Securities code: 600077 securities abbreviation: Sundy Land Investment Co.Ltd(600077) Announcement No.: pro 2022-022
Sundy Land Investment Co.Ltd(600077)
Announcement on reply to inquiry letter of Shanghai Stock Exchange
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
Important content tips:
1. During the repurchase period, the company has disclosed the fact that “shares have not been repurchased” in the progress announcement within three trading days at the beginning of each month and the progress announcement with more than half the implementation period. However, because the market environment is difficult to predict and the company still tries to complete the repurchase as scheduled, the reasons for the failure to implement the repurchase, subsequent arrangements and relevant risk tips were not disclosed when the repurchase implementation period was more than half. Therefore, the company sincerely apologized to the majority of investors for the failure to timely and fully disclose the risk prompt of failure to repurchase on schedule in the progress announcement of the repurchase period.
2. On January 21, 2022, the company terminated the repurchase plan. The board of directors of the company sincerely apologized for the inconvenience caused to the majority of investors by terminating the repurchase of the company’s shares without reaching the lower limit of the repurchase plan (i.e. 130 million yuan).
Sundy Land Investment Co.Ltd(600077) (hereinafter referred to as “the company” or “the company”) received the inquiry letter on matters related to Sundy Land Investment Co.Ltd(600077) share repurchase and performance forecast from Shanghai Stock Exchange on January 23, 2022 (szgh [2022] No. 0046). After verification by the company, the relevant issues are stated as follows:
1、 According to the announcement, the company disclosed the repurchase plan on January 23, 2021, and plans to repurchase shares by centralized bidding within 12 months, with a repurchase amount of 130-260 million yuan. On January 21, 2022, the company terminated the repurchase plan, and the repurchase amount was only 8 million yuan. The company is requested to explain whether the early-stage decision is prudent in combination with the specific basis and risk factors considered when formulating the repurchase plan, and whether timely and sufficient risk tips have been given for the failure to complete the repurchase on schedule in combination with the information disclosure during the repurchase period. The independent directors and the board of supervisors are requested to express clear opinions on the above issues.
reply:
(1) Please explain whether the early decision is prudent in combination with the specific basis and risk factors considered when formulating the repurchase plan.
1.1 specific basis for the company to formulate repurchase plan
First of all, the company formulates the repurchase plan for the needs of internal governance and future development. In January 2021, the average daily market value of the company was 3.832 billion yuan, which was lower than the net assets of 4.58 billion yuan attributable to shareholders of listed companies on September 30, 2020. Based on the confidence in the company’s sustainable and stable development in the future and the reasonable judgment of the company’s stock value, and comprehensively considering the actual operation and future development prospects, the company strengthened the establishment and improvement of the company’s long-term incentive mechanism, attracted and retained excellent talents, enhanced investor confidence and safeguarded the interests of investors, and decided that all the shares to be repurchased would be used for the subsequent implementation of equity incentive.
After comprehensively considering the actual operation situation and development needs of the company, the company, in accordance with the company law, the securities law, the administrative measures for the repurchase of social public shares by listed companies (for Trial Implementation), the detailed rules for the implementation of share repurchase by listed companies of Shanghai Stock Exchange, and the supplementary provisions on the repurchase of shares by listed companies through centralized bidding transaction The company has formulated a share repurchase plan in accordance with the relevant provisions of laws, regulations and normative documents such as the opinions on supporting listed companies to repurchase shares, the Listing Rules of Shanghai Stock Exchange and so on. On January 22, 2021, the 25th meeting of the 10th board of directors and the 21st Meeting of the 10th board of supervisors deliberated and adopted the proposal on share repurchase plan by centralized bidding. The company plans to repurchase the company’s shares by centralized bidding and all of them will be used for the later implementation of equity incentive plan. The total capital of this share repurchase shall not be less than 130 million yuan and not more than 260 million yuan, and the repurchase price shall not exceed 4.61 yuan / share. The term of share repurchase shall not exceed 12 months from the date when the board of directors of the company deliberates and approves the repurchase plan. Authorize the company’s management to handle matters related to this share repurchase. The independent directors of the company expressed their independent opinions on the repurchase of the company. According to Article 22 (III) and Article 24 of the articles of association, this matter belongs to the approval authority of the board of directors and does not need to be submitted to the general meeting of shareholders for deliberation. (see Announcement No. 2021-004 and No. 2021-006 disclosed by the company for details)
Secondly, when formulating the repurchase plan, the company made reference to the company’s third quarter report in 2020 and the company’s financial capital at that time. As of September 30, 2020 (Unaudited), the company’s net assets attributable to shareholders of listed companies were 4.58 billion yuan and monetary funds were 5.803 billion yuan. Since the funds to be used in this repurchase are not less than 130 million yuan and not more than 260 million yuan, even if the funds used reach the upper limit of 260 million yuan, according to the financial data as of September 30, 2020, the repurchase funds account for about 5.68% of the net assets attributable to the shareholders of the listed company and 4.48% of the monetary funds.
In May 2020, after negotiation between the company and the controlling shareholder Zhejiang Songdu Holding Co., Ltd. (hereinafter referred to as “Songdu holding”) and the actual controller Mr. Yu Jianwu, the actual controller and Songdu holding planned to take relevant measures to consolidate realizable assets, broaden financing channels, optimize financing structure and strengthen stock risk control, And promised to strive to completely solve the problem of providing certificate of deposit pledge guarantee for controlling shareholders within one year from May 27, 2020. (see Announcement No. 2020-060 disclosed by the company for details), so at that time, the company expects that the company can release the corresponding restricted certificate of deposit funds in 2021. The share repurchase plan formulated by the company is carried out at the right time during the repurchase period (2021 / 1 / 22-2022 / 1 / 22), which is flexible. The company believes that the capital payment pressure during the repurchase period is small, so it will not have a significant impact on the company’s finance, operation and debt performance.
1.2 risk factors considered by the company when formulating repurchase plan
The risk factors considered by the company when formulating the repurchase plan are as follows: 1) after the repurchase is considered and approved by the board of directors, there is still a risk that the repurchase plan cannot be implemented because the company’s stock price continues to exceed the price range disclosed in the repurchase plan; 2) The repurchased shares are intended to be used for equity incentive. There may be a risk that the repurchased shares cannot be fully granted due to the failure to be deliberated and approved by the decision-making bodies such as the board of directors and the general meeting of shareholders, and some incentive objects give up the subscription of shares. 3) There is a risk that the plan will be affected due to the occurrence of major events that have a significant impact on the trading price of the company’s shares or the decision of the board of directors to terminate the repurchase plan; 4) If the funds required for this share repurchase are not raised in place, there may be a risk that the repurchase plan cannot be implemented or partially implemented.
The company’s announcement on the uncertainty of share repurchase transaction on 2021-23 has been taken into account (see the notice on the uncertainty of the company’s announcement on share repurchase transaction on 2021-23 for details)
In conclusion, combined with the basis for the company to formulate the repurchase plan and the risk factors considered, the company believes that the early-stage decision-making is reasonable and prudent.
(2) In combination with the information disclosure during the repurchase period, it explains whether there are timely and sufficient risk prompts for the failure to complete the repurchase on schedule.
The repurchase period of the company’s share repurchase plan is: 2021 / 1 / 22-2022 / 1 / 22.
On January 28, 2021, the company disclosed the report on repurchase of shares through centralized bidding transaction (hereinafter referred to as the “repurchase report”). In the “important content prompt” of the repurchase report, the company has given a risk prompt for the failure to complete the repurchase on schedule, including “there is a risk that the plan will be affected due to the occurrence of major events that have a significant impact on the stock trading price of the company or the decision of the board of directors to terminate the repurchase plan”; In the “Chapter III uncertainty risk of repurchase plan” of the repurchase report, the risk prompt has also been given for the failure to complete the repurchase on schedule, including “if the funds required for this repurchase of shares are not raised in place, there may be a risk that the repurchase plan cannot be implemented or partially implemented.” It was emphasized again that “the company will strive to promote the smooth implementation of this repurchase plan on the premise of ensuring its normal operation. If the above risks lead to the impossibility of this repurchase plan, the company will revise the repurchase plan, fulfill the review procedures and information disclosure obligations in accordance with relevant laws and regulations and the articles of association, and choose the opportunity to implement or terminate the implementation.” (see Announcement No. 2021-012 disclosed by the company for details).
During the repurchase period, the company disclosed the progress of the repurchase in its regular reports, and described the possible policy risks, market risks, operational risks and financial risks of the company in the risk prompt chapters of the company’s 2019 annual report and the company’s 2020 semi annual report.
During the repurchase period, the company has disclosed the fact that “shares have not been repurchased” in the progress announcement within three trading days at the beginning of each month and the progress announcement with more than half the implementation period. However, because the market environment is difficult to predict and the company still tries to complete the repurchase as scheduled, the reasons for the failure to implement the repurchase, subsequent arrangements and relevant risk tips were not disclosed when the repurchase implementation period was more than half. Therefore, the company sincerely apologized to the majority of investors for the failure to timely and fully disclose the risk prompt of failure to repurchase on schedule in the progress announcement of the repurchase period.
(3) Opinions of independent directors and board of supervisors
The independent directors of the company believe that: 1. The company’s share repurchase plan complies with the provisions of the company law of the people’s Republic of China (revised in 2018), the opinions on supporting the share repurchase of listed companies, the detailed rules for the implementation of share repurchase of listed companies on Shanghai Stock exchange (revised in 2019), and other laws, regulations and normative documents, The voting procedures of the board meeting shall comply with the relevant provisions of laws and regulations and the articles of association. 2. The company’s launch of the repurchase plan is the result of the prudent decision-making of the company’s management, and has made timely and sufficient tips on the existing risks. During the repurchase period, the company has disclosed the progress of the repurchase of shares and the possible risks of the company in the periodic report, but the temporary announcement of the repurchase progress did not give timely and sufficient tips on the risks of failure to repurchase on schedule.
The board of supervisors of the company believes that: 1. The company’s share repurchase plan complies with the provisions of laws, regulations and normative documents such as the company law of the people’s Republic of China (revised in 2018), opinions on supporting the share repurchase of listed companies, detailed rules for the implementation of share repurchase of listed companies on Shanghai Stock Exchange (revised in 2019), The voting procedures of the board meeting shall comply with the relevant provisions of laws and regulations and the articles of association. 2. The company’s launch of the repurchase plan is the result of the prudent decision-making of the company’s management, and has made timely and sufficient tips on the existing risks. During the repurchase period, the company has disclosed the progress of the repurchase of shares and the possible risks of the company in the periodic report, but the temporary announcement of the repurchase progress did not give timely and sufficient tips on the risks of failure to repurchase on schedule.
2、 According to the announcement, the company said that one of the reasons for terminating the repurchase was to strengthen the safety management of the company’s capital liquidity. During the repurchase period, the company purchased the private fund shares held by the actual controller with RMB 131 million in cash and invested RMB 500 million to establish a lithium subsidiary. The company is requested to: (1) explain in detail the reasons and rationality of repeatedly using large amount of funds for foreign investment but failing to arrange funds to complete share repurchase, and whether it damages the interests of minority shareholders; (2) Combined with the share pledge and reduction of the controlling shareholder and the directors, supervisors and senior executives, explain whether to use the repurchase information to affect the stock price. The independent directors and the board of supervisors are requested to express clear opinions on the above issues. reply:
(1) Explain in detail the reasons and rationality of repeatedly using large amount of funds for foreign investment, but failing to arrange funds to complete share repurchase, and whether it damages the interests of minority shareholders
1.1 investment in private equity fund shares
On October 15, 2021, the extraordinary general meeting of shareholders held by the company deliberated and approved the proposal on foreign investment and related party transactions, and the company transferred the private fund shares held by the actual controller with RMB 131 million in cash. Investment funds are venture capital funds, which mainly cover early or growing industries such as health care and advanced technology. The company plans to cooperate with the professional fund management team to broaden the understanding and research of other industries and fields, which will help to improve the possibility of expanding business layout. At the same time, in order to protect the interests of the company and minority shareholders, Mr. Yu Jianwu made a bottom-up commitment: when the company “holds the fund for three years” and “sells or withdraws the investment fund in the next three years”, the net value or market value of the fund is lower than “transaction cost” and “transaction cost and reasonable investment return” respectively, Promised to make up the difference. The company believes that investing in private equity fund shares has the necessity and rationality of trading, and the risk is generally controllable.
1.2 establishment of lithium subsidiary
At the 33rd meeting of the 10th board of directors held on December 31, 2021, the company passed the proposal on establishing a new wholly-owned subsidiary. This foreign investment is a wholly-owned subsidiary of the company with a newly established registered capital of 500 million yuan. It does not involve specific investment projects and has not signed an investment agreement. On January 5, 2022, the company has completed the industrial and commercial registration of establishing a wholly-owned subsidiary. Up to now, the subscribed registered capital has not been paid in. Therefore, the company believes that the establishment of a wholly-owned subsidiary is a prerequisite for business development, which is necessary and reasonable.
1.3 termination of share repurchase
With the continuation of real estate macro-control policies and the implementation of regulatory policies such as “three red lines” of real estate enterprises, the company’s external environment continues to tighten, and the company’s business environment is facing phased challenges. In order to maintain the sustainable development of the company’s real estate business within a reasonable capital range, the company has abandoned the plot of Hang Zheng Chu Chu [2021] No. 8 (see Lin 2021-076 and Lin 2021-080 announcements disclosed by the company for details). According to the third quarter report of 2021 disclosed by the company, as of September 30, 2021, the monetary capital of the company was 7.723 billion yuan, including 3.941 billion yuan of restricted capital. In 2021, the company’s monetary capital is mainly used for main business operation and
