Huafang Textile Litigation Ripped Past Grievances Over 900 Million Of Capital Occupation Doubtful.

Recently, Hua Fang Spin [6.51 0.77% shares bar Research Report] (600273.SH) announced a lawsuit winning news, or will bring a 12 million 317 thousand and 700 yuan account.

Alex Hua Tian, a company mentioned in the lawsuit, has been losing money for over two years, and has become a bad asset that Hua Fang textile is determined to divestiture. It is precisely this hot potato that the transferee, Xiao Zhao ya, has accepted from the generosity to the Fang Fang textile court.

In addition, when the textile industry is in a downturn, Huafang textile has borrowed heavily, and has invested in Xiajin textile, a wholly owned subsidiary in a loss situation. Not only does data fight, but also more than 900 million of the non operating capital is included in the accounts of prepaid accounts, making investors suspicious.

In July 24th, China's capital [3.88 0.00%] securities network telephoned the Huafang textile secretaries office to make a public call. The staff member said that Zhao Jiangbo, the director of the Commission, was in a meeting and could not reply.

　　 The lawsuit has not yet entered the final stage.

Why did it suddenly blow up after the deal?

The main business of Huafang textile is to produce knitting yarns, knitted grey fabrics, knitted dyeing and finishing fabrics and all kinds of knitted garments of various specifications.

In the evening of July 17th, Hua Fang textile announced that in the case of the dispute between the company and the defendant, Zhangjiagang Hutian Mstar Technology Ltd (hereinafter referred to as "Alex Hua Tian company") and Xiao Chao Asian enterprise loan contract, the Huafang textile company won the principal and the total yield of 12 million 317 thousand and 700 yuan.

In from July 17th to 20th, Huafang textile shares closed for four consecutive days.

Recently, however, media reports reported that Xiao had already appealed to the Suzhou intermediate people's court.

It should be pointed out that Alex Hua Tian was founded in June 2010 by the joint venture between Huafang textile and natural person Xiao Zhao ya. As of July 31, 2011, Alex Hua Tian company received capital of 23 million 330 thousand yuan. Among them, Huafang textile invested 16 million 330 thousand yuan in real terms, which accounted for 7 million yuan of 70%. Xiao Chao ya, who received the registered capital of Alex Hua Tian company, accounting for 30%. of the registered capital of the company.

As of July 31, 2011, the total assets of Alex Hua Tian company were 41419068.17 yuan and net assets of only 9148797.88 yuan. Statistics show that in 2010, Alex Hua Tian company's net profit was -819 million, and by the end of July 2011, the net profit of Alex Hua Tian company was -14181202.12 yuan.

It can be seen that Alex Hua Tian company, which has been established for less than two years, has been losing money and has become the bad assets that Hua Fang textile is determined to divestiture. It is also this hot potato that allows the transferee Xiao Zhao to accept from the generosity to the two sides.

Statistics show that on August 10, 2011 -11, Huafang textile had received a 4 million yuan deposit for the transfer of shares before the board had passed the examination and approval, and signed a pledge agreement with Xiao Chao, and pledged the 30% stake of Xiao Zhao's holding company to Hua Fang textile.

In August 16, 2011, the twelve board of directors of Huafang textile company passed the resolution on the transfer of Alex Hua Tian company, transferring the 70% stake of Alex Hua Tian company to 8 million 140 thousand yuan to Xiao Zhaoya. Huafang textile completed its registration of industrial and commercial changes in October 21, 2011.

But what is bizarre is that in the first 3 days of the registration of industrial and commercial change, that is, October 18, 2011, Hua Fang textile has already brought Xiao Zhaoya to court on the amount of net loan amount of Alex Hua Tian company which is still less than 12 million 798 thousand yuan (loan amount deducting margin and partial repayment).

Some investors said that Huafang textile in the process of transferring Alex Hua Tian shares, there is a suspicion of selling the first batch. Now that Xiao Zhaoya has been sent to court before the change of industry and commerce, it reflects that Huafang textile seems to be very happy to sell Alex Hua Tian shares. Then why is Xiao Zhaoya willing to buy the bad assets which have been in a loss, and what promise does Huafang textile give to it? {page_break}

　 Non business nature capital Transactions are included in prepaid accounts.

　 More than 900 million capital occupation cited questioned

In April 23rd, a special report on the related fund transactions of Huafang textile company, which was audited by Hu Zhihua and Liu Xiaohu of Shanghai Council of accounting firms, revealed that Huafang textile and holding subsidiary Huafang Xiajin Textile Co., Ltd. (hereinafter referred to as "Xiajin textile") had more than 900 million yuan of capital transactions, which triggered investors' doubts. "2011"

According to the special report, Huafang textile showed that the balance of non operating current funds was 189 million yuan at the beginning of 2011, and the total amount of non operating current funds in 2011 was 984 million yuan. In 2011, the total amount of non operating current funds in Xiajin was 940 million yuan. The balance of non operating current funds at the end of 2011 was 233 million yuan.

However, the 2011 Annual report shows that Xiajin textile's pre payment of Huafang textile is 240 million yuan. So, where did the difference of millions of dollars go?

In this regard, Jing Xiaoyong, a senior accounting expert, pointed out that the non operating capital transactions of Huafang textile company were obviously not in compliance with the prepaid accounts.

By the end of 2011, the Xiajin textile asset liability ratio has reached as high as 98%.. Is it possible to understand Xiajin textile's disguised financing through Huafang textile?

If so, according to the annual interest rate of 6.56% in 2011, the Xiajin Textile Institute will pay 240 million yuan for the Hua Fang textile, which should pay about 15 million 740 thousand yuan interest.

In the 2011 year, Xiajin textile also accumulated 984 million yuan in the non operating capital occupancy, which led investors to question.

The 2011 Annual report shows that Xiajin textile's operating income in the 2011 year is 1 billion 159 million yuan, while its operating cost is 1 billion 266 million yuan, and its net profit is -2.34 billion yuan. Huafang textile said that 2011 was the most serious year of raw material crisis in the textile industry. The price of cotton yarn dropped sharply, while the cost of raw materials could not keep up with the decline of the products, and the production cost and the period cost remained high.

And the days of Huafang textile were not very good. By the end of 2011, the currency of Huafang textile was 281 million yuan, short-term loans were 881 million yuan, and the non current liabilities due within one year were 50 million yuan. In 2012, a quarterly report also showed that Huafang textile currency fund was 319 million yuan, short-term borrowing was 918 million yuan, and non current liabilities due in one year were 50 million yuan. A large number of short-term loans are a difficult problem in front of Huafang textile.

Some investors said that in the textile industry as a whole Recession At the same time, it is hard to imagine that Xiajin textile will occupy such a large amount of capital of listed companies.

In July 24th, the China Capital Securities Network contacted the Huafang textile secretaries office to make a public phone call. The staff member said that Zhao Jiangbo, a director of the board of directors, met with the Nanjing securities regulatory bureau and could not reply.