In the case of sluggish main business, Dongguan Kingsun Optoelectronic Co.Ltd(002638) (hereinafter referred to as ” Dongguan Kingsun Optoelectronic Co.Ltd(002638) “, 002638. SZ) has become a typical case of A-share transformation education industry through large-scale M & A in recent years. However, under the impact of the “double reduction” policy, it is expected that the company’s education business will be significantly and adversely affected recently.
On January 6, Dongguan Kingsun Optoelectronic Co.Ltd(002638) issued two announcements in a row. One was the risk warning on the impact of the implementation of the “double reduction” price limit on the operation of Longwen education, a wholly-owned subsidiary. It pointed out that due to the influence of local policies such as Beijing, Shanghai and Guangzhou, the class hour charge of discipline compulsory education training units decreased by more than 70% compared with the original market charge, In the third quarter of 2021, the provision for impairment of goodwill formed by the acquisition of Longwen education was RMB 249 million.
Second, the announcement on receiving the decision on administrative supervision measures of Guangdong regulatory bureau of China Securities Regulatory Commission pointed out that during the on-site inspection, it was found that Dongguan Kingsun Optoelectronic Co.Ltd(002638) had problems in information disclosure, financial accounting and insider information management, and administrative supervision measures requiring correction were taken, At the same time, the company is required to conduct internal accountability for relevant responsible personnel.
according to the combing of Nanfang finance all media reporters, since 2014, Dongguan Kingsun Optoelectronic Co.Ltd(002638) has been punished by supervision almost every year, with the exception of 2019. In addition, Dongguan Kingsun Optoelectronic Co.Ltd(002638) since the transformation of the education industry in 2017, it has spent more than 4 billion yuan to acquire seven education companies, but its performance has declined significantly in recent four years, with a cumulative loss of more than 1.9 billion yuan.
4 billion gambling on transformation education frustrated
The predecessor of Dongguan Kingsun Optoelectronic Co.Ltd(002638) is Qinshang optoelectronics. It was listed on the small and medium-sized board in December 2011. The company’s main business is led lighting. It is the first listed company in A-Shares to focus on LED lighting lamps. After listing, its performance continued to decline. After 2017, it was determined to transform education and once had a plan to peel off the semiconductor lighting business.
According to the financial report, Dongguan Kingsun Optoelectronic Co.Ltd(002638) in the first three quarters of 2021, it recorded a revenue of 887 million yuan and a net profit loss attributable to the parent of 347 million yuan. According to the data of the semi annual report, the main businesses are semiconductor lighting business and education and training business, accounting for 46% and 53% of the revenue respectively.
Looking back on the past few years, Dongguan Kingsun Optoelectronic Co.Ltd(002638) also had difficulties in profitability. The net profit in 2020 was 45.18 million yuan, the loss in 2019 was 373 million yuan, the loss in 2018 was 1.249 billion yuan, and the cumulative loss in recent four years was 1.924 billion yuan.
In terms of education business, the semi annual report of 2021 shows that the operating revenue is 341 million yuan, and the gross profit margin is 13.49%; In 2020, the revenue is 499 million yuan, and the gross profit margin is only 8.86%; In 2019, the revenue was 637 million yuan and the gross profit margin was 15.13%; In 2018, the revenue was 691 million yuan and the gross profit margin was 25.50%.
It can be seen that the gross profit margin of Dongguan Kingsun Optoelectronic Co.Ltd(002638) education business has declined sharply in the past two years, and the arrival of the “double reduction” policy is even worse. In contrast, the semiconductor lighting business previously planned to be stripped off has a relatively stable gross profit margin of about 15% – 20% in recent years.
according to the announcement, Longwen education has accounted for more than 50% of the company’s operating revenue and profits. According to the notice of education departments in Beijing, Shanghai, Guangzhou and other places, the unit class hour charge has decreased by more than 70% compared with the original market charge. According to the current price limit, the difficulty of maintaining profit and loss balance of discipline after-school training will be greatly improved, and Longwen education will be greatly adversely affected.
The reporter observed that the charging standard of the measures of Beijing Municipality for the administration of fees for Discipline after-school training at the stage of compulsory education (for Trial Implementation) recently released in Beijing shows that the training fees for the duration of offline and online standard courses are divided into four grades according to the number of offline and online people, ranging from 20 yuan to 80 yuan / class hour · person; Guangzhou has also issued similar regulations, with the price ranging from 35 yuan to 70 yuan / class hour · person, and the training institutions can float up no more than 10% and down no limit.
A person from the education industry in Guangzhou told reporters, “the prices and charges of different teaching products in different regional campuses of Longwen education are different. The more common is in the range of 100 yuan to 200 yuan per class, and the new price limit policy has greatly reduced its original profit space. It is uncertain whether the discipline training business of compulsory education can continue to make profits.”
According to the 2017 semi annual report, Dongguan Kingsun Optoelectronic Co.Ltd(002638) believes that the education industry has shown a good development trend in recent years, has become an important growth point in China’s social and economic field, and there has been a rare historical opportunity for innovation and development of China’s private education industry.
At that time, Dongguan Kingsun Optoelectronic Co.Ltd(002638) ‘s semiconductor lighting performance continued to decline, so it began to make a decision to transform to education since 2017. In order to concentrate the company’s advantageous resources into the education industry, Dongguan Kingsun Optoelectronic Co.Ltd(002638) has been suspended for half a year since May 25, 2017. It plans to spin off the company’s semiconductor lighting business, but it fails after 15 months. The announcement points out that the reason is that the objective conditions such as China’s market environment, economic environment and financing environment have changed greatly, and both parties to the transaction decide to terminate this major asset restructuring.
According to incomplete statistics, since 2016, Dongguan Kingsun Optoelectronic Co.Ltd(002638) has invested 4 billion yuan in the education industry and has acquired 7 education companies.
In January 2016, Dongguan Kingsun Optoelectronic Co.Ltd(002638) spent RMB 2 billion to acquire 100% equity of Guangzhou Longwen education, and the premium rate of this transaction reached 3151.52%; In October 2016, it acquired 40% equity of British education with RMB 88 million; In November of the same year, it announced the acquisition of Liuzhou Little Red Riding Hood with RMB 870 million; In January 2017, it was announced that it planned to acquire 10% equity of concave convex education and Siqi education through capital increase, with a total cost of 860 million yuan; In November 2017, half a year after the suspension, Dongguan Kingsun Optoelectronic Co.Ltd(002638) announced that it planned to control Wharton sports with RMB 140 million; In July 2019, Longwen education, a wholly-owned subsidiary, acquired 30% equity of one shot sports for 80 million yuan. The above educational assets involve preschool education, K12, international education and vocational training, covering all stages of education.
In 2016, Dongguan Kingsun Optoelectronic Co.Ltd(002638) plans to acquire 100% equity of Eddie education in cash, with a Preliminary Valuation of RMB 2.9 billion. In June 2020, Dongguan Kingsun Optoelectronic Co.Ltd(002638) issued an announcement announcing the decision to terminate the acquisition, requiring Eddie education to return the advance purchase payment of RMB 790 million in full in batches. Therefore, Eddie education plans to sell its Shanghai Australia Exhibition for cash, but it has not been sold until the end of November 2020.
At the beginning of 2021, Dongguan Kingsun Optoelectronic Co.Ltd(002638) said that it would change the transaction scheme into that Eddie education transferred its 100% equity and 649 million yuan of creditor’s rights held by Shanghai Aozhan to the company, and paid 120 million yuan of cash to the company in installments to offset 790 million yuan of advance investment funds.
According to the analysis of a securities firm, “in recent years, Dongguan Kingsun Optoelectronic Co.Ltd(002638) capital operation has made continuous actions, successively arranging k12 education, international education and preschool education, showing the determination and courage of the company’s transformation education sector layout. However, with the introduction of the” double reduction “policy, it is difficult to make profits in compulsory education and training business, which has been stripped off by listed companies as a probability event.”
take the acquisition case of Longwen education as an example, Dongguan Kingsun Optoelectronic Co.Ltd(002638) was initially acquired at a premium of 30 times, but its performance commitments from 2015 to 2018 repeatedly “overturned”. Huge goodwill impairment and asset impairment losses have become the main reasons for Dongguan Kingsun Optoelectronic Co.Ltd(002638) ‘s performance losses in recent years. The original business reputation of nearly 2 billion yuan has been impaired by more than 1.8 billion yuan, The remaining 194 million yuan of goodwill still has the possibility of partial or full impairment in the future.
The announcement shows that due to the introduction of the “double reduction” policy, Longwen education has been impaired by 249 million yuan again. Looking back on history, in 2016, due to the failure of Longwen education’s operation to meet expectations, the company accrued an impairment of RMB 464 million for the goodwill formed by the acquisition of Longwen education, resulting in a net profit loss of RMB 427 million in the current period; In 2018, Longwen education’s net profit failed to reach the profit forecast again, and the company recognized an asset impairment loss of about RMB 1.2 billion, resulting in a loss of Dongguan Kingsun Optoelectronic Co.Ltd(002638) net profit attributable to the parent company of RMB 1.249 billion.
Dongguan Kingsun Optoelectronic Co.Ltd(002638) said that under the background of the strict k12 education and training policy, Longwen education will actively face the competition and meet the policy development through the introduction of educational products, multi track layout and deepening services.
repeatedly received regulatory fines
According to the reporter’s combing, since 2014, Dongguan Kingsun Optoelectronic Co.Ltd(002638) has been punished by supervision almost every year, with the exception of 2019.
In terms of this punishment, it mainly focuses on information disclosure, financial accounting and insider information management, including inaccurate information disclosure to related parties and failure to truthfully disclose the whereabouts of Yuguang lighting’s large trust funds.
Guangdong securities regulatory bureau pointed out that Dongguan Kingsun Optoelectronic Co.Ltd(002638) is not completely separated from the controlling shareholder in terms of personnel and finance. The office of Dongguan Kingsun Optoelectronic Co.Ltd(002638) stores the seal cards and seal approval forms of some controlling shareholders, their subsidiaries and related parties, and some seal approval forms are approved by Dongguan Kingsun Optoelectronic Co.Ltd(002638) chairman, general manager or chief financial officer.
Secondly, the information disclosure of related parties is inaccurate. Dongguan Yuguang Lighting Co., Ltd. (hereinafter referred to as Yuguang lighting) was originally a wholly-owned subsidiary of Dongguan Kingsun Optoelectronic Co.Ltd(002638) . In November 2019, Yuguang lighting introduced new shareholders, and Dongguan Kingsun Optoelectronic Co.Ltd(002638) will no longer include Yuguang lighting in the scope of consolidated statements (hereinafter referred to as “statement”) from December 2019.
After investigation, Yuguang lighting’s business operation still relies heavily on Dongguan Kingsun Optoelectronic Co.Ltd(002638) , Dongguan Kingsun Optoelectronic Co.Ltd(002638) personnel participate in the use and approval of Yuguang lighting’s official seal, control and use Yuguang lighting’s relevant bank accounts, participate in Yuguang lighting’s accounting and tax treatment and audit and evaluation of relevant annual financial statements, Dongguan Kingsun Optoelectronic Co.Ltd(002638) is still the main paid in investor of Yuguang lighting. The above situation shows that Dongguan Kingsun Optoelectronic Co.Ltd(002638) maintains a special relationship with Yuguang lighting, which still has a great impact on its operation and finance. Yuguang lighting should be recognized as a related party of Dongguan Kingsun Optoelectronic Co.Ltd(002638) .
In addition, in terms of insider information management, Dongguan Kingsun Optoelectronic Co.Ltd(002638) did not prepare insider files and memos on the progress of major issues in the termination of the acquisition of 100% equity of nit Education Group (Chinese name Eddie Education) and the acquisition of Shanghai Aozhan Investment Consulting Co., Ltd. in 2020.
Guangdong securities regulatory bureau pointed out that Liang Jincheng, as the chairman, general manager and Acting Secretary of the board of directors of Dongguan Kingsun Optoelectronic Co.Ltd(002638) and Deng Junhong, as the chief financial officer, failed to perform the obligation of diligence and responsibility in accordance with Article 3 of the measures for the administration of information disclosure of listed companies, and was mainly responsible for the above-mentioned violations of the company. Among them, Liang Jincheng is mainly responsible for all the above violations of the company, and Deng Junhong is mainly responsible for the company’s violations other than insider information management.
In fact, the reporter found that Dongguan Kingsun Optoelectronic Co.Ltd(002638) getting a ticket is a common thing. For example, in July 2020, Guangdong securities regulatory bureau pointed out that on February 29, 2020, Dongguan Kingsun Optoelectronic Co.Ltd(002638) issued a performance express, which disclosed that the expected net profit in 2019 was 26.72 million yuan. After that, the audited 2019 annual report was released again, revealing the company’s loss of RMB 373 million in 2019. Under the significant “face change” of performance, Guangdong Securities Regulatory Bureau believes that the performance express and information disclosure related to main business performance previously disclosed by Dongguan Kingsun Optoelectronic Co.Ltd(002638) are inaccurate, which violates the relevant provisions of articles 2 and 25 of the measures for the administration of information disclosure of listed companies.
In November 2018, Guangdong securities regulatory bureau also punished Dongguan Kingsun Optoelectronic Co.Ltd(002638) . Mainly because Li Xuliang, the actual controller of Qinshang, has ceased to serve as the chairman and legal representative since July 2014, but the financial management agreement of Qinshang in 2017 still uses the seal of “Li Xuliang”; In 2016, Qinshang acquired Longwen education, but did not send directors and financial personnel to Longwen from beginning to end; The letter phi is still inaccurate and insufficient; In November 2016, Qinshang fixed an increase of 1.271 billion yuan to invest in Longwen outlets, small classes, online education platforms and o2o projects, but long-term idle funds were used to deposit time deposits or structural deposits. In addition, in January 2018, Dongguan Kingsun Optoelectronic Co.Ltd(002638) information disclosure was falsified and severely punished by the CSRC. Li Xuliang, the actual controller, was banned from the securities market for life, and Hu Xuan, the company’s financial director, was banned from the securities market for five years.
According to statistics, since 2014, Guangdong securities regulatory bureau has made 6 administrative penalties or administrative supervision measures on Dongguan Kingsun Optoelectronic Co.Ltd(002638) and the management department of small and medium-sized board companies of Shenzhen Stock Exchange has issued 2 supervision letters on Dongguan Kingsun Optoelectronic Co.Ltd(002638) .
(21st Century Business Herald)
