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China Singapore Jingwei, May 22, Shenzhen Stock Exchange issued a letter of inquiry on the annual report to Lingnan Ecological Culture and Tourism Co., Ltd. (hereinafter referred to as Lingnan Shares) on May 22, asking whether the company's debt paying ability is sufficient and whether there is liquidity risk.
Screenshot of inquiry letter The inquiry letter mentioned that the company's 2023 financial report was issued with an unqualified opinion with significant uncertainties of going concern. As of April 29, 2024, the total amount involved in newly added undisclosed litigation and arbitration matters of the Company and its holding subsidiaries for 12 consecutive months is about 160 million yuan, accounting for 7.59% of the net assets attributable to the parent company through audit in the latest period; The overdue debts of the Company and its subsidiaries in banks, commercial factoring companies and other financial institutions totaled 225 million yuan, accounting for more than 10% of the latest audited net assets. The company has been included in the list of dishonest persons to be executed. At the end of the first quarter of 2024, the Company's monetary capital balance is 247 million yuan, the balance of short-term borrowings is 2.240 billion yuan, and the balance of non current liabilities due within one year is 1.662 billion yuan. It is difficult for the Company's monetary capital to cover short-term liabilities.
In this regard, Shenzhen Stock Exchange requires explanation Whether the company's solvency is sufficient and whether there is liquidity risk ； Whether there is default risk; Whether the obligation of information disclosure has been fulfilled in a timely manner, and whether there are other risk warnings specified in the Stock Listing Rules due to the freezing of major bank accounts; Adequacy and rationality of the provision of estimated liabilities at the end of the reporting period; Fully remind the company of possible risks in future operation, including but not limited to production and operation risks, delisting risks, litigation risks, etc.
The inquiry letter mentioned that on April 20, 2024, the Company disclosed the Announcement on Waiting Freeze of New Shareholder Shares, which showed that all shares held by the former controlling shareholder Yin Hongwei were subject to judicial freeze and waiting freeze, and some shares were subject to judicial compulsory disposal. The controlling shareholder of the company, Zhongshan Huaying Industrial Investment Partnership (Limited Partnership) (hereinafter referred to as Huaying Industrial Investment), directly holds 5.02% of the company's shares and is entrusted to exercise the voting rights corresponding to the 17.38% shares held by Yin Hongwei.
Shenzhen Stock Exchange required to explain the specific situation of the judicial freezing and waiting freezing of Yin Hongwei's shares, the progress of litigation, and the specific measures and feasibility of resolving related disputes; If the company shares held by Yin Hongwei are subject to judicial compulsory disposal, whether the voting rights entrusted to Huaying Property Investment Bank will continue to be effective, whether it will affect the stability of the company's control rights, whether it will have an adverse impact on the company's production and operation, and the company's measures to protect the stability of control rights.
According to the inquiry letter, during the reporting period, the company realized an operating income of 2.130 billion yuan, down 17.08% year on year; Net profit attributable to shareholders of the listed company (hereinafter referred to as "net profit") was 1.096 billion yuan, up 27.38% year on year; The net profit attributable to shareholders of the listed company after deducting non recurring profits and losses (hereinafter referred to as net profit after deducting non recurring profits and losses) was 1.075 billion yuan, up 29.63% year on year; The net cash flow from operating activities was - 279 million yuan, up 24.44% year on year. The company's operating income has been declining since 2018, with net profit being negative for two consecutive years and net cash flow from operating activities being negative for three consecutive years 。
In this regard, Shenzhen Stock Exchange asked to explain the specific reasons for the inconsistency between the change trend of operating revenue and net profit in each quarter; Reasons for continuous decline of operating income , compare with companies in the same industry to explain whether there is a significant difference in the revenue decline, Whether there is cross period recognition of income ； The reason for the sharp decline of operating income in West China, East China and Central China; The reasons for the long-term negative cash flow from operating activities and its impact on the ability to continue as a going concern.
The inquiry letter mentioned that in 2022, the gross profit rate of the company's ecological environment construction and restoration business will be -22.46%, and the gross profit rate of water environment management business of water affairs will be -3.63%; In 2023, the gross profit rate of the company's ecological environment construction and restoration business will be 2.57%, and the gross profit rate of the water environment treatment business of water affairs will be 5.74%.
Shenzhen Stock Exchange requires to explain whether there are significant differences in gross profit rates of different projects; The reason and rationality of the gross profit rate of ecological environment construction and restoration business and water environment treatment business in 2023 from negative to positive, whether it is consistent with the change trend of comparable companies in the same industry, and whether there is a situation of inter temporal recognition of income and cost to adjust profits.
The inquiry letter also mentioned that at the end of the reporting period, the book value of the company's accounts receivable was 2.589 billion yuan, and the provision for bad debts in the current period was 815 million yuan. The Company classifies the accounts receivable for which bad debt reserves are accrued by portfolio into the portfolio of accounts receivable from local governments/local state-owned enterprises, accounts receivable from real estate enterprises, accounts receivable from other related parties and accounts receivable from other customers.
Shenzhen Stock Exchange requires to explain whether the Company has long account receivable age and slow collection; Explain the payment collection arrangement agreed in the contract of the main projects in the current reporting period, the actual payment collection in the past five years, the balance of accounts receivable and the provision for bad debts of the main projects in the past five years, and whether the provision for bad debts of accounts receivable in the current and previous years of the above project reporting period is sufficient; Explain the recognition process and rationality of the bad debt provision proportion corresponding to each aging of accounts receivable in different combinations; Explain the company's credit policy for major customers, whether the amount and aging of accounts receivable match the credit policy, and whether there is a situation of increasing business income by relaxing the credit policy; Describe the company Whether there is any false increase in operating income and operating cost through fictitious business in the earlier period 。
The inquiry letter mentioned that at the end of the reporting period, the book balance of contract assets was 6.525 billion yuan, and 564 million yuan of impairment reserves had been withdrawn; In other non current assets, the balance of contract assets is 810 million yuan, and the provision for impairment has been withdrawn by 44 million yuan.
Shenzhen Stock Exchange requires to explain the feasibility of continuing to promote relevant projects, whether there are contract assets with long aging and difficult to recover, and whether the recognition of early income is prudent; Whether there is quality dispute; Further verify the accuracy and sufficiency of the provision for impairment of the company's contract assets.
The inquiry letter shows that at the end of the reporting period, the balance of the company's long-term equity investment was 2.789 billion yuan, and the accumulated provision for impairment was 214 million yuan; BT construction project and PPP project ending balance of non current assets due within one year is 335 million yuan; The balance of BT construction projects and PPP projects in long-term receivables is 1.023 billion yuan. The annual report shows that the company holds more than 50% or less than 50% of the shares in several joint ventures. These companies are all PPP project companies invested by your company, and PPP project companies do not engage in specific business except payment and collection.
Shenzhen Stock Exchange requires to explain the accounting treatment policies of the company for PPP projects and their compliance; Explain whether the provision for impairment of long-term equity investment and the provision for bad debt of long-term receivables are sufficient.
The annual report shows that the ending balance of current accounts in other receivables of the company is 314 million yuan, and the ending balance of current accounts in other payables is 604 million yuan.
In this regard, SZSE requires to explain the reasons for the formation of the above current accounts, the aging of accounts, the name of the counterparty, whether the counterparty is a related party, whether it constitutes the provision of financial assistance to the outside world or the occupation of non operating funds, whether it has performed appropriate review procedures and disclosure obligations, whether it has established an internal control system for fund management and adequate and effective risk prevention measures.
In addition, the inquiry letter also requires to explain whether the company has large overdue accounts payable; Whether the accuracy and sufficiency of the provision for impairment of goodwill comply with the Accounting Standards for Business Enterprises; Explain the reason and rationality that the total amount of guarantee far exceeds the net assets; Whether the guarantee risk is controllable and whether there is any situation that damages the interests of the listed company; Follow up treatment plan for overdue guarantee, impact on the company and countermeasures; The reasons for the sharp decline in the number of R&D personnel during the reporting period, whether there are labor disputes or potential risks, whether the remaining R&D personnel can maintain the R&D level required for daily operation, whether production and operation are significantly affected and the countermeasures; Whether the basis for recognizing deferred income tax assets is sufficient and in compliance with the relevant provisions of the Accounting Standards for Business Enterprises.
According to the official website, Lingnan Shares was founded in 1998 and listed on the SME board of Shenzhen Stock Exchange in 2014. After listing, Lingnan shares, centering on the strategic development direction of "ecology+culture and tourism", focused on planning and design, water conservancy and water environment, municipal administration and garden, culture, technology and tourism, land improvement and other businesses, to provide customers with one-stop services from investment, planning, construction to operation.
In the first quarter of 2024, Lingnan Stock's revenue will be 305 million yuan, down 39.09% year on year; The net profit loss attributable to the shareholders of the listed company was 90.1613 million yuan, with a year-on-year increase of 78.45%.
On the secondary market, as of the midday closing, Lingnan shares had dropped by 10.16% to 1.68 yuan. (Zhongxin Jingwei APP)
