In A Letter Sent By The Shenzhen Stock Exchange, He Asked Why The Shares Of The Company Were Pledged.

On the 25 day, he received the inquiry letter from the Shenzhen Stock Exchange.

In October 16th, he published the documents on the issuance of shares and plans for related party pactions, and intends to purchase 100% stake in ERON and Lijiang Hui long held by Xing Xing media in the form of issuing shares, and the paction price was initially set at 806 million yuan.

After the formal review of this plan, the Shenzhen Stock Exchange asked for a supplementary explanation.

First, the requirements of the Shenzhen Stock Exchange.

The independent financial advisors and lawyers hired for this reorganization shall, in accordance with relevant regulations, carefully check and issue independent financial advisors' verification opinions and legal opinions and other documents.

Since the opening of the market in June 6, 2018, the plan has been suspended for more than 4 months.

Requirements of the Shenzhen Stock Exchange

Explain the specific verification procedures for the implementation of independent financial advisors, and explain in detail the reasons for issuing a clear verification opinion when the plan is not disclosed. According to the chronological list, the specific work done by the intermediaries involved in the planning of the reorganization is discussed. Whether there are factors that lead to slow progress in the reorganization and the substantive obstacles to the proposal, and require relevant intermediary agencies to explain their respective work during the suspension period.

According to the plan, he intends to buy the target company.

The 100% stake and related equity are all in pledge.

In response, the Shenzhen Stock Exchange asked Hinur to explain the reasons for the above pledge, the duration of the pledge, the main uses and actual use of the pledge party, the pledge financing, the plan for lifting the pledge, the sources of the relevant funds, and the specific circumstances and adequacy of the quality assurance measures (if any).

At the same time, the Shenzhen Stock Exchange also asked Hinur to explain the details of the above changes in the past three years, and the difference between the rights and interests in the past three years and the difference in the pricing. This shows whether the pfer of shares requires the consent of the relevant pledging parties (if necessary, to disclose the current communication with the pledging parties and the principled views of the pledging parties).

As of May 31, 2018, the total assets of Lijiang ERON were 1 billion 143 million yuan, including 18 thousand and 200 square meters of fixed assets, land use rights and trademarks. The total assets of Lijiang Hui lung were 146 million yuan, including fixed assets and land use rights.

All two of the above land and property are in a state of mortgage.

In this regard, the Shenzhen Stock Exchange asked Hinur to explain the details of the assets of the underlying company, and whether the main assets could meet the follow-up business plan disclosed by the plan, and disclose the red line area and distribution of the land and property mortgaged by the underlying mortgage, disclose the details of the land and real estate, the proportion of assets, and the reasons for the mortgage, the starting and ending time, the mortgages, the use and actual use of the mortgage funds, the plan for releasing the mortgage, the source of funds and the guarantee measures for lifting the mortgage (if any).

The Shenzhen Stock Exchange also inquired about the specific defects of the asset rights defects of the underlying company, including, but not limited to, details of the defective assets, acquisition status, book value and proportion, types of defects, reasons for formation, solutions, obstacles, and plan arrangements for major defects, such as procedures to be performed, time schedules, cost holders, etc., as well as current progress.

From 2016 to 2018 1-5, the operating income of ERON in Lijiang was 13 million 729 thousand and 100 yuan, 13 million 689 thousand and 100 yuan and 800 thousand and 600 yuan respectively, with net profit of 4 million 635 thousand and 400 yuan, 2 million 928 thousand and 600 yuan and -437.17 million yuan. The operating income of Li Jianghui dragon was 238.954 yuan, 10000 yuan, 2 million 277 thousand and 500 yuan and 1 million 320 thousand and 400 yuan respectively, and the net profit was -217.49 yuan, 1 million 123 thousand and 100 yuan and -4.02 yuan respectively.

The Shenzhen Stock Exchange asked Hinur to explain the actual business situation of the company since its establishment, the net profit after deduction, the business mode and profit mode, the main business revenue composition, source and main customer situation, the main cost, the cost situation and the main suppliers, the depreciation and amortization of the fixed assets and intangible assets and the main provision, as well as the assets involved, the specific circumstances of the related pactions in the reporting period, and the related pactions after the acquisition.

For the existence of the paction subject matter whether there are non operating pactions and guarantees to shareholders, as well as the specific circumstances of the major products of the paction, and the subsequent business plans drawn up after the purchase of the product, after the completion of the reorganization, the Shenzhen Stock Exchange also asked questions about the parties, the actual controller of the trading partner and its associated parties, and whether the existing directors of the target company remained in office.

The Lijiang ERON and Lijiang Hui Dragon of the target company had smaller operating income and lower performance and negative net profit in 1-5 months in 2018. For this reason, the Shenzhen Stock Exchange asked Hinur to analyze the business continuity, profitability and solvency of the underlying paction, indicating whether the paction was in line with the eleventh provisions of the restructuring measures and provided the basis.

According to the plan, the main business is the traditional clothing industry, which mainly deals in suits, shirts and others.

Sales of products.

After the completion of this paction, he will add cultural tourism industry.

The Shenzhen Stock Exchange asked for the connection between the target of the paction and the main business of the company, supplementing the reasons and reasonableness of the acquisition, the reasons why he bought into the new industry and whether he has the ability to engage in new industries. The integration plan, integration risk and corresponding management and control measures of the paction in business, assets, finance, personnel and institutions, and he maintained the relevant measures for the stability of the core technical personnel.

As a compensation obligor, the Xingxing media, which accepts the share payment, promises that the actual net profit of any fiscal year in 2018, 2019 and 2020 is lower than the net profit forecast, and will compensate the difference according to the profit forecast compensation agreement.

The Shenzhen Stock Exchange asked Hinur to explain the specific amount of annual net profit forecast in the performance commitment period, combined with the management ability of Hinur's benchmarking, profitability of the target company during the reporting period, and the development of the industry.

And so on, indicating the realization of the performance commitment of the target company, and disclosing whether the relevant parties have the ability to perform the performance compensation undertaking and the safeguards adopted to ensure the performance of the paction agreement.

Finally, the Shenzhen Stock Exchange inquired about the valuation of the paction target.

According to the plan, the estimated value of the underlying assets of Lijiang ERON 100% and Lijiang Huilong 100% stake is 806 million yuan on the basis of pre assessment date (May 31, 2018) under the asset based act.

The total value of the audited consolidated assets of the two companies in May 31, 2018 was 817 million yuan, and the appreciation rate was -1.35%.

In this regard, the Shenzhen Stock Exchange asked Hinur to explain the reasons and reasonableness of choosing the asset based method instead of adopting other valuation methods, the estimated value of the main assets of the underlying company, the determined parameters of the estimated value, the estimated value added rate and the reasons for the increment, the differences between the main assets and the active comparable market, the reasons and reasonableness of the differences, and at the same time, the reasons and reasonableness of assessing the negative rate of appreciation.