Securities Announcement No.: 000202416 Minsheng Holdings Co.Ltd(000416)
Reply announcement on the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee the contents of information disclosure
True, accurate and complete, without false records, misleading statements or major omissions.
Minsheng Holdings Co.Ltd(000416) (hereinafter referred to as ” Minsheng Holdings Co.Ltd(000416) “, “company” or “listed company”) received the notice on Minsheng Holdings Co.Ltd(000416) on January 30, 2022 (company Department notice letter [2022] No. 104, hereinafter referred to as the “notice”). After receiving the letter of concern, the board of directors of the company attached great importance to it, earnestly implemented the requirements of the letter, and actively organized relevant replies. In response to the questions raised in the letter of concern, the company replied to the announcement as follows: 1. The announcement disclosed by your company on May 27 and November 20, 2021 shows that the US dollar bonds issued by Oceanwide Holdings Co.Ltd(000046) overseas subsidiaries purchased by your company with its own funds of US $3.6844 million and RMB 43 million respectively and the private placement funds issued by Minsheng trust have not been cashed on schedule. As of January 6, 2022, only US $539400 of interest had been received for us dollar bonds; For private placement funds, only 13.3951 million yuan of principal and interest have been received, and the remaining 30.1 million yuan of principal and corresponding income have not been received. Please explain your company’s provision for impairment of the above investment products, including but not limited to the basis, amount, calculation process and compliance.
The reply is as follows:
1、 Investment in US dollar bonds
Minsheng International Investment Co., Ltd., a wholly-owned subsidiary of the company, invested a total of US $3684365.55 in May 2019 and August 2020 respectively, and purchased a total of 3.72 million US dollar bonds issued by Oceanwide Holdings Co.Ltd(000046) (hereinafter referred to as ” Oceanwide Holdings Co.Ltd(000046) “) overseas subsidiary Oceanwide Holdings Co.Ltd(000046) international development No. 3 Co., Ltd. at the prevailing market price in the Hong Kong bond market, with a face value of US $3.72 million. After the maturity of the US dollar bond on May 23, 2021, Oceanwide Holdings Co.Ltd(000046) issued two announcements successively, extending the payment date of the US dollar bond to August 23, 2021 and November 23, 2021 respectively, but failed to pay as scheduled. On December 6, 2021, the company received the interest of USD 539400 as of November 23, 2021. As of December 31, 2021, the outstanding amount of the US dollar bond was US $3.72 million.
Oceanwide Holdings Co.Ltd(000046) announced on November 24, 2021 that it planned to extend the principal of the above bonds to about US $134 million until March 23, 2022. In order to eliminate the impact of the uncertainty on the company as soon as possible, and recover the cash for other investment projects and obtain income as soon as possible, after careful consideration and inquiry and negotiation in the Hong Kong market, the company plans to transfer the US dollar bond to an independent third party in the Hong Kong market, and the transfer price shall not be less than 78% of the nominal value. On January 28, 2022, the company issued the notice of convening the 12th (Interim) meeting of the 10th board of directors to consider the company’s discount transfer of the US dollar bonds. On February 11, 2022, the 12th (Interim) meeting of the 10th board of directors considered and approved the company’s transfer plan of the US dollar bonds. See the announcement on February 14, 2022 for details. Up to now, the company has contacted the intended transferee of US dollar bonds, the transfer agreement is to be signed in the near future, and the transfer procedures are expected to be completed around the end of February 2022. Based on this, according to the relevant provisions of the accounting standards for business enterprises and the company’s accounting policies, the company plans to withdraw the impairment provision for the US dollar bond on the basis of the recoverable amount and record it into the financial statements of 2021. If the recoverable amount is 78% of the nominal value, the amount of impairment provision is US $818400 (US $3.72 million * (1-78%)), which affects the net profit attributable to the shareholders of the listed company in the consolidated statements of the company in 2021 and the net profit attributable to the shareholders of the listed company after deducting non recurring profits and losses, which is about US $7500900, equivalent to about RMB – 4.8 million.
The impact of the provision for impairment of US dollar bonds on the company’s performance has been fully considered in the performance forecast of 2021 disclosed by the company on January 29, 2022. The company’s provision for impairment of the US dollar bonds complies with the provisions of the accounting standards for business enterprises, reflecting the impact of the event on the company’s operation in 2021 and its financial position on December 31, 2021.
2、 Investment in Minsheng trust products
On April 3, 2020, the company signed a contract with China Minsheng Trust Co., Ltd. (hereinafter referred to as “Minsheng trust”) to subscribe for the “China Minsheng trust Zhixin No. 772 Rongsheng real estate equity investment contractual private equity fund” issued by Minsheng trust with its own capital of 43 million yuan. The maturity date is November 19, 2021. Since the implementation of this investment in April 2020, Minsheng trust has regularly sent fund management reports to our company. Since April 2021, our company has strengthened its contact with Minsheng trust and expressed its concern about our investment projects by telephone, letter and other means. During this period, Minsheng trust also replied that the overall situation was normal.
On November 18, 2021, the company received a reply from Minsheng trust, saying, “at present, according to the assets held by the fund and the progress of our judicial measures, the fund plans to complete the cash distribution before December 31, 2021. The above distribution arrangement will be adjusted according to the asset status and disposal process. If there is any adjustment, it will be announced in advance.” Judging from the situation at that time, if Minsheng trust can cash on schedule, it will not have a significant impact on the company’s financial situation and operating results in 2021.
The company received a total of 13.3951 million yuan of trust principal and income distributed by Minsheng trust before November 25. After communication with Minsheng trust, the distribution is cashed according to 30% of the principal and 30% of the income from the previous payment to the end date of the project, including 12.9 million yuan of principal and 495100 yuan of income.
On December 31, 2021, the company did not receive the remaining principal of 30.1 million yuan and the corresponding income. Accordingly, the company issued the announcement on the progress of investment and financial products and risk tips on January 6, 2022, and sent the letter on the sufficiency and cashing progress of the pledge of Zhixin No. 772 Rongsheng project to Minsheng trust on January 7, 2022.
On January 27, 2022, the company received a reply from Minsheng trust, which said, “I. bottom asset status: our company has paid in 630 million yuan to the partnership on behalf of the fund. As of the date of this reply, our company has received 134202874.02 yuan of investment price (principal) and 65178636.10 yuan of benchmark investment income”; 2、 “In view of the overdue situation of the project, our company has frozen 151 million uncollateralized shares of listed company Rongsheng Real Estate Development Co., Ltd. (hereinafter referred to as’ Risesun Real Estate Development Co.Ltd(002146) ‘) held by Rongsheng holdings, with a market value of 717 million yuan (calculated according to the closing price of Risesun Real Estate Development Co.Ltd(002146) of 4.75 yuan / share on January 20, 2022), which is enough to cover the remaining outstanding fund shares.
”； 3、 “Distribution arrangement: at present, our company and Rongsheng holding are actively negotiating a peaceful solution. According to the collection of the underlying assets of the project, we plan to complete the distribution of the remaining amount before June 30, 2022.”
According to the reply, based on the received investment price principal of RMB 134 million and the corresponding benchmark investment income of RMB 65 million of Minsheng trust, the principal of RMB 496 million of Minsheng trust has not been recovered. Even if the underlying assets are not paid back in time, Minsheng trust can still pay in full when Risesun Real Estate Development Co.Ltd(002146) shares are not less than 3.29 yuan / share according to the calculation of 151 million frozen Risesun Real Estate Development Co.Ltd(002146) shares. As of February 11, 2022, the closing average price of Risesun Real Estate Development Co.Ltd(002146) in recent 20 trading days was 4.51 yuan / share, with a market value of about 681 million yuan. From the current situation, the fair value of the product has not changed significantly and has not had a significant impact on the company’s performance in 2021. The company will continue to track the changes in the underlying assets and Risesun Real Estate Development Co.Ltd(002146) share price of the investment project. In case of adverse changes, the company will timely and accurately handle the accounts in accordance with the accounting standards for business enterprises, relevant regulatory provisions and the company’s accounting policies.
2. According to the third quarter report disclosed by your company, in the first three quarters of 2021, your company only realized an operating revenue of 26.31 million yuan and a net profit of – 2.65 million yuan after deduction. However, your company expects to realize an operating revenue of 56.6 million yuan and a net profit of 5.21 million yuan after deduction in 2021. In combination with the development of pawn business and insurance brokerage business in the fourth quarter, please explain the reasons for the significant increase in operating revenue in the fourth quarter compared with the previous three quarters, whether the relevant revenue recognition basis and amount comply with the relevant provisions of the accounting standards for business enterprises, and whether there is any situation of sudden recognition of revenue at the end of the year or recognition of revenue in advance.
The reply is as follows:
The main financial indicators of the company in the first three quarters and the fourth quarter of 2021 are shown in the table below:
Unit: 10000 yuan
The first three quarters of 2021 and the fourth quarter of 2021
Operating income 2630.65 3029.35 5660.00
Net profit attributable to shareholders of listed company 697.09 812.91 1510.00
Deduction attributable to shareholders of listed companies non recurring
Net profit of profit and loss -265.47 786.47 521.00
In the fourth quarter of 2021, the company’s operating income, net profit attributable to the shareholders of the listed company and net profit attributable to the shareholders of the listed company after non deduction increased compared with the previous three quarters, mainly due to the increase in the business income of Beijing Minsheng pawn Co., Ltd. (hereinafter referred to as “Minsheng pawn”).
The operating income of Minsheng pawn and Minsheng insurance brokerage Co., Ltd. (hereinafter referred to as “Minsheng insurance brokerage”) in the first three quarters and the fourth quarter of 2021 is shown in the table below:
Unit: 10000 yuan
The first three quarters of 2021 and the fourth quarter of 2021
Minsheng pawn 2137.53 2880.87 5018.40
Minsheng insurance brokerage 493.12 148.48 641.60
Total 2630.65 3029.35 5660.00
The increase in operating income in the fourth quarter of 2021 was mainly due to the recovery of overdue interest fees of some customers in the fourth quarter and the recognition of income in accordance with the accounting standards for business enterprises. Affected by the epidemic and macroeconomic situation, the overdue principal and interest fees of some customers of Minsheng pawn increased in 2021. Therefore, since the third quarter, Minsheng pawn has adopted a variety of targeted ways to collect the principal and interest fees. According to the situation of different customers, it urges customers to handle the redemption or renewal procedures in time and pay the interest fees in time by December 31 through different means such as negotiation, letter sending, enforcement and litigation.
According to the management regulations of the pawn industry and the business process of Minsheng pawn, after Minsheng pawn signs the pawn contract with the customer, the pawn interest fee is charged, and the income is recognized according to the principle of accrual basis. When the customer’s loan is overdue, there is great uncertainty about whether Minsheng pawn can receive interest and fees, which does not meet the conditions that “the consideration that the enterprise is entitled to obtain due to the transfer of goods to customers is likely to be recovered” stipulated in the accounting standards for Business Enterprises No. 14 – income, and the income is not included. Minsheng pawn only recognizes the income by stages according to the accrual basis principle when actually receiving the interest and fees paid by overdue customers.
To sum up, in the third and fourth quarters of 2021, the company took various targeted measures to urge customers to perform the contract, timely handle the renewal or redemption of the pawn and pay the overdue interest payment fee, which belongs to the normal business behavior of the pawn company, which not only increases the company’s income, but also reduces the business risk and financial risk, and ensures the asset quality of the company’s loans. The recognition of people’s livelihood pawn income complies with the provisions of the accounting standards for business enterprises, and it is not the sudden recognition of income at the end of the year or the recognition of income in advance.
3. The announcement shows that your company expects the amount of non recurring profits and losses during the reporting period to be 9.89 million yuan. Please explain whether the recognition of non recurring gains and losses is accurate and whether the relevant requirements of explanatory Announcement No. 1 on information disclosure of companies offering securities to the public – non recurring gains and losses are met in combination with the specific composition of non recurring gains and losses, the essence of specific transactions or events involved, and the compliance of accounting treatment Whether non recurring items are listed as recurring profit and loss items, and whether the disclosure of non recurring profit and loss is true, accurate and complete.
The reply is as follows:
In accordance with the explanatory Announcement No. 1 on information disclosure of companies offering securities to the public——
