Three years ago, Ningbo Joyson Electronic Corp(600699) (600699) made a significant contribution to China's auto parts industry with the acquisition of Takata assets and stood at the top of the wave. Since then, Ningbo Joyson Electronic Corp(600699) Junsheng safety (full name "Junsheng vehicle safety system") has replaced takada and KSS to become the second largest vehicle safety supplier in the world. However, this acquisition also brings new challenges to Ningbo Joyson Electronic Corp(600699) : how to integrate, sort out, digest and absorb the acquired assets to maximize their efficiency.
On January 28, 2022, Ningbo Joyson Electronic Corp(600699) was pushed to the forefront of the industry again with the release of a performance forecast. However, this time it was because the company's biggest advance loss was nearly 4 billion yuan. After ten years of backdoor, the first loss was ushered in. Such a report card not only eclipsed all previous heroic words, but also attracted the Shanghai Stock Exchange and investors to question the company's alleged "financial bath".
As the saying goes, "the seven-year itch" can be Ningbo Joyson Electronic Corp(600699) successfully acquired together to remove the itch and stand at the forefront of the industry. But now, why did you encounter the "war of ten years"?
received the inquiry letter and was suspected of "financial bathing"
In the inquiry letter issued by the Shanghai Stock Exchange, the question directly refers to whether there is a "financial crisis" in Ningbo Joyson Electronic Corp(600699) . Among them, it focuses on whether Ningbo Joyson Electronic Corp(600699) has used improper profit adjustment to damage the interests of investors, and whether the provision for goodwill impairment in previous periods is sufficient and accurate. According to the performance forecast of Ningbo Joyson Electronic Corp(600699) , the one-time provision for impairment of long-term assets (including goodwill) accounts for 13.6% of net assets.
For the query of the Shanghai Stock Exchange, Ningbo Joyson Electronic Corp(600699) announced after the closing on February 11 that the large losses in 2021 were in line with the characteristics and actual situation of the company's industry, and there was no case of using improper profit adjustment to damage the interests of investors.
In fact, this is not Ningbo Joyson Electronic Corp(600699) the first time to receive an inquiry letter due to goodwill. As early as 2019, the Shanghai Stock Exchange questioned whether the "provision for goodwill impairment is sufficient and accurate and meets the prudence requirements" in the Ningbo Joyson Electronic Corp(600699) 2018 annual report.
From the perspective of enterprise development, goodwill itself is hard to say good or bad. As the premium part of M & A, goodwill reflects the acquirer's expectation of the performance of the subject matter of M & A. if the performance does not meet the expectation, it is not a bad thing to withdraw the impairment of goodwill in time. However, Ningbo Joyson Electronic Corp(600699) has never provided for impairment of high goodwill before, which naturally attracted the continuous attention of the Shanghai Stock Exchange.
At the same time, the market has never stopped paying attention to Ningbo Joyson Electronic Corp(600699) high goodwill. In May 2021, many investors asked Ningbo Joyson Electronic Corp(600699) "will the company's goodwill put pressure on future performance?".
The reply given by Ningbo Joyson Electronic Corp(600699) is: "according to the verification opinions issued by KPMG Huazhen Certified Public Accountants (special general partnership), an external auditor hired by the company, and the results of the disclosed audit reports over the years, the company has no impairment of goodwill!"
However, after a lapse of nine months, the impairment of goodwill was "unexpected". Although the market has been somewhat prepared for this, the Ningbo Joyson Electronic Corp(600699) share price is still firmly nailed to the falling limit on the first trading day of the year of the tiger. As of the closing on February 11, Ningbo Joyson Electronic Corp(600699) the cumulative decline of share price in 2022 has reached 24.53%.
Also likely to be affected by goodwill impairment is the bond "20 Ningbo Joyson Electronic Corp(600699) (epidemic prevention and control bond) mtn001" issued by Ningbo Joyson Electronic Corp(600699) . United credit rating Co., Ltd., the entrusted rating agency of the bond, announced on February 10 that it had contacted Ningbo Joyson Electronic Corp(600699) and would further maintain communication, so as to comprehensively analyze and timely reflect the possible impact of performance pre loss on the company's main body and the credit level of the above-mentioned bonds.
there may be an omen before the "Thunderstorm"
In the face of this storm of goodwill impairment, it is difficult for investors to calm down, and began to question that the provision of large amount of goodwill is to facilitate the exercise of ESOP.
The employee stock ownership plan referred to by investors is the 2021 employee stock ownership plan (Draft) issued by Ningbo Joyson Electronic Corp(600699) in October 2021. According to the plan, the performance appraisal period is from 2022 to 2024. Among them, the performance appraisal target in 2022 is that the return on net assets of the company is 5% or the net profit margin of the company in 2022 is 2.5%. According to the data of the third quarterly report of 2021, these two indicators are only 0.12% and - 0.86% respectively. It is worth noting that no matter which performance appraisal target you want to achieve, it is closely related to the current net profit data.
Back to the goodwill accrual event itself, this is naturally related to the lower than expected performance of related businesses. When Ningbo Joyson Electronic Corp(600699) mentioned the reasons for goodwill impairment, core shortage was listed as one of the most important factors. It is true that this round of core shortage of auto enterprises sweeping the world has been surging for a long time, but in terms of approximate time, the start time of the auto industry trapped by chips is about after November 2020. But before that, the profit data of Ningbo Joyson Electronic Corp(600699) had already turned downward.
In 2020, Ningbo Joyson Electronic Corp(600699) achieved a revenue of 47.89 billion yuan, a year-on-year decrease of 22.38%. In that year, it achieved a net profit of 204 million yuan, a decrease of 85.96%. However, quarterly, after the "unsatisfactory" performance in the first three quarters of 2020, the fourth quarter net profit data bucked the trend and ushered in a year-on-year increase of 183.63%. However, after careful study, this "counter attack" has nothing to do with performance. In the fourth quarter of 2020, Ningbo Joyson Electronic Corp(600699) sold 51% shares of its holding subsidiary Junsheng Qunying, with a total transaction amount of 2.04 billion yuan, of which the first phase of share transfer was 1.2 billion yuan.
Ningbo Joyson Electronic Corp(600699) the explanation for this is to make the business more focused on growth fields such as intelligent driving, intelligent cockpit and new energy control system. However, according to the published data, in addition to the relevant asset group of Junsheng automobile safety division, which has accrued goodwill impairment this time, Ningbo Joyson Electronic Corp(600699) smart car company business also showed a downward trend, and its revenue has decreased from 3.054 billion yuan in 2018 to 2.651 billion yuan in 2020.
In fact, even without the two major factors of epidemic and lack of core, Ningbo Joyson Electronic Corp(600699) the situation of increasing income without increasing profit has appeared as early as 2019. In that year, the revenue of Ningbo Joyson Electronic Corp(600699) increased to 61.699 billion yuan, but the net profit decreased to 1.452 billion yuan from 2.127 billion yuan in 2018. Along with the decline in net profit, there is the gross profit margin index, which fell earlier. After reaching a high of 21.65% in 2015, it fluctuated downward, and the data in 2020 was only 13.31%.
what are the hidden dangers left by the "equal win mode"?
Despite the early decline in profitability, the revenue of Ningbo Joyson Electronic Corp(600699) rose all the way with crazy foreign mergers and acquisitions before the outbreak, which is the "win-win model" loved by the auto parts industry.
The first shot of the "equal win model" was the acquisition of German Puri. At that time, Ningbo Joyson Electronic Corp(600699) took advantage of the group's capital advantages or capital mortgage advantages to acquire some overseas assets in cash. Subsequently, listed companies with less capital issued additional shares to the group to obtain this part of overseas assets. By the end of 2011, Ningbo Joyson Electronic Corp(600699) had only 157 million yuan of monetary capital. Winning Puri was tantamount to "snake swallowing elephant".
Since then, Ningbo Joyson Electronic Corp(600699) spent a lot of money to win 100% equity of KSS project and TS project respectively in 2016. In 2018 and 2019, it successively purchased Gaotian assets and some assets of Yanfeng bailide. Behind the crazy "equal win model" is the continuous rise of goodwill. In 2016, the goodwill of Ningbo Joyson Electronic Corp(600699) increased sharply from 304 million yuan to 7.468 billion yuan, reaching 8.182 billion yuan in 2018. By the end of September 2021, there was still 7.169 billion yuan left, accounting for 39% of the net assets.
Another side effect of the "equal win model" is to keep the company's asset liability ratio high. In recent years, Ningbo Joyson Electronic Corp(600699) the index has exceeded 60% for a long time, and it is close to 70% from 2018 to 2019. Under the high debt, the interest expense of the company continues to be high, with an average annual income of more than 1 billion yuan from 2018 to 2020. By the end of September 2021, the interest expense of Ningbo Joyson Electronic Corp(600699) was 731 million yuan.
It is worth mentioning that the share pledge proportion of Ningbo Joyson Electronic Corp(600699) controlling shareholders is also high. As of press time, Junsheng group has pledged about 329 million shares of the company, accounting for 69.12% of its shareholding and 24.09% of the total share capital of the company.
Under high goodwill and high liabilities, Ningbo Joyson Electronic Corp(600699) frequently alleviates the pressure of capital by introducing external investment and refinancing. For whether the introduction of external investment will increase the difficulty of asset restructuring in the later stage, the reporter called Ningbo Joyson Electronic Corp(600699) , and the staff said: "there is no relevant plan in the short term."
After previous mergers and acquisitions, the completion of Junsheng security integration, which is highly expected, is also pending. According to the information previously disclosed by Ningbo Joyson Electronic Corp(600699) , the company's automobile safety business segment has completed most of the integration work in 2020, and the company plans to complete the remaining integration work in 2021. In this regard, the reporter asked the staff to verify whether the integration work was completed at present. The other party replied: "it has been basically completed."
