On January 28, Ningbo Joyson Electronic Corp(600699) (600699, SH) released the performance forecast. It is expected that there will be a loss in 2021, and the net profit attributable to the shareholders of the listed company will be – 3.18 billion yuan to – 3.78 billion yuan.
The reporter of the daily economic news noted that in addition to the difficulties faced by the industry in 2021, Ningbo Joyson Electronic Corp(600699) large provision for goodwill impairment is an important reason for losses.
After Ningbo Joyson Electronic Corp(600699) issued the performance announcement, on January 28, the Shanghai stock exchange quickly issued the inquiry letter, requiring Ningbo Joyson Electronic Corp(600699) to explain “the specific reasons for the company’s loss and the corresponding loss amount”.
The estimated loss is more than 3 billion yuan
According to the third quarterly report of Ningbo Joyson Electronic Corp(600699) 2021, the accumulated operating revenue of Ningbo Joyson Electronic Corp(600699) in the first three quarters of last year was about 34.1 billion yuan, and the net profit attributable to the shareholders of the listed company was about 18.05 million yuan. On January 28, Ningbo Joyson Electronic Corp(600699) released a performance forecast that the net profit attributable to the parent company in 2021 is expected to be – 3.18 billion yuan to – 3.78 billion yuan.
In response to performance changes, Ningbo Joyson Electronic Corp(600699) explained that in 2021, the company’s business continued to be affected by covid-19 epidemic and global chip shortage. It is expected to achieve an operating revenue of about 45.6 billion yuan in 2021, a year-on-year decrease of about 5%. This is mainly because some auto enterprises in North America, Europe and Asia have been exacerbated by the impact of chip shortage since the third quarter of last year, resulting in output reduction or shutdown, which has a great impact on the development of the company’s auto safety business and the control of costs and expenses.
\u3000\u3000 “Due to the shock of the global automobile supply chain system, the prices of upstream raw materials and transportation costs of the company gradually increased from the second quarter, especially in the fourth quarter. The prices of the company’s main raw materials, such as electronic parts, steel, plastic parts, magnesium aluminum alloy and spinning, reached the historical price peak. In 2021, it was mainly due to the sharp rise of global raw material prices and transportation costs of automobile safety business As a result, the company’s annual gross profit decreased by about 950 million yuan. Affected by the global covid-19 epidemic and the instability of the supply chain, the company lost about 600 million yuan mainly due to the shutdown of some factories in Mexico, Brazil and India and the unscheduled temporary scheduling adjustment of customers. ” Ningbo Joyson Electronic Corp(600699) said in its announcement.
It is worth noting that in addition to the above factors, Ningbo Joyson Electronic Corp(600699) made a large impairment of goodwill, which is an important reason for the loss.
Ningbo Joyson Electronic Corp(600699) said that it had conducted a preliminary impairment test on the relevant asset groups of Junsheng automobile safety division, and planned to make impairment provision for long-term assets (including goodwill), which would have an impact on the company’s net profit attributable to shareholders of Listed Companies in 2021 of 2 billion yuan to 2.5 billion yuan.
Shanghai stock exchange quickly issued an inquiry letter
On the evening of January 28, the Shanghai Stock Exchange issued an inquiry letter to Ningbo Joyson Electronic Corp(600699) .
According to the third quarterly report of Ningbo Joyson Electronic Corp(600699) 2021, as of September 30, 2021, the goodwill of Ningbo Joyson Electronic Corp(600699) was about 7.17 billion yuan. Ningbo Joyson Electronic Corp(600699) disclosed the specific composition of its goodwill in its 2021 semi annual report, including KSS holdings, Inc. (hereinafter referred to as KSS) and preh car connect GmbH account for the majority of the goodwill balance, which is about 6.32 billion yuan and 810 million yuan respectively
Image Source: Ningbo Joyson Electronic Corp(600699) screenshot of 2021 semi annual report (with deletion)
In 2016, Ningbo Joyson Electronic Corp(600699) completed the acquisition of KSS. According to the announcement at that time, KSS is the world’s top automotive safety system supplier. It has been involved in the automotive safety market since the 1950s. After more than 60 years of development, KSS has become a leading supplier in this field. Its main business includes three categories: active safety, passive safety and special products. It is one of the few furniture equipment active and passive safety system integration capabilities in the world, A company that provides safety solutions for autonomous driving.
In view of the purpose of M & a KSS, Ningbo Joyson Electronic Corp(600699) said: “the company has good complementarity and synergy in terms of business, market and resources. After M & A, the company will become the world’s top supplier of automotive electronics, vehicle safety, especially active and passive safety, HMI, autopilot, automotive information and vehicle networking.”
In the performance forecast, Ningbo Joyson Electronic Corp(600699) did not explain where the huge goodwill impairment of 2 billion yuan to 2.5 billion yuan came from, but only disclosed that it came from the “relevant asset group of automobile safety division”.
The Shanghai stock exchange requires Ningbo Joyson Electronic Corp(600699) to disclose the specific reasons for the company’s losses and the corresponding amount of losses in the inquiry letter.
“A number of mergers and acquisitions of the company in recent years have led to the continuous growth of goodwill. The third quarterly report of 2021 shows that the book balance of goodwill is RMB 7.169 billion, accounting for 39% of net assets, but no large amount of goodwill impairment has been accrued in the early stage. The one-time provision of impairment of long-term assets (including goodwill) accounts for about 13.6% of net assets.” The Shanghai Stock Exchange said in the inquiry letter.
Shanghai stock exchange requires Ningbo Joyson Electronic Corp(600699) to explain the specific circumstances of the impairment, the specific reasons for the impairment and the adequacy and rationality of the amount of impairment; Whether the provision for goodwill impairment in previous periods is sufficient and accurate; Combined with the cumulative investment and income of the underlying assets, explain whether the early acquisition decision is prudent and whether the directors, supervisors and senior managers are diligent and responsible.
In addition, the Shanghai Stock Exchange also requires Ningbo Joyson Electronic Corp(600699) “to check whether there is a situation in which improper profit adjustment is used to damage the interests of investors”.
