Six-year loss of 337 million yuan Jinbei auto or re-outing risk

At the just-concluded Chengdu International Auto Show, Brilliance Jinbei unveiled 11 models under its three brands, mainly promoting China V3 and 2017 Huason 7. However, the capital market is more concerned with another brand: Jinbei Auto (600609.SH), which has suspended trading for five months to achieve major asset restructuring, has finally ushered in the long-lost resumption.

On August 23, the Jinbei Automobile announced that the company had supplemented and improved the "Golden Cup Motor Co., Ltd. major assets sale and related transaction pre-arrangement" and summary, and issued the "About Jinbei" issued by the Shanghai Stock Exchange. "Inquiry letter on the disclosure of major asset sales and related transaction plan information disclosure of the Automobile Co., Ltd." requires that each issue be checked, implemented, and carefully answered one by one.

Regarding the progress of asset restructuring, the relevant person in charge of the Jinbei Automobile stated to the reporter of “China Business” that “it is still under active implementation and it is expected to complete the equity transfer within the year.”

However, the market does not buy the gold cup car. In the early morning of August 23, the stock price of Jinbei Automobile turned green after the opening of the stock and failed to escape the fall. The stock price once fell to 10.02%. As of the close, Jinbei Auto's stock price reported 7.32 yuan, down 9.41%. For three consecutive trading days on August 23, 24, and 25, the cumulative deviation of Jinbei auto's closing price was more than 20%, and the closing share price was 6.61 yuan.

Lost in huge losses

This company, which was suspended on March 20, 2017 for major asset restructuring issues, released its interim results report on the evening of August 23. According to statistics, Jinbei Automobile achieved operating revenue of RMB 2.580 billion from January to June 2017, an increase of 10.19% year-on-year. The average operating income of the automotive industry grew by 75.40%, and the net profit attributable to shareholders of listed companies was RMB 337 million. With a drop of 671.87%, the average net profit growth rate of the automotive industry is 78.56%.

In fact, it is not difficult to see through the financial reports of Jinbei Automobile in recent years that the main business of vehicle manufacturing has encountered difficulties.

According to the reporter’s statistics for the ten fiscal years from 2007 to 2016, Jinbei Automobile’s net profit attributable to the shareholders of the listed company for four fiscal years was negative, and the net profit attributable to the shareholders of the listed company for ten years was a total loss of 5.38. 100 million yuan. In this decade, Jinbei Automobile received government subsidies of up to 472 million yuan. Among them, Jinbei Automobile's net profit loss in 2016 was 208 million yuan, and the loss reached the highest value in seven years. In the first half of this year, this record was again broken.

Jinbei Automobile believes that “mainly due to the operating loss of the whole vehicle and the emission standards for whole vehicle products from the country’s four upgrades to the State Five’s provision for asset impairment preparations.” Data show that from January to July, the production of Jinbei Automobile completed 11086 vehicles. , a year-on-year decrease of 13.76%, sales of 11,330 vehicles, a year-on-year decrease of 17.47%.

In addition to consecutive losses, the debt burden of Jinbei Automobile continues to increase. The financial report shows that the asset-liability ratio of Jinbei Auto in 2013~2016 was 90.16%, 92.89%, 92.99% and 94.13%, respectively. As of the end of March 2017, the total assets of Jinbei Automobile were 12.366 billion yuan, total liabilities were 11.911 billion yuan, and the debt ratio was as high as 96.32%, which was the highest level in years and faced the difficult situation of insolvency.

"Inadequate upgrading of our own products and technologies, intensified market competition, economic downturn in the Northeast region, and the challenges brought about by the technological upgrades in the automotive industry have led to the overlapping of multiple factors, which has caused Jinbei Automobile to be unable to move." said Zhong Shi, a senior observer in the automotive industry.

Stripping and reorganization

In order to optimize the company's business structure and improve the asset quality of listed companies, Jinbei Automobile has implemented a major asset restructuring. From March 20, 2017 to the suspension, to June 19, 2017, disclosed the "Golden Cup auto major asset sales and related transactions pre-plan." Jinbei Automobile intends to transfer the 100% equity of Jinbei Vehicle, which is directly and indirectly held, to Shenyang Automobile Industry Asset Management Co., Ltd.

After the completion of this transaction, Jinbei Auto's listed company no longer holds the stake in Jinbei Vehicles, spun off the vehicle manufacturing business. Shenyang Automotive Industry Asset Management Co., Ltd. holds 24.38% equity of Jinbei Automobile, a controlling shareholder of listed companies.

On July 3, the Jinbei Automobile announced that it received an inquiry letter issued by the Shanghai Stock Exchange. The plan disclosed that due to historical reasons, since 2005, the actual controller of the company's industrial and commercial registration was the Shenyang SASAC, and the potential ultimate controller was the Liaoning SASAC. The company’s control rights were in fact in a state of unclear ownership. Whether the preplan can further promote the existence of major uncertainties. The inquiry letter requires listed companies to provide additional disclosures: the specific approval procedures that need to be performed during the reorganization, including the examination and approval of state-owned assets, the exemption of tender offers, etc., and the specific measures and follow-up arrangements that will be taken to solve the current actual controller problems.

The inquiry letter also involved requesting Jinbei Automobile to explain whether it would form a major reliance on related parties, price of assets, and the source of the transaction parties’ acquisition of funds.

In response, Jinbei Automobile issued a reply statement on August 23 to explain this in detail. In order to solve the potential actual controller problem of Jinbei Automobile, Huachen Group will coordinate and communicate with its subsidiary Jinbei Auto Control, and will cooperate with industry as soon as possible. State-owned companies, Jinsheng Group, and automobile equity companies negotiated and reached an agreement to cooperate with and promote Huachen Group to transfer 100% of the equity of Auto Assets and New Gold Cup through state-owned property rights transfer/gratis transfer.

The current situation is that both the Shenyang City SASAC and the Liaoning Provincial State Assets Supervision and Administration Commission agree with Jinbei’s equity transfer. According to Liaoning Provincial SASAC, this major asset reorganization is an important task for the Brilliance Group’s state-owned enterprise reform and a key measure to promote the development of the Liaoning automobile industry. Completion of this major asset reorganization will effectively promote the development of listed companies and give strong support to the local economy.

Due to the downturn of Jinbei Automobile's complete vehicle business, the operating results of listed companies in recent years have already become dependent on its affiliated BMW Brilliance. Since 2003, Jinbei Automobile’s subsidiary Shenyang Jinbei Jinbei Johnson Automotive Interiors Co., Ltd. (hereinafter referred to as “Jinbei Johnson”) has sold auto parts products to BMW Brilliance, including BMW door panels, dashboards, interiors, and seats. .

In the latest five years (2012 to 2016), sales revenue of Jinbei Johnson’s related parties to BMW Brilliance was 819 million yuan, 1.121 billion yuan, 1.61 billion yuan, 1.559 billion yuan, and 2.114 billion yuan, showing a strong growth trend. In 2016, Jinbei Automobile's total operating revenue was 4.801 billion yuan, an increase of 3.52% year-on-year. From this, it can be seen that the revenue from the sale of parts and components of Jinbei Automobile to BMW Brilliance has approached half of the annual revenue, and has become the main source of growth.

After the completion of the equity transfer transaction, Jinbei will completely divest the vehicle manufacturing business and concentrate resources on the development of auto parts manufacturing and sales business. In the view of many analysts, Jinbei Motors, by divesting its non-performing assets to the parent company of Brilliance Group, left only profitable and high-quality projects that could “beautify” its financial statements and improve the profitability of listed companies.

"The Jinbei auto must be profitable this year, otherwise the risk of delisting will appear again. This is unwilling to see Gold Cup autos that have been under protection for many years," said a securities analyst in the auto industry.

After the stripping of the entire vehicle business, whether the Jinbei Automobile can move forward is still unknown. However, there are also industry insiders that the fact that the subsidiaries’ poor management results in losses is in fact a common problem for the entire Gold Cup Group. Therefore, “sale of non-performing assets” is in fact only a temporary solution, and it is still to be tested whether the Jinbei Automobile can be rescued from difficulties.