On February 7, Leo Group Co.Ltd(002131) (002131, SZ) received a letter of concern, requiring the company to explain the reason, amount and specific calculation process of the provision for large amount goodwill impairment in 2021.
On the eve of the Spring Festival, Leo Group Co.Ltd(002131) disclosed the announcement of net profit loss in 2021. According to the performance forecast, the company expects to realize the net profit attributable to the parent company in 2021 from a loss of 930 million yuan to a loss of 780 million yuan, and the deduction of non net profit from a loss of 1.4 billion yuan to a loss of 1.25 billion yuan, mainly due to the provision for goodwill impairment of digital boards and the provision for bad debts of customer receivables.
loss in advance is a large amount of provision for goodwill impairment
Two years later, Leo Group Co.Ltd(002131) made another large provision for goodwill impairment to digest the historical problems caused by the merger and acquisition of the digital sector. From the proportion of performance contribution in 2020, the digital sector has accounted for 83.04% of the overall operating revenue and 4.87% of the gross profit margin since the acquisition.
In 2018, Leo Group Co.Ltd(002131) because the operating performance of some subsidiaries did not meet the expectations, an impairment of RMB 1.809 billion was accrued for the goodwill formed by their investment, resulting in a deduction of non net profit loss of RMB 1.967 billion in the current year. By the end of the third quarter of 2021, the company still had goodwill of RMB 1.768 billion in the book.
On January 29, Leo Group Co.Ltd(002131) said in the performance forecast that in combination with the development of the industry, the current business operation and the judgment of the future operation, the company expects the impairment amount of goodwill involved in Leo digital sector to be about 1.25 billion yuan – 1.45 billion yuan in 2021.
In this regard, the Shenzhen stock exchange sent a letter asking the company to explain the formation process of the above-mentioned goodwill, the reasons for the provision for large goodwill impairment in 2021, the amount and specific calculation process, whether the provision for goodwill impairment in previous years was sufficient, and whether there was improper earnings management.
In addition to goodwill, the bad debt of accounts receivable also deserves attention. According to the announcement, due to the abnormal operation of the customer, as of December 31, 2021, Leo Group Co.Ltd(002131) still had 332 million yuan of large receivables for the customer, which were difficult to recover. The management of the company believes that there are signs of impairment and plans to withdraw bad debt reserves at a proportion of 50% for all receivables of the customer.
Leo Group Co.Ltd(002131) said that after excluding the impact of the company’s additional bad debt provision for the above customer receivables and the provision for goodwill impairment on the net profit, the net profit range attributable to the shareholders of the listed company in 2021 is expected to be about 550 million yuan – 650 million yuan.
On February 7, the reporter of “daily economic news” called the company, and the other party said: “this year, due to the provision of goodwill, the profit is shown as a loss. The biggest income from investment comes from ideal cars, and the sharp increase of profit last year is also affected by this.”
Impact on the company’s investment performance {123567}
The above letter of concern also mentioned that in 2020, Leo Group Co.Ltd(002131) achieved a net profit of 4.772 billion yuan, which was due to the recognition of the income from changes in the fair value of ideal vehicles of about 4.5 billion yuan and the net profit after deduction of 283 million yuan.
In 2021, the impact of ideal automobile shares held by the company on the net profit attributable to shareholders of listed companies was 329 million yuan, which was included in non recurring profits and losses, which reduced the net profit attributable to the parent company from a maximum loss of 1.4 billion yuan to a maximum loss of 930 million yuan.
In this regard, the Shenzhen stock exchange requires the company to explain the reasons for the significant loss of performance in 2021 and whether the business environment has changed significantly in combination with the business environment, main business conditions and main products.
Leo Group Co.Ltd(002131) the board secretary told reporters that it is uncertain whether the company’s investment project in ideal cars will change in the future, which needs to be determined by careful analysis of the company according to the actual situation.
However, some voices in the market that Leo Group Co.Ltd(002131) “success is also ideal and failure is also ideal” have existed for a long time.
On July 30, 2020, ideal automobile landed in US stocks, and its share price soared to $47.70 per share. As an early investor, Leo Group Co.Ltd(002131) once gained more than 10 billion in Book floating profit. However, the good time is not long. From December 2020, the stock price of ideal automobile has suffered a shock downward for up to six months, and it will not usher in a short-term rise until June 2021.
As of the first half of 2021, the book value of the company’s investment in ideal vehicles had decreased to 6.192 billion yuan. By the first three quarters of 2021, the company’s investment income was – 17.5 million yuan, a decrease of 163.95% compared with the same period of the previous year. Compared with the highest in history, at the end of 2021, the share price of ideal automobile was almost halved, but it was basically the same as that at the beginning of the year.
Due to Leo Group Co.Ltd(002131) ‘s huge investment in the ideal car, the book floating profit of only $3 / share still allows the company to reap an investment return of 438 million yuan. The company’s board secretary said that the company’s investment projects next year are still mainly focused on the high-tech field, “those who are optimistic will be considered”.
