Sichuan Changhong Transfers 300 Million Stake In The Great Wall Securities

　　 In the evening of November 29th, Sichuan Changhong (600839.SH) the announcement said that the company will open the auction in November 26th. Great Wall Securities 2.42% of equity transfer to major shareholder Sichuan Changhong Electronics Group Co., Ltd. (hereinafter referred to as Changhong group), the transaction price of 300 million 500 thousand yuan, the realization of investment income of about 250 million yuan. Roughly calculated, the transaction price is 11% higher than the assessed value.

Earlier media reports said that in June of 2010, Sichuan Changhong spent 27 billion 200 million yuan to build 8.5 generation LCD panel production lines in Chengdu high tech Zone to compete in the field of intense LCD panels. This statement was denied by Changhong group spokesman Liu Haizhong. The transfer of the Great Wall Securities equity, the company also announced that, mainly based on the focus of resource development company's core industries, revitalize the company's non main assets considerations. However, from the company's earnings report, Sichuan Changhong cash flow situation is worrying, but it is an indisputable fact.

According to the three quarterly report of Sichuan Changhong, the company achieved operating income of 29 billion 300 million yuan in the first three quarters of 2010, achieving a net profit of 94 million yuan, down 0.12% from the same period last year, and its performance is lower than market expectations. In addition, the company's short-term borrowings amounted to 8 billion 500 million yuan. Due to high receivables and high inventories, the company's operating cash flow was -21 billion and its asset liability ratio was 66%.

To this end, Sichuan Changhong moves frequently in the capital market. In August, the company transferred some fixed assets to large shareholder Changhong group at 70 million yuan. After only one month, the company immediately sold its 2.42% stake in the Great Wall securities at a high public price. In October 28th, the board of directors adopted the motion to apply to the 601939.SH branch of Mianyang Construction Bank and the Sichuan branch of the Communications Bank of China (601328.SH) to apply for a comprehensive credit equivalent of RMB 2 billion 100 million.