asset-liability ratio will also increase significantly. Thus it can be seen that in order to increase the size of film and television, the acquisition of Xinke material at that time was quite a bit of a gamble.

however, because the Shanghai Stock Exchange asked the counterparty to provide further supplementary information about the acquisition, but the other party failed to cooperate, which also made the reorganization uncertain, so Xinke material finally had no choice but to terminate the reorganization.

< strong > traditional industries drag down performance < / strong >

as can be seen from the company's operating performance in recent years, Xinke's move from transforming film and television to increasing film and television several times is a helpless move by the company under the condition of poor performance in traditional industries. However, after the transformation of film and television, the company's performance improvement is not obvious.

Financial data show that the attributable net profit of Xinke Materials in 2013 was about 53.8139 million yuan. In the face of performance losses, Xinke material acquired 100% equity in Xi'an Mengzhou to transform the film and television industry in 2014, and Xi'an Mengzhou was included in the company's consolidated statement in June 2015. When talking about the reasons for the transformation of film and television, Xinke material also said that in the plight of weak performance growth in the traditional copper processing business, the company has formed a pattern of copper processing and cultural film and television business through the acquisition of Xi'an Mengzhou.

after the acquisition of the film and television industry, the attributable net profit of Xinke Materials from 2014 to 2015 was about 26.1386 million yuan and 32.9786 million yuan respectively, and the performance increased to a certain extent. however, the corresponding net profit after deducting non-attribution is about-37.3925 million yuan and-6.2252 million yuan respectively in the same period, and the performance is still not optimistic. It is worth mentioning that the 2015 annual report shows that Xi'an Mengzhou achieved a net profit of about 155 million yuan, but this is still inadequate to improve the performance of Xinke Materials, which is already in trouble in traditional industries. The loss of Xinke Materials further increased in the first half of 2016. In the same period, the attributable net profit was about-59.5287 million yuan, and the loss increased by about 25.3778 million yuan compared with the same period last year. The net profit realized by Xi'an Mengzhou is a loss of 9.2164 million yuan. To the first three quarters of 2016, Xinke material realized a further loss in the vested net profit, with a loss of about 79.8194 million yuan.

in the face of poor performance, Xinke material also began a "self-rescue operation", selling a total of about 3.0807 million shares of China Electric Power Xinlong shares on December 28 and 29, 2016. According to the preliminary calculation, the company can get an investment income of about 38.4226 million yuan from the sale of China Electric Power Xinlong shares. According to the latest performance forecast, Xinke material is expected to make a net profit of 165 million-205 million yuan in 2016, an increase of 400% over the same period last year. Xinke material explained the reason for the performance growth as the steady growth of the company's film and television culture business. At the same time, Xinke material also said that the investment income from the sale of China Electric Power Xinlong shares also had a certain impact on the company's performance.

in response to related issues such as whether the company will divest its traditional industries and further increase its film and television business plans in the future, a reporter from Beijing Commercial Daily called the office of Dong Mi of Xinke Materials for an interview, but the other party's phone call was not answered.

Edit: nancy