At present, it is the disclosure period of the annual report, but the announcements of asset impairment of listed companies have sprung up.
On February 26, Dianguang Explosion-Proof Technology Co.Ltd(002730) announced that after the company and its subsidiaries conducted a comprehensive inventory and preliminary asset impairment test of assets (including inventory, accounts receivable, fixed assets, goodwill, etc.) with possible signs of impairment as of December 31, 2021, it is proposed to withdraw credit impairment loss from accounts receivable, with a total amount of RMB 113473 million.
On the same day, 12 listed companies including Shanghai Construction Group Co.Ltd(600170) , Shandong Shengli Co.Ltd(000407) , Zhejiang Huatong Meat Products Co.Ltd(002840) and others also issued announcements on the provision for asset impairment. According to the data of China stock market news choice, 130 listed companies have issued asset impairment announcements this year. Among them, Suning.Com Co.Ltd(002024) it is estimated that the provision for asset impairment will reach 25.475 billion yuan.
provision for asset impairment or performance loss
“When the value of the company’s original assets decreases due to major changes in the industry, listed companies need to withdraw asset impairment to reflect the changes in the fair value of assets.” Bai Wenxi, chief economist of IPG China, told the Securities Daily.
Some listed companies suffered performance losses due to the provision of asset impairment. For example, Cosco Shipping Energy Transportation Co.Ltd(600026) in the performance forecast disclosed on January 22, it is estimated that the net profit attributable to the shareholders of the listed company will lose 4.92 billion yuan to 5.12 billion yuan in 2021, which is mainly due to two factors: first, the continuous downturn of the international oil transportation market in 2021 and the rigid growth of epidemic prevention costs in the post epidemic period have seriously affected the operating performance of the company; Second, the company made provision for asset impairment for 94 ships, with a total impairment amount of about 4.96 billion yuan.
The phenomenon of one-time “centralized” large amount accrual has become the focus of supervision Nanjing Red Sun Co.Ltd(000525) it is estimated that the revenue in 2021 will range from 4.5 billion yuan to 4.7 billion yuan, and the net profit attributable to the parent company will range from 3.4 billion yuan to 3.7 billion yuan. The provision for impairment of the company’s assets totaled about RMB 2021 billion, which is mainly due to the significant impairment provision of the company’s assets in the current year. Therefore, Shenzhen stock exchange sent a letter of concern to Nanjing Red Sun Co.Ltd(000525) requesting the company to explain the adequacy of the provision for relevant estimated liabilities and the provision for relevant bad debts.
An insider who asked not to be named told the Securities Daily: “the operation of withdrawing the provision for asset impairment is a common means for listed companies to manipulate profits. Companies can withdraw the provision for impairment in a large amount in a profit-making year and slowly reverse it in the following years, which can not only hide the profits of that year, but also create the illusion of turning losses into profits in the future.”
Writer Xiong Jinqiu said that some listed companies had a “financial bath” in a certain year. On the surface, the performance of this year suddenly became extremely miserable. In fact, they may have lost money in the previous few years, but there was no provision at that time, covering up the fact of loss. In this way, some are to avoid continuous losses and step on the delisting red line, and some are to cooperate with the speculation of the main force of the secondary market on the stock price.
is it good or bad to withdraw impairment
Will the provision for asset impairment of listed companies have a negative impact on the sentiment of the secondary market?
Bai Wenxi said: “there is the possibility of artificial operation to adjust the performance, whitewash the statements and manipulate the market. The provision of asset impairment by listed companies will have a negative impact in the performance profit state; in the large loss state, it is conducive to squeeze out the performance water, but has a certain positive effect.”
On February 23, Dawning Information Industry Co.Ltd(603019) issued an announcement on withdrawing asset impairment, saying that the company plans to withdraw a total of 200 million yuan of asset impairment reserves in 2021. On February 24, the share price of the stock fell slightly by 1.63%.
The same is the provision for asset impairment, but Beijing Thunisoft Co.Ltd(300271) ‘s share price rose instead of falling. On February 24, Beijing Thunisoft Co.Ltd(300271) disclosed the announcement of withdrawing assets. On February 25, the share price of the stock rose slightly by 1.15%.
Wang Chikun, a financial commentator who understands the Research Institute, told the Securities Daily: “asset impairment indicates the reduction of shareholders’ equity and the decline of stock net assets, which is essentially bad news. However, if some companies withdraw asset impairment during the decline of asset price, once the valuation rises in the future, the company’s assets will increase in value.”
Insiders reminded that if listed companies carry out asset impairment in accordance with the rules and meet the requirements of financial audit, it is a normal phenomenon, and investors need not worry too much. However, in order to adjust profits, some companies made substantial asset impairment in the previous year and then offset it back in the next year to increase profits, so as to achieve the purpose of manipulating stock prices by controlling profits. For such companies, investors should also avoid risks in time.
