Zhejiang Furun (600070): Inquiry On Asset Transfer

Recently, the stock price of Zhejiang Furun (600070. SH), which is dressed as "byte hopping concept stock", has been booming all the way. The company plans to divest its traditional printing and dyeing and textile assets, and its strategic planning focusing on emerging businesses has also attracted a lot of attention.

After three times of public listing, Zhejiang Furun plans to peel the ion company's series of actions have made initial progress. The announcement showed that the delisting price of the equity transfer was only 56% of the assessed value and lower than the book value, which aroused the concern of the regulatory authorities. On August 4, the Shanghai Stock Exchange issued an inquiry letter to Zhejiang Furun on the above issues.

201 million shares of the two companies were transferred, and one of the targets was expected to receive 506 million demolition compensation

Backtracking announcement: on June 30, Zhejiang Furun announced that the company intends to transfer 46% equity of Zhejiang Furun printing and dyeing Co., Ltd. (hereinafter referred to as "printing and dyeing company") and 51% equity of Zhejiang Furun Textile Co., Ltd. (hereinafter referred to as "textile company") by means of public listing.

In this transaction, the company adopts the asset-based method to determine that the valuation of printing and dyeing company and textile company is 589 million yuan and 173 million yuan respectively, that is, the valuation of the corresponding equity of the transfer object is 360 million yuan, and the total bottom price of initial public listing transfer will not be less than 360 million yuan.

At the same time, the company said that if the initial public listing transfer fails to solicit qualified intended transferees or fails to conclude the transaction, it will conduct the second public listing transfer at a price no less than 70% of the assessed value. If the transaction has not been completed, the third public listing transfer shall be conducted at no less than 80% of the bottom price of the second public listing transfer.

On August 3, the deal finally made new progress.

Zhejiang Furun announced that as of July 29, a bidder participated in the third public listing, which is the company's controlling shareholder Furun Holding Group Co., Ltd., and the bottom price of the third listing was 201.391 million yuan.

According to the announcement, the book value of shareholders' equity corresponding to the above two objects is 231 million yuan, and the transfer price is 201 million yuan. Zhejiang Furun said that if the public listing transfer is successful, it will generate an investment loss of 29.3528 million yuan, which will have a certain impact on the company's performance this year.

It is worth noting that the textile and printing and dyeing business is the main traditional business of the company, and the textile company and printing and dyeing company are important business entities. The performance of the target of the "discount" transfer is also relatively stable.

In 2019, the printing and dyeing company will achieve a revenue of 1.196 billion yuan and a net profit of 74.903 million yuan; the textile company will achieve a revenue of 225 million yuan and a net profit of 27.4814 million yuan. In addition, the printing and dyeing company has signed a resettlement agreement with the government in February 2018, which is expected to obtain a relocation compensation of 506 million yuan.

Based on the above situation, the regulatory authorities questioned the related party transaction.

The Shanghai stock exchange requires the company to make supplementary disclosure of the main asset items, evaluation value, evaluation pricing basis and rationality of the printing and dyeing company and textile company; whether the impact of relocation compensation has been considered in the evaluation process, and the impact and calculation process are described in detail; the impact of relocation and compensation on the printing and dyeing company is analyzed, and the transfer price is specified at the current time Whether the equity of dyeing company is in line with the interests of listed companies.

At the same time, the company is required to explain the main considerations of selling textile company and printing and dyeing company, and explain the impact on the company's performance after the sale; combined with the listing transfer time and discount, as well as the operation of the company to be sold, it is necessary and fair to sell the shares of the two companies at a discount to the controlling shareholders.

"Dip" byte jump, stock prices soar, senior shareholders busy reduce holdings

As for the reasons for the transfer, Zhejiang Furun said that due to trade friction, rising labor costs and increasing environmental pressure, the company's traditional textile printing and dyeing, seamless steel pipe processing business profit space is becoming smaller and smaller. The divestiture of traditional assets is conducive to optimize the company's industrial structure, improve the company's profitability, in line with the company's strategic planning.

In fact, since 2015, Zhejiang Furun has begun to seek transformation by setting up industrial funds and investing in emerging industries such as the Internet.

In December 2016, the company received Hangzhou taiyizhishang Technology Co., Ltd. (hereinafter referred to as "taiyizhishang") in the form of non-public share issuance and cash payment, with a premium of 3 times, forming a goodwill of RMB 794 million, and officially entered the Internet marketing and big data service industry.

From 2016 to 2018, taiyizhishang achieved the net profit of 61.5329 million yuan, 86.672 million yuan and 132 million yuan respectively after deducting non-profit, and fulfilled the performance commitment.

However, the performance commitment period has just passed. In 2019, the net profit of taiyishang declined by 42.9% to 75 million yuan. The Shanghai Stock Exchange once issued the annual report inquiry letter to the company, asking the company to check whether there is any situation of recognizing revenue or adjusting profit in advance.

At the same time, taiyishang's gross profit rate also plummeted, from 28.63% in 2017 to 13.49% in 2019. The company said that the main reason is that the number of Internet advertising agency service companies is large, the market access threshold is low, and the competition pattern is relatively scattered. In the face of strong brand owners and concentrated media resources, the bargaining power of advertising agency companies has been continuously reduced, and the situation of advertisers' price depressing is serious. At the same time, the purchase cost of media resources of the head launch platform has increased year by year, which leads to the decline of gross profit rate of the industry Slippery.

In the face of strong downstream enterprises, Taiyi still relaxed the credit policy.

According to the reply from Shanghai Stock Exchange, Taiyi has extended the actual collection period of some customers to 6-12 months, and the extension of credit period has promoted the growth of business income to a certain extent. As of the end of 2019, the book value of accounts receivable of taiyizhi was as high as 959 million yuan, accounting for 57.05% of the current revenue of 1.681 billion yuan.

Despite the decline of Taiyi index's performance, the company disclosed in the announcement that its business contacts with byte beating also stimulated the nerves of the market.

The announcement disclosed that since August 2018, taiyizhi has begun to intervene in the Internet marketing service business of Tencent advertising, today's headlines and twitter platform. According to Zhejiang Furun's reply to the Shanghai Stock Exchange on June 19, the revenue of taiyizhishang based on the platform of shaking sound will reach 362 million yuan in 2019, with a year-on-year increase of 196.8%; in today's headlines, the revenue is 152 million yuan, with a year-on-year increase of 123.6%.

Affected by the news, Zhejiang Furun share price rose all the way. By the end of August 5, the company's share price closed at 15.56 yuan / share, up 46.79% from 10.6 yuan / share on June 19.

It is worth noting that during this period, the company's shareholders and executives have reduced their holdings.

As of July 27, Changjiang Yougui, the shareholder and deputy director of the company, and Jiaxing taiyizhishang investment partnership (limited partnership) have reduced the total shares of the company by 7.4943 million, with a total amount of 99.1729 million yuan.