On the evening of January 29, Suning.Com Co.Ltd(002024) an announcement with an advance loss of 42.3 billion yuan to 43.3 billion yuan shocked a shares. That night, the exchange quickly issued a letter of concern, requesting additional information.
One year’s loss exceeds the current market value. What happened behind it? On February 11, Suning.Com Co.Ltd(002024) issued a notice of reply to the letter of concern, responding to many issues concerned by the exchange one by one.
428 Suning stores closed
According to the China Securities Taurus app, dragged down by the huge advance loss news, the first trading day of the year Suning.Com Co.Ltd(002024) fell 7.16%. On February 11, Suning.Com Co.Ltd(002024) reported 3.84 yuan per share, down 0.26% on the same day, with the latest market value of 35.75 billion yuan.
In the reply announcement of the company on the evening of February 11, Suning.Com Co.Ltd(002024) said that during the reporting period, the operation of Suning small stores as related parties was significantly affected by the epidemic, and the number of stores decreased from 567 at the beginning of the year to 139 at the end of the year. Due to business difficulties, the payment of Suning store was delayed and could not be paid after September 29, 2021. In addition, since September last year, Suning.Com Co.Ltd(002024) has also stopped supplying Suning store.
According to the data, the total amount of related party transactions between the two sides in 2021 was 551 million yuan. As of December 31, 2021, the balance of accounts receivable of Suning store was 1.174 billion yuan.
Suning.Com Co.Ltd(002024) believes that the credit risk of accounts receivable in Suning store has increased significantly and has been impaired. At the same time, there is no collateral and guarantee. Therefore, the company fully accrued the credit impairment loss of accounts receivable of Suning store. Suning.Com Co.Ltd(002024) said that it would still fully promote the recovery of the above accounts receivable.
deny centralized large amount provision for impairment
According to the reply announcement, the previously Suning.Com Co.Ltd(002024) heavily acquired Tiantian express lost money for years, and Carrefour China’s revenue was lower than expected, which became an important reason to drag down the company’s performance. However, Suning.Com Co.Ltd(002024) indicates that there is no centralized provision for impairment in large amount.
According to the announcement, Tiantian express lost 1.786 billion yuan in 2019 and Suning.Com Co.Ltd(002024) made about 217 million yuan of goodwill impairment provision in that year. In 2020, Tiantian express lost another 1.226 billion yuan and Suning.Com Co.Ltd(002024) made another provision for goodwill impairment of about 1.033 billion yuan.
In the second half of 2021, Suning.Com Co.Ltd(002024) shut down Tiantian express logistics business, resulting in the value and goodwill of Tiantian express no longer exist. Therefore, Suning.Com Co.Ltd(002024) the provision for impairment of goodwill is about 800 million yuan and the provision for impairment of intangible assets is about 1.3 billion yuan, totaling about 2.1 billion yuan, with a total impact on the net profit attributable to the parent company of about 1.775 billion yuan.
For Carrefour China, the acquisition of 80% equity of Carrefour China was completed in Suning.Com Co.Ltd(002024) September 2019. However, since 2021, Carrefour’s main business in China has been impacted by the expansion of community group buying at low prices, repeated epidemics and other adverse factors, and its operating revenue has decreased by more than 10% year-on-year. In the second half of 2021, Carrefour China closed 7 hypermarkets, 8 convenience stores and 3 boutiques. Therefore, according to the preliminary results of goodwill impairment test, Suning.Com Co.Ltd(002024) made a provision for goodwill impairment of about 1 billion yuan at the end of 2021.
241 stores lost money for three consecutive years
In terms of main business, during the reporting period, Suning.Com Co.Ltd(002024) home appliance 3C home life professional store’s offline retail sales revenue decreased significantly year-on-year, and the phased loss increased, further dragging down the company’s performance. According to the announcement, Suning.Com Co.Ltd(002024) a total of 241 stores have suffered losses for three consecutive years. Due to continuous losses, there are signs of impairment of some long-term assets corresponding to these stores.
In this regard, Suning.Com Co.Ltd(002024) compared the recoverable amount of such stores as the smallest asset group with the expected Book long-term assets (including long-term assets such as store use right assets), the impairment provision was made for the part of the recoverable amount lower than the book long-term assets of about 2.65 billion yuan, which had an impact on the net profit attributable to the parent company of about 2 billion yuan.
In addition, in 2021, the associated company Shanghai Xingtu Financial Services Group Co., Ltd. (hereinafter referred to as financial services company) confirmed an investment loss of about 3.5 billion yuan. Due to the changes in the Internet financial industry and the losses of financial services company, the company believes that the long-term equity investment of financial services company shows signs of impairment. After comprehensive evaluation, it is confirmed that the impairment loss of long-term equity investment is about 8.2 billion yuan and the impact on the net profit attributable to the parent company is about 6.3 billion yuan.
Suning.Com Co.Ltd(002024) in the reply to the announcement, the company also said that last year, the company actively took various self-help measures. With the support of all parties, the company’s operation is gradually recovering and improving. The company further focuses on the core business, gives full play to the core competence of the enterprise, grasps the development direction of the industry, formulates business strategies, and has the ability of sustainable operation.
