On April 29, Lanhai Medical Investment Co.Ltd(600896) ( Lanhai Medical Investment Co.Ltd(600896) , SH; previous closing price of 1.74 yuan; hereinafter referred to as “Lanhai medical”) received the notice in advance on the proposed termination of Lanhai Medical Investment Co.Ltd(600896) stock listing (hereinafter referred to as the notice) from Shanghai Stock Exchange after six reminders of the risk that the company’s shares may be terminated.
According to the notice, the 2021 annual report disclosed by Lanhai medical on the same day shows that the company’s annual financial and accounting report has been issued with qualified audit report. According to article 9.3.11 of the stock listing rules, the Shanghai Stock Exchange will make a decision on whether to terminate the listing of the company’s shares within 15 trading days after the company discloses the 2021 annual report according to the audit opinions of the listing committee.
At the 22nd Meeting of the 10th board of directors considering the annual report, MI Chunlei, chairman and legal representative of Lanhai medical, was absent from the meeting because he was temporarily unable to perform his duties. In fact, MI Chunlei’s whereabouts have been unknown since the beginning of 2022. According to upstream news reports, MI Chunlei’s other well-known identity is the husband of famous host Dong Qing.
construction assets become a burden in 6 years
Lanhai medical is mainly engaged in the investment, construction and operation management of high-end medical projects including general hospitals, specialized hospitals and outpatient departments.
According to the annual report of 2021, during the reporting period, the main business income of Lanhai medical came from medical services and medical consultation. The annual main business income was about 118.5 million yuan, a year-on-year increase of 59.29%; The net loss attributable to the shareholders of the listed company was about 281 million yuan, with a profit of 612792 million yuan in the same period last year. Lanhai medical said that the main influencing factors of the company’s profit last year were the company’s medical service operation profit and loss, and the company’s 44% equity of Hefeng hospital and the provision for large impairment.
After combing the previous announcement of Lanhai medical, the reporter learned that Hefeng hospital was formerly known as Shanghai Hefeng Real Estate Co., Ltd. in December 2016, Lanhai medical obtained 95% of the equity and 749 million yuan of creditor’s rights of Hefeng hospital by delisting, and Hefeng hospital immediately became the holding subsidiary of Lanhai medical. At that time, Lanhai medical was ambitious and said that it would update and transform some medical property assets of Huangpu District Central Hospital (original site) subordinate to Hefeng real estate, and set up an international high-end comprehensive hospital – Bund hospital in the central urban area of Shanghai, “to build the company into a full industry chain and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) three-dimensional medical service listing platform.”
However, the hospital project has the characteristics of high initial investment and long operation return cycle. Even after several years of construction, the project progress of Hefeng hospital still does not meet expectations. Based on the consideration of investment burden, Lanhai medical sold its 51% equity of Hefeng hospital and the company’s creditor’s rights of 512 million yuan to the controlling shareholder Shanghai Lanhai Investment Co., Ltd. (hereinafter referred to as Lanhai investment) in November 2020, with a total transfer price of 857 million yuan.
For this major asset sale transaction, Lanhai medical once commented: “the Hefeng hospital project, which is still in the construction stage, has a long construction cycle, requires a large amount of funds for development, and is difficult to put into operation and make profits in the short term. The listed company plans to sell the controlling stake of the target company, which can significantly reduce the future investment burden of the listed company and realize the overall profit as soon as possible on the basis of the existing two comprehensive clinics (in operation) and two specialized hospitals (under construction).”
Lanhai medical sold the equity of its subsidiary to the controlling shareholder in order to make the controlling shareholder “blood transfusion” to reduce the burden of listed companies. However, in its reply to the supervision letter of Shanghai Stock Exchange on April 26, Lanhai medical said that after the implementation of the previous major asset restructuring, The total principal and interest of the company’s creditor’s rights to the associated enterprise Shanghai Hefeng hospital Co., Ltd. is 468 million yuan (including 441 million yuan of creditor’s rights principal and 268089 million yuan of interest), which will expire on January 24, 2022. Since Lanhai investment, the controlling shareholder of Hefeng hospital, is a related party of the company, the company failed to recover the above-mentioned creditor’s rights in time, which has formed the occupation of non operating funds by the controlling shareholder and its related parties.
In the 2021 annual report of Lanhai medical, Hefeng hospital is still a burden for listed companies. Lanhai medical said that due to the excessive investment in the follow-up construction cost of Hefeng hospital, there is great uncertainty in the financial support of shareholders, and the financing capacity of Hefeng hospital is also seriously insufficient. Lanhai medical made provision for impairment of 157 million yuan for long-term equity investment holding 44% of Hefeng hospital.
The story of Hefeng hospital is still not over. One of the reasons why Linhai medical has issued a qualified opinion on the annual financial and accounting report of the company is that by the end of 2021, the book balance of other receivables of Linhai medical to Hefeng hospital, a joint venture, was 539 million yuan, and the bad debt provision was 1.6169 million yuan. Hexin certified public accountants noted that according to the loan agreement signed between Lanhai medical and Hefeng hospital, 468 million yuan had expired on January 24, 2022 and had not been recovered as of the date of issuance of the audit report. Hexin certified public accountants was unable to obtain sufficient and appropriate audit evidence to determine its recoverability and impact on the financial report.
auditor’s qualified opinion
From the evening of January 28 to the evening of April 28, Lanhai medical disclosed six risk warning announcements about the possible termination of the listing of the company’s shares. With the approaching of the disclosure date of the annual report, the company has more and more problems.
Among them, the first two risk warning announcements only involve some financial data of Lanhai medical and delisting reasons such as non-standard net profit after deduction; However, the third risk warning announcement revealed more information. The annual audit accountant and trust accounting firm or the audit report with qualified opinions issued for the company mainly include: the recognition of income, the occupation of non operating funds by related parties and the recoverability of the company’s creditor’s rights to Hefeng Hospital; Since then, several risk warning announcements have also disclosed matters such as the freezing of the equity of associated enterprises.
The share price of Lanhai medical also fell sharply during this period. In the 11 trading days from April 15 to April 29, the cumulative decline of the company’s share price reached 42.95%.
Finally, Hexin Certified Public Accountants issued a qualified audit report on the 2021 annual report of Lanhai medical, and believed that the company had four main problems: the recognition of income, the occupation of non operating funds by related parties, the recoverability of large amounts of other receivables and the freezing of the equity of associated enterprises.
However, Cai Zehua, director and chief financial officer of Lanhai medical, refuted these four reasons at the beginning of the annual report. For the first point, the recognition of main business income, he said that in the audit process of Hexin, Lanhai medical has cooperated with the auditors of Hexin to take measures such as opening the his system of Lanhai medical clinic Show the charging documents, POS card swiping records and other measures to confirm the authenticity and commercial essence of the revenue from Lanhai medical service business; In response to the second point of related parties and related transactions, Cai Zehua said that after the verification of Lanhai medical, in addition to the related party transactions submitted to Hexin, no new related transactions were found in other capital expenditures of Lanhai medical in 2021, and all related transactions of Lanhai medical have been truthfully and completely disclosed in the financial report; In view of the third point, the recoverability of large amounts of other receivables, Cai Zehua said that Lanhai medical has asked a professional evaluation institution to evaluate the equity of Hefeng hospital. The overall equity evaluation value of Hefeng hospital is 478 million yuan, and the real estate disposal amount of Hefeng hospital is enough to cover the company’s creditor’s rights; In response to the fourth point that the equity of associated enterprises was frozen, Cai Zehua said that the equity freeze of Chengjiang Yihe Health Industry Development Co., Ltd. occurred in April 2022, which is a non adjustment event after the period, and the company has truthfully disclosed it in the notes after the period.
Based on the above reasons, Cai Zehua said: “I am convinced that the above four reservations mentioned in the audit report of Hexin failed to objectively reflect the real situation of Lanhai medical treatment.”
receipt of advance notice of proposed termination of listing
In June 2021, when Lanhai medical held the 2020 annual general meeting of shareholders, the reporter of daily economic news also attended as a shareholder. At that time, MI Chunlei presided over the annual general meeting of shareholders of the company. When reviewing the company’s operation in 2020, he once said that in the past two years, the company had many problems, “but one thing I firmly believe is that our strategic direction around high-end medical services must be very clear, and I personally think it is very correct. In fact, there should be no big deviation between our original intention and our strategic direction, but the relevant work that has been implemented has not met expectations”.
Since 2022, MI Chunlei’s whereabouts have become a mystery. According to the announcement of Lanhai medical on January 29, the company recently received a written authorization issued by the chairman Mi Chunlei, authorizing Ni Xiaowei, the director of the company, to perform the duties of the chairman on his behalf for a period of three months from the date of deliberation and approval by the board of directors.
At that time, Lanhai medical said in the announcement that the above matters would not affect the normal operation of the company. The company had a perfect organizational structure and standardized governance system, and all business activities were normal. The announcement of the listed company on April 12 said that recently, it received the written authorization issued by the chairman Mi Chunlei again, recommending and authorizing the company’s director Ni Xiaowei to perform the duties of the chairman on behalf of the chairman. The authorization period is three months from April 7, 2022.
On the evening of April 26, Lanhai medical said in the announcement in reply to the supervision letter of Shanghai stock exchange that the company was highly concerned about Mi Chunlei’s failure to perform his duties normally and verified the relevant situation with the controlling shareholder and Mi Chunlei’s family for many times. As of the announcement date, the company had not learned any information about Mr. Mi Chunlei that should be disclosed but not disclosed. Since the company cannot contact Mr. Mi Chunlei in time, the company will continue to pay attention to the progress of the matter and fulfill the obligation of information disclosure in time according to the progress of subsequent verification.
On April 29, the company announced that it had received the advance notice on the proposed termination of Lanhai Medical Investment Co.Ltd(600896) stock listing from Shanghai Stock Exchange. “Delisting” of Lanhai medical has become a high probability event. Subsequently, the Shanghai Stock Exchange will make a decision on whether to terminate the listing of the company’s shares in accordance with relevant rules. If it is decided to terminate the listing of the company’s shares, according to relevant regulations, the company’s stock trading will enter the delisting consolidation period, with a trading period of 15 trading days. Within 5 trading days after the expiration of the delisting consolidation period, the Shanghai Stock Exchange shall delist the shares of the listed company, and the listing of the company’s shares shall be terminated.
