Letter of concern about Lvjing Holding Co.Ltd(000502)
Attention letter of the company Department [2022] No. 90 Lvjing Holding Co.Ltd(000502) the board of directors:
According to the performance forecast for 2021 disclosed by your company on January 28, 2022, your company expects the net profit attributable to the shareholders of the listed company in 2021 (hereinafter referred to as “net profit”) to be a loss of 17 million yuan to 21 million yuan, and the net profit after deducting non recurring profits and losses (hereinafter referred to as “net profit after deducting non recurring profits and losses”) to be a loss of 19 million yuan to 23 million yuan, The income is expected to be 150 million yuan to 175 million yuan, and the income after deduction is expected to be 140 million yuan to 165 million yuan. The change in revenue during the reporting period was mainly due to the company’s cash acquisition of 51% equity of Sanhe Yali Information Technology Co., Ltd. in 2021. Shenzhen Hongyi Construction Engineering Co., Ltd., a wholly-owned subsidiary of the company, actively carried out special engineering construction business of data center, and the company’s revenue increased significantly compared with the same period of last year. The main reasons for the performance loss in the reporting period are the provision of asset impairment for the parking space inventory of Foshan Ruifeng Investment Co., Ltd., a holding subsidiary, and the company’s expenses during the reporting period, including the expenses of the company’s major asset restructuring intermediaries.
Our department is highly concerned about this. Please verify and explain the following problems: 1. Your company achieved operating revenue of 11.7381 million yuan and 97.5144 million yuan in the first half and third quarter of 2021 respectively. In the first three quarters, you achieved cumulative revenue of 109 million yuan, an increase of 797.03% over the same period of last year. In the first half of 2021 In the first three quarters, the net profit attributable to the shareholders of the listed company (hereinafter referred to as “net profit attributable to the parent”) decreased by – 281.59% and – 28.54% respectively year-on-year. According to the reply announcement on the letter of concern to Shenzhen Stock Exchange (hereinafter referred to as the “reply”) disclosed by your company on December 23, 2021, the reason for the sharp increase of the company’s operating revenue in the third quarter is that the subsidiary Shenzhen Hongyi increased the business revenue of mechanical and electrical installation engineering by 73.8265 million yuan. The gross profit margin of this business is low and can not cover the period expenses, Therefore, the net profit of your company in the first three quarters was negative.
Please explain the reason and rationality of the continuous and substantial growth of operating revenue in the fourth quarter, whether the gross profit margin of main business in the fourth quarter deviated from the average level of the same industry, and the specific situation and compliance of your company for the impairment of parking space inventory of the holding subsidiary Foshan Ruifeng Investment Co., Ltd. The annual audit accountant shall check and give opinions.
2. Your company acquired Sanhe Yali in May 2021 and plans to transform IDC business. However, since the third quarter, your company’s revenue mainly comes from electromechanical installation business, and the gross profit margin of this business is low, which can not cover the expenses during the period. Please your company:
(1) Explain whether the electromechanical installation business is in line with your company’s development strategy, whether it is your company’s main business, the reason and rationality of still engaging in the above business under the condition of low gross profit margin, and whether it is conducive to improving your company’s sustainable profitability and core competitiveness.
(2) Explain whether the mechanical and electrical installation business can form a “stable business model”, and carefully verify whether the company has income unrelated to its main business or without commercial substance in strict accordance with the relevant requirements on matters related to the deduction of operating income in the guide for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – business handling, Whether there is a situation to avoid the risk of termination of listing by adjusting income, and give special risk tips on the possible risk of termination of listing. The annual audit accountant shall check and give opinions.
3. According to your 2020 annual report, your company purchased 100% equity of Shenzhen Hongyi from Peng Suhong in cash on March 22, 2021, with a transaction amount of 380000 Yuan. Public information shows that Shenzhen Hongyi was established in September 2020 with a registered capital of only 10 million. According to your company’s early announcement, Shenzhen Hongyi has signed electromechanical installation contracts with a total amount of about 180 million yuan with a number of customers since the second half of 2021. Please your company:
(1) Explain whether the counterparty Peng Suhong has any related relationship or other interest arrangement with your company, the controlling shareholder and actual controller of your company, the directors and supervisors of the company, whether the transaction price is fair, and whether the relevant income belongs to “the income from the subsidiary or business of business combination obtained at a significantly unfair consideration”.
(2) Explain the reasons why Shenzhen Hongyi’s core assets have been established for a short time but sign large orders with multiple customers in a short time, whether they have relevant business qualifications (if applicable) and experience in electromechanical installation business.
(3) According to your company’s announcement, one of the customers of mechanical and electrical installation business is Jiangsu Hongyuan huitai Construction Engineering Co., Ltd. (hereinafter referred to as “Jiangsu Hongyuan”). After inquiry of public information, the registered capital of Jiangsu Hongyuan is only 4260 yuan, but the total contract amount signed between your company and it is as high as 100 million yuan. Explain the business scope, business qualification, relevant business development, revenue recognition principle, recognized amount and compliance of Jiangsu Hongyuan, and whether the business and personnel scale match the service scale provided by your company.
The annual audit accountant shall check and give opinions.
4. According to the announcement on signing engineering construction contract disclosed by your company on October 26, 2021, Shenzhen Hongyi and the third construction (Shenzhen) Co., Ltd. of China Construction Fifth Engineering Bureau (hereinafter referred to as “Shenzhen company of the third company of China Construction Fifth Engineering Bureau”) signed the professional subcontract of cable bid I project of Guangdong Ruiqing times lithium ion battery production project (hereinafter referred to as “Ruiqing times contract”), with the contract amount of 9907045.00 yuan and the construction period from September 1, 2021 to December 31, 2021. However, according to the progress announcement on project construction contract disclosed by your company on January 22, 2022, on January 20, 2022, Shenzhen company of the third company of China Construction Fifth Engineering Bureau and Shenzhen Hongyi signed the agreement on termination of subcontract of cable bid I project of Guangdong Ruiqing times lithium ion battery production project (hereinafter referred to as the “termination agreement”), Terminate the original contract. As of the date of termination of the original contract, your company has not entered the site for construction and has not carried out any operation. Shenzhen company of the third company of China Construction Fifth Engineering Bureau does not need to pay any project payment to Party B. The construction period agreed in the Ruiqing times contract starts from September 1, 2021, but your company didn’t disclose it to the public until October 26, 2021, and it still hasn’t started after the expiration of the construction period agreed in the contract. Please your company:
(1) Explain the reasons for the delay in disclosing the above contracts for nearly two months and whether there is any problem of untimely information disclosure.
(2) Explain the reasons why the above subcontracted project did not start and the contract was terminated nearly one month after the expiration of the construction period agreed in the contract, whether your company has purchased relevant raw materials or made early investment, whether the liquidated damages can cover all kinds of expenses invested by your company, and explain the impact on the main financial indicators of your company.
(3) Since June 2021, your company has successively disclosed several announcements of signing mechanical and electrical installation and construction contracts. Please verify whether there are other situations in which the construction is not started on schedule and there are significant differences between the actual construction and the contract. If so, please explain the specific situation one by one and explain the reasons for the differences. Please make a written statement on the above issues, submit the relevant explanatory materials to our department for disclosure before February 11, 2022, and send a copy to the dispatched office at the same time. At the same time, remind your company and all directors, supervisors and senior managers to strictly abide by the securities law, the company law and other laws and regulations, as well as the stock listing rules of the exchange, and perform the obligation of information disclosure truthfully, accurately, completely, timely and fairly.
We are writing to inform you that
Shenzhen Stock Exchange listed company management department I
January 29, 2022
