Dongguan Kingsun Optoelectronic Co.Ltd(002638) ( Dongguan Kingsun Optoelectronic Co.Ltd(002638) , SZ) finally “moved” the teaching and training business.
On March 14, Dongguan Kingsun Optoelectronic Co.Ltd(002638) announced that the company plans to transfer 100% equity of Guangzhou Longwen Education Technology Co., Ltd. (hereinafter referred to as Longwen Education) and 99% equity of Beijing longwenyun Education Technology Co., Ltd. (hereinafter referred to as Beijing longwenyun) to Zhuhai Huizhuo enterprise management partnership (limited partnership) (hereinafter referred to as Zhuhai Huizhuo) for a consideration of 1 yuan. Through this transaction, the company will set up some education and training businesses, which will have a significant impact on the company’s business structure and business scale.
It should be noted that the transaction party Zhuhai Huizhuo is an affiliate of Dongguan Kingsun Optoelectronic Co.Ltd(002638) and a company just established in February 2022. The reporter of the daily economic news learned that at the end of 2015, Dongguan Kingsun Optoelectronic Co.Ltd(002638) acquired 100% equity of Longwen education at a high premium of 2 billion yuan. This acquisition is also the first work of Dongguan Kingsun Optoelectronic Co.Ltd(002638) entering the education industry. Beijing longwenyun company invested 9.9 million yuan to acquire 99% equity in 2018. The two subsidiaries acquired at a cumulative cost of about 2.01 billion yuan are now to be stripped off at a price of 1 yuan.
Dongguan Kingsun Optoelectronic Co.Ltd(002638) expects to lose at least 700 million yuan in 2021. One of the reasons is the epidemic situation and the “double reduction policy”, which has a significant adverse impact on the profitability of Longwen education.
Longwen education bought with 2 billion yuan seven years ago
According to Dongguan Kingsun Optoelectronic Co.Ltd(002638) announcement, affected by the “double reduction policy” implemented in July 2021 and a series of policies on education and training industry issued by relevant competent departments, the company’s education and training related businesses have significant policy risks. In order to implement the “double reduction policy”, safeguard the rights and interests of listed companies and realize the business adjustment related to education and training as soon as possible, the board of directors of the company plans to transfer 100% equity of Longwen education and 99% equity of Beijing longwenyun to Zhuhai Huizhuo at a consideration of 1 yuan.
After the equity transfer is completed, Longwen education and Beijing longwenyun will no longer be included in the scope of the company’s consolidated statements, and the above transactions need to be deliberated and approved by the general meeting of shareholders.
According to Dongguan Kingsun Optoelectronic Co.Ltd(002638) disclosure, as of the end of November 2021, the net assets of Longwen education were -682334 million yuan, the operating income in the first 11 months was 328 million yuan, and the net profit was -120375 million yuan. The 99% equity of Beijing longwenyun was acquired in 2018. As of the end of November last year, the net assets of Beijing longwenyun were -905831 million yuan, the operating income in the first 11 months was 825576 million yuan, and the net profit was -513026 million yuan. As early as 2020, the two subsidiaries were already in a state of loss.
The reporter of the daily economic news noted that Longwen education was acquired by Dongguan Kingsun Optoelectronic Co.Ltd(002638) 2015 at a high premium of 2 billion yuan, and the value-added rate of the underlying assets at the time of acquisition was as high as 315152%. The acquisition of Longwen education made Dongguan Kingsun Optoelectronic Co.Ltd(002638) once a “Star stock” of a shares, earning enough attention. With this acquisition, Dongguan Kingsun Optoelectronic Co.Ltd(002638) also opened the dual main business operation of semiconductor lighting products and K12 counseling services.
However, unexpectedly, the performance completion rate of Longwen education in the commitment period from 2015 to 2018 was only 52.24%. Seven years later, Dongguan Kingsun Optoelectronic Co.Ltd(002638) 1 yuan stripped off this “cumbersome” asset.
It should also be noted that the transferee of the above two education and training subsidiaries is also an affiliate of Dongguan Kingsun Optoelectronic Co.Ltd(002638) and Jia Xi, the director and deputy general manager of the company, holds 30% equity of Zhuhai Zhourui Enterprise Management Co., Ltd. (hereinafter referred to as Zhuhai Zhourui), the executive partner of Zhuhai Huizhuo, and serves as the manager of Zhuhai Zhourui. Zhuhai Huizhuo and Zhuhai Zhourui are newly established organizations in February 2022.
education business dragged down the performance of listed companies
According to the performance forecast released in late Dongguan Kingsun Optoelectronic Co.Ltd(002638) 1 month, the company expects to achieve an operating revenue of RMB 900 million to RMB 1.1 billion in 2021, but the net profit will lose at least RMB 700 million and at most RMB 820 million. In 2020, the company realized a net profit of 451879 million yuan. For the reasons for the decline in performance, Dongguan Kingsun Optoelectronic Co.Ltd(002638) explained that on the one hand, the company’s semiconductor lighting business market was affected by fierce competition, rising raw material prices and other factors, and the decline in gross profit margin affected the current profit; On the other hand, the overall operation and profitability of Longwen education are impacted by the “double reduction” policy, which is also an important reason for the sharp decline of the company’s net profit.
In 2021, Dongguan Kingsun Optoelectronic Co.Ltd(002638) it is also estimated that about 443 million yuan of goodwill impairment provision will be made for Longwen education, and 575501 million yuan of long-term equity investment impairment provision will be made for the two associated enterprises invested by Longwen education. The provision for impairment also has an impact on the net profit of Dongguan Kingsun Optoelectronic Co.Ltd(002638) 2021.
However, it should be noted that education and training are still the main source of revenue for Dongguan Kingsun Optoelectronic Co.Ltd(002638) . In the first half of 2021, the company’s revenue from education and cultivation business was 341 million yuan, while the revenue from semiconductor lighting business was 298 million yuan. Longwen education to be stripped this time accounts for more than 50% of Dongguan Kingsun Optoelectronic Co.Ltd(002638) revenue, which is one of the current main business income and profit sources of the company.
According to the reporter’s incomplete statistics, since 2016, Dongguan Kingsun Optoelectronic Co.Ltd(002638) has invested a total of 4 billion yuan in the education industry and acquired seven education companies. Now the stripping of Longwen education also means that a large part of Dongguan Kingsun Optoelectronic Co.Ltd(002638) education and training business has been set up. The reporter will keep an eye on how the education and training business of the follow-up company evolves.
