AutoBeta(AutoBeta.net)10/24 Report--

On October 23rd, * ST issued an announcement on the Shanghai Stock Exchange's response to the post-review inquiry letter of the 2019 semi-annual report, revealing the current operating condition of the group and the reasons for the decline in the company's gravity.

In view of the continuous decline in the amount of rebates receivable by the company, * ST said it was mainly due to the continuous decline in the number of vehicle purchases and sales.

As a result, the number of stores licensed by the brand is decreasing. In addition, the purchase and sales of vehicles of all brands of the company have declined, and the decline in the number of vehicle purchases and sales as well as the decline of vehicle business has led to a continuous decline in the number of stores authorized by the brand.

Affected by the company's closure and transfer of some stores and the cancellation of brand authorization, the number of car brands and brand authorization stores operated by the company decreased compared with the same period last year.

As of December 31, 2018, the company has 418 brand authorized stores. By June 30, 2019, the company has 359 brand authorized stores, a decrease of 59, accounting for 14.11%. Affected by the decrease in the number of authorized dealerships, the amount of rebates receivable by the company has gradually decreased.

Overall, the decline in rebate receivables is mainly due to the reduction in purchases and the number of stores. In view of the former, the company intends to take relevant improvement measures to alleviate the financial pressure. In view of the latter, the measures taken by the company, such as shutting down and transferring loss stores, will lead to a reduction in the rebate balance in the short term, but in the long run, it will be conducive to the stable operation of the company, and the proportion of loss stores will gradually decline. Therefore, during the reporting period, the amount of rebates receivable by the company decreased, which did not have a material impact on the company's ability to continue to operate.

In the announcement, * ST also said that the decline in the total amount of credit available in banks and other institutions further affected the company's procurement business, and the lack of procurement funds directly led to the lack of cars to sell in some stores, so the company's sales business was also further affected.

On September 5, 2019, the Tangshan Intermediate people's Court ruled to accept the company's application for restructuring on the grounds that the company could not repay its due debts and that it might lose its ability to pay off its debts. According to the relevant provisions of the Enterprise bankruptcy Law, if the reorganization of the company fails, the company will be declared bankrupt by the court.

According to the financial report, the company achieved an operating income of 10.256 billion yuan in the first half of 2019, a decrease of 62.17% over the same period last year, and a net profit loss of 1.199 billion yuan belonging to shareholders of listed companies. It changed from profit to loss compared with the same period last year. According to the 2018 annual report, the company incurred a loss of 6.155 billion yuan in 2018.

An inquiry about whether the company's operating conditions have improved substantially compared with 2018. The large group replied that the operating data such as revenue, cost, gross profit and period expenses in the first half of 2019 compared with the first half of 2018 and the second half of 2018, overall, the company's operating performance showed a decline, the operating situation has not achieved a substantial improvement compared with 2018.

The large group said that judicial restructuring was under way, with the goal of saving the debtor, retaining the legal entity of the debtor and restoring sustainable profitability.

On September 5, the giant group issued two consecutive announcements, and the court has decided to accept the restructuring application of the giant group and implement the delisting risk warning; on September 9, the delisting risk warning was implemented and the stock was changed to * ST huge; on September 12, * ST disclosed the company's intention to restructure investors; on September 18, it issued a plan to increase investors' shareholdings and nominated new directors. On October 18th, * ST issued an announcement called alleviating the company's shortage of funds and supporting the company to carry out normal production and operation activities during the reorganization period. With the consent and introduction of intended investors, Shijiazhuang State Control Investment Group Co., Ltd. intends to provide the company with 600 million yuan in common benefit debt loan, which will be used for production and operation expenses during the restructuring period.

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