A supervision letter made the “black hole” of receivables of Shanghai Industrial Development Co.Ltd(600748) (600748) subsidiary shangshilongchuang surface.
On January 11, Shanghai Industrial Development Co.Ltd(600748) announced that the company recently received the supervision letter from Shanghai Stock Exchange and carried out self inspection on the accounts receivable of Shanghai shilongchuang according to the requirements of the supervision letter. By the end of 2021, the unaudited accounts receivable of Shangshi longchuang totaled about RMB 2.615 billion, some of which may involve financing trade.
After investigation, the reporter of securities times · e company found that the financing trade not “singled out” in the Shanghai Industrial Development Co.Ltd(600748) announcement or involving Shanghai Electric Group Company Limited(601727) series of private network communication events. As a result, some downstream customers of Shangshi longchuang coincided with the thunder exploding customers in the previous private network communication scam.
“It is still in the process of business inventory. There are many contracts involved. It takes time to conduct a complete inventory before we can give the self inspection results. We will have corresponding working groups and external institutions. At present, the self inspection time is estimated to take at least one week.” Shanghai Industrial Development Co.Ltd(600748) the staff of the board secretary office told the reporter of securities times · e company.
What kind of company is Shangshi longchuang, and how is the accounts receivable of 2.615 billion yuan formed? The reporter of securities times · e company visited the headquarters of Shangshi longchuang. The staff said that they did not know about the accounts receivable. At present, the employees of the company are still working normally. “There are many light business departments of the company, all of which are project-based, and have also participated in many large projects. I don\’t know which business will involve private network communication.”
Meanwhile, the reporter repeatedly called Cao Wenlong, founder, chairman and general manager of Shangshi longchuang, but they were not connected as of the deadline.
At the opening of trading on January 12, Shanghai Industrial Development Co.Ltd(600748) collapsed nearly 8 points, falling 5.23% to 3.99 yuan / share as of the closing.
field visit to Shangshi longchuang headquarters
On January 12, the reporter of securities times · e company came to the Shangshi longchuang headquarters located in the information service industry base on Wanrong Road, Jing’an District, Shanghai.
More than ten private cars are parked at the door of the company. The main body of the office building is a 6-storey gray white building, and the logo of “Shangshi longchuang” is hung on the top floor of the office building.
At noon, there were people in and out of the office building from time to time. According to the floor index, the first floor to the fifth floor were the offices of Shangshi longchuang, and the sixth floor was other companies. Among them, the first floor is the innovation center and R & D Laboratory of shangshilongchuang smart city, and the second floor to the fourth floor are shangshilongchuang technology research center, operation center, financial center and major business departments. The 5th floor is the office of the board of directors and the general manager of the company. Through the window on the facade of the office building, you can see that the lights on all floors are on.
“Our company has about two or three hundred people. We used to be product agents. Now we mainly operate artificial intelligence application services, and the business scale is not small.” A staff member of Shangshi longchuang told reporters. For the accounts receivable of 2.6 billion yuan, the staff said they didn\’t know, “we work normally and can\’t see the impact.”
Subsequently, the reporter came to the shangshilongchuang intelligent innovation experience center, which is more like a display center. The development history of the company is hung on the left wall, and the right wall is filled with enterprise honor certificates and trophies. From the perspective of enterprise development, Shangshi longchuang has experienced several business transformation and renaming.
In 1999, Cao Wenlong founded Shanghai longchuang Automatic Control System Co., Ltd. two years later, the company began building intelligence and building energy-saving system. Shangshi longchuang completed the financing share reform in 2012 and changed its name to Shanghai longchuang energy saving system Co., Ltd. In 2014, the company developed cloud computing and big data energy efficiency management platform and began to develop building energy efficiency business. By 2018, Shangshi longchuang will switch to the application of artificial intelligence industry.
“The development track of the company is an industry legend. Once unknown, it has grown from a former computer company to a service provider in the field of artificial intelligence application technology.” In the brochure of the 20th anniversary of Shangshi longchuang, the reporter saw the evaluation of the company’s employees.
In Shangshi longchuang R & D laboratory, the reporter saw high and low temperature test cabinets and other equipment. On one side of the whiteboard, the edge calculation R & D team’s work schedule was also pasted, but there were no staff in the laboratory.
subsidiaries set up multiple business units
Enterprise investigation information shows that Shangshi longchuang provides professional intelligent solutions for cities with intelligent IOT, edge computing and industrial SaaS applications.
From the perspective of shareholder structure, Shangshi longchuang has five shareholders with a registered capital of RMB 61.1868 million, of which Shanghai Industrial Development Co.Ltd(600748) subscribed capital of RMB 42.6992 million, accounting for 69.78% of the equity of Shangshi longchuang. Cao Wenlong subscribed 9.178 million yuan and held 15% of the shares. In addition, Shanghai Shangshi Venture Capital Co., Ltd. holds about 10.22%, and natural persons Wu Dawei and Dai Jianbiao hold 3% and 2% respectively.
In addition to being acquired by Shanghai Industrial Development Co.Ltd(600748) in 2015, Shangshi longchuang also experienced a round of strategic financing in January 2016. The investor was new Silk Road financial holding, and the transaction amount was not disclosed.
Cao Wenlong, the legal representative of Shangshi longchuang, is also the chairman and general manager of the company. Cao Wenlong also actually controls 12 companies such as Shanghai longchuang Xinwen energy saving technology and Co., Ltd. and Shanghai longchuang Low Carbon Technology Co., Ltd.
On January 11, Shanghai Industrial Development Co.Ltd(600748) announced that there was an unrecoverable risk in the unaudited accounts receivable of about 2.615 billion yuan of shangshilongchuang, its holding subsidiary.
Shanghai Industrial Development Co.Ltd(600748) after receiving the supervision letter from Shanghai Stock Exchange, the company is required to conduct self-examination and verification on the nature and risks of the business related to the receivables of Shanghai shilongchuang, a holding subsidiary, and perform the corresponding information disclosure obligations.
At present, the above verification work is in progress. Combined with the preliminary self-examination results, as of December 31, 2021, the unaudited accounts receivable of Shangshi longchuang totaled about RMB 2.615 billion, of which some businesses may involve financing trade, and this business model has significant business risks.
The reporter learned from the employees of Shangshi longchuang headquarters that the company’s business involves 31 provinces and regions in China, with a total of more than 4350 projects. “The company has many business divisions, including smart medical, digital buildings, information infrastructure, new infrastructure and other business divisions. The company is also basically project-based. I don\’t know which business will involve private network communication.” The employee said.
From the brochures placed in the company’s headquarters, there are not a few large projects participated by Shangshi longchuang, including Shanghai Metro Line 13 project and Shanghai Hongqiao International Airport Terminal 2 project in 2009; China Pavilion and Expo Axis Project of 2010 Shanghai World Expo; Beijing Daxing International Airport Project in 2019.
In terms of honor, Shangshi longchuang has won Shanghai Science and technology small giant enterprise and Shanghai may day labor award. In January 5th, the company was announced on the official WeChat official account. The company was selected to the list of design and guidance enterprises in Shanghai in 2021. The confirmation work was sponsored by the Shanghai Municipal Economic and Information Committee.
self inspection has been carried out before the issuance of the supervision letter
Shangshi longchuang came to Shanghai Industrial Development Co.Ltd(600748) implement diversified M & A. Listed companies are mainly engaged in real estate development and operation. Their business model is mainly medium and high-end residential development, taking into account the development and operation of commercial real estate. The actual controller is Shanghai SASAC.
In November 2015, Shanghai Industrial Development Co.Ltd(600748) disclosed a fixed increase of 4.8 billion yuan, of which 639 million yuan was used to acquire part of the equity of longchuang energy conservation from Cao Wenlong and increase its capital.
In January 2016, Shanghai Industrial Development Co.Ltd(600748) completed the holding of Shangshi longchuang (61.48%) and included it in the consolidated statements. Cao Wenlong and other shareholders made a performance commitment of 203 million yuan to the cumulative net profit of Shangshi longchuang from 2015 to 2017.
From 2015 to 2017, Shangshi longchuang fulfilled its performance commitment as promised, and achieved a cumulative net profit of 206 million yuan after non deduction in three years, slightly exceeding the promised performance. Financial data show that the revenue scale of Shangshi longchuang in 2020 ranks second in the list of subsidiaries of listed companies. In 2020, the revenue will be 1.912 billion yuan and the net profit will be 60.3345 million yuan.
Shangshi longchuang plays an important role in the system of listed companies. Why did the company’s accounts receivable risk be exposed due to recent regulatory attention?
“The company’s self inspection has lasted for a long time. The overall self inspection has been started before receiving the supervision letter, before December (2021).” Shanghai Industrial Development Co.Ltd(600748) the staff of the board secretary office told reporters, “Shangshi longchuang is our holding subsidiary, and we have corresponding systems to supervise and manage him. At present, the self inspection work is stable and orderly”.
However, the person said it was inconvenient to disclose whether the members of the self inspection working group included senior executives of Shangshi longchuang.
One detail is that in the latest announcement, Shanghai Industrial Development Co.Ltd(600748) wrote the full name of shangshilongchuang as “Shanghai shangshilongchuang Smart Energy Technology Co., Ltd”, which is the former name of the company. Shangshilongchuang has changed its name twice after being acquired by Shanghai Industrial Development Co.Ltd(600748) .
According to the enterprise investigation, in February 2016, “Shanghai longchuang energy saving system Co., Ltd.” was changed to “Shanghai Shangshi longchuang Intelligent Energy Technology Co., Ltd.” and after May 2020, the industrial and commercial name was changed to the current “Shanghai Shangshi longchuang Intelligent Technology Co., Ltd.”. The reporter noted that in many previous announcements, the full name of Shangshi longchuang was also mixed.
2.6 billion receivables foggy
Previously Shanghai Industrial Development Co.Ltd(600748) in the announcement, it was not introduced that Shangshi longchuang was involved in financing trade business. According to the announcement, the listed company disclosed that it had carried out self inspection on the receivables of Shangshi longchuang because it received the requirements of the regulatory work letter.
Shanghai Industrial Development Co.Ltd(600748) said it would continue to make every effort to find out the above matters as soon as possible and carefully evaluate the impact of the above matters on the company’s operating performance in 2021.
But there are still many questions to be solved behind this announcement.
According to the announcement, by the end of 2021, the total receivables of Shangshi longchuang had reached about 2.615 billion yuan. Some of these businesses may involve financing trade. However, the “part of business” has no specific direction, the listed company has not introduced it, and the specific amount involved is not clear.
The announcement also did not mention when the financing trade department of Shangshi longchuang will be launched, the products involved, specific business models, upstream and downstream customers, etc.
For the proportion of unrecoverable receivables found by ourselves, the staff of the above Shanghai Industrial Development Co.Ltd(600748) board secretary office said that there was no accurate data, and the subsequent announcement shall prevail. As for when Shangshi longchuang will carry out financing trade, it is also necessary to sort out all contracts before giving a strict explanation. At that time, there will be split disclosure of relevant business categories.
Previously, the business changes of Shangshi longchuang with stable performance are not without omens. Since 2021, the operational risks surrounding the company have emerged.
Shanghai Industrial Development Co.Ltd(600748) it was announced in March 2021 that the company made provision for impairment of various assets of about 231 million yuan in 2020, including bad debt provision for other receivables of about 80.7805 million yuan. The provision for major projects, including some projects involving contract disputes of Shangshi longchuang, calculates the expected credit loss of about 50.4583 million yuan through default risk and expected credit rate throughout the duration. In addition, the provision for impairment of contract assets is about 50.1134 million yuan. The main item of provision is the contract assets between Shangshi longchuang and some purchasers. Due to the expected inability to recover, the full amount of provision for impairment is about 20.2945 million yuan.
In the semi annual report of 2021, the entrepreneurial performance of shangshilong also decreased significantly. During this period, the revenue of shangshilong was 621 million yuan, the loss was 152 million yuan, and the cash flow from operating activities was – 585 million yuan. In addition, the semi annual report also disclosed the progress of several litigation matters involved in Shangshi longchuang in 2020.
involved in private network communication scam
On May 30, 2021, another well-known state-owned enterprise Shanghai Electric Group Company Limited(601727) in Shanghai suddenly reported the explosion of 8.7 billion accounts receivable. Since then, a hidden financing trade network under the guise of private network communication business emerged, and more than 10 listed companies were gradually involved in the event.
After investigation, the reporter of securities times · e company found that Shanghai Industrial Development Co.Ltd(600748) did not “pick out” the subsidiary’s financing trade or was involved in the event.
The reporter inquired about the unified registration and publicity platform of real estate financing of the credit investigation center of the central bank and found that in April and October 2019, shangshilong Chuang first and then had two accounts receivable pledged to China Minsheng Banking Corp.Ltd(600016) Shanghai Branch, providing guarantee for the discount of commercial acceptance bills with an accumulated amount of 150 million yuan. These two accounts receivable are based on the equipment sales contracts signed with downstream customers CLP Technology (Nanjing) electronics Trust Alliance Information Development Inc.Ltd.Shanghai(300469) Co., Ltd. and Fushen Industrial Co., Ltd., and all accounts receivable generated by the contracts are about 115 million yuan and 118 million yuan respectively.
Fushen industry, the downstream customer of Shangshi longchuang, is the thunder explosion customer of Shangdian communication of the Shanghai Electric Group Company Limited(601727) event sub company. From May 2019 to December 2020, Fushen industry purchased 886 million yuan of communication products from Shangdian communication, but it still owed 788 million yuan on the date of prosecution. Fushen industry has also appeared in the list of many listed companies involved in private network communication scams, such as Suzhou New Sea Union Telecom Technology Co.Ltd(002089) , Huaxun Fangzhou Co.Ltd(000687) , Kaile Science And Technology Co.Ltd.Hubei(600260) , Raisecom Technology Co.Ltd(603803) , Changshu Guorui Technology Co.Ltd(300600) .
In addition, the reporter consulted the previous judicial cases of Shangshi longchuang, and global Jingxing Industrial Co., Ltd. appeared in a contract sales dispute of Shangshi longchuang in 2021. Global Jingxing also appeared many times in the private network communication scam last year, which was the thunder blasting customers of Shanghai Electric Group Company Limited(601727) , Raisecom Technology Co.Ltd(603803) , Kaile Science And Technology Co.Ltd.Hubei(600260) and other companies.
In September last year, when answering a reporter’s question on the risks related to the private network communication business of relevant listed companies, a spokesman of the CSRC pointed out that the CSRC, together with relevant securities regulatory bureaus and exchanges, conducted a comprehensive investigation on the risks, transaction essence and information disclosure of listed companies engaged in such private network communication business, and found that such business was suspected of false trade, Individual listed companies are suspected of financial fraud.
At that time, the spokesman of the CSRC also said that in the next step, the CSRC will uphold the “zero tolerance” attitude, strictly deal with the listed companies and responsible personnel suspected of violating laws and regulations according to law, strictly enforce market discipline, and transfer those suspected of committing a crime to the public security organ for criminal responsibility according to law.
On December 9, 2021, Shanghai SASAC disclosed in the notice on the progress of inspection and rectification to comprehensively prevent financing trade.
The work plan on supervising enterprises to comprehensively prevent financing trade and establish a long-term mechanism for supervision and inspection has been formulated and issued. For the problems found in the special inspection in 2019 and 2020, urge the enterprise to reduce the exposure and make rectification. The inspection items of financing trade shall be included in the daily inspection items, the amount of financing trade in violation of regulations shall be excluded from the business performance assessment of the legal representative of the enterprise, and the points shall be deducted from the strict assessment of financing trade business in violation of regulations. At the same time, according to relevant regulations, accountability will be carried out for the existence of financing trade business, inadequate rectification and false rectification.
Whether the company is involved in the private network communication incident “depends on our investigation results, verification results, business qualitative and so on.” The above Shanghai Industrial Development Co.Ltd(600748) staff said.
A judgment is evidence that Shangshi longchuang once participated in idling trade. In December 2020, according to the criminal judgment of first instance of Tan Jianbo’s bribery issued by China judicial document network, in 2016, the defendant Tan Jianbo met Yu, the actual controller of Nanjing hengerhui Network Technology Co., Ltd. (now renamed Jiangsu zhenyihua Network Technology Co., Ltd.) and Nanjing kuheng Network Technology Co., Ltd, Yu wanted to develop Bowei information company into a platform for idling trade, so he gained Tan Jianbo’s trust through close communication, pulled Tan Jianbo into the idling trade circle and carried out idling trade, so as to make the funds advanced by relevant companies circulate between upstream and downstream companies, and finally transfer the funds to Yu, so that he can obtain the right to use large amounts of funds Bank interest discount spread and operating performance.
Shangshi longchuang is one of the participants in idling trade. Among them, in the second half of 2018 and the first half of 2019, Yu arranged Bowei information company to sign purchase contracts with many companies including Shangshi longchuang to carry out idle trade.
The fastest way to uncover many questions may be to wait a week. “It is still in the process of business inventory. There are many contracts involved. It takes time to conduct a complete inventory before we can give the self inspection results. We will have corresponding working groups and external institutions. At present, the self inspection time is estimated to take at least one week.” Shanghai Industrial Development Co.Ltd(600748) the staff of the board secretary office told reporters.
