*ST Saline Lake Responds To Inquiries: After Stripping The Loss Business, It Can Ensure Stable Revenue And Profits.

On the night of January 14th, *ST Saline Lake (000792.SZ) responded to the letter from the Shenzhen Stock Exchange.

Prior to this, *ST Saline Lake has received a lot of attention due to a about 40000000000 loss forecast. The Shenzhen Stock Exchange has asked the company to respond to relevant questions in its previous letter of concern.

It includes the preliminary calculation and calculation of the estimated loss of assets in the initial estimate of about 41 billion 735 million yuan, and demonstrates the necessity and rationality of this asset disposal leading to the impairment of large assets. It shows that the other 8 shareholders advocate that the company buy back the shares of Saline Lake magnesium industry and the company purchases the shares of Saline Lake magnesium industry to the national fund. Quantitative analysis and combined with the company's potassium chloride, lithium carbonate business and other performance impact prove whether the company has sustainable operation and profitability after the disposal of the assets.

Loss of assets impairment loss 46 billion 650 million

In view of the loss of assets of about 41 billion 735 million yuan, *ST Saline Lake said that it included 46 billion 650 million yuan loss of assets and assets loss calculated by the transfer of asset prices, and the disposal of the shares of Saline Lake magnesium and Haina chemical company that had entered the bankruptcy reorganization process. The consolidated statements returned to the earlier stage, and the excess losses caused by the earlier stage affected the increase of investment income by 4 billion 367 million yuan. As a result of the disposition of shares, the unrealized internal trading profits accounted for an increase of 549 million yuan in investment income.

The impairment loss mentioned in the reference is the impairment loss caused by the disposal of assets of Saline Lake magnesium industry, Haina chemical and chemical branch.

Prior to this, after 6 filming, the Saline Lake magnesium industry, Haina chemical and chemical branch of the assets of the state-owned assets of Qinghai Huixin asset management limited liability company to 3 billion yuan price transferee.

Specifically, the corresponding assessment values of these three items in the evaluation report are 17 billion 759 million yuan, 3 billion 285 million yuan, and 4 billion 383 million yuan respectively, and the assessment value for the stock of Saline Lake magnesium industry and Haina chemical industry is 0, and the assets appraisal value is 25 billion 427 million yuan. According to the agreed transaction price in the asset purchase framework agreement, 3 billion yuan is allocated according to the proportion of the assets valuation value to the transaction price of 3 billion yuan, the disposal price of the receivable creditor's rights of the Saline Lake magnesium industry is 2 billion 95 million yuan, the disposal price of the receivable creditor's rights of Haina chemical industry is 399 million yuan, the disposal price of the asset allocation of the chemical branch company is 517 million yuan; the assets package of the chemical branch includes inventory, fixed assets, in construction projects and intangible assets, according to the difference between the transaction price of each asset allocation and the amount of the declared creditor's rights and the book value of the assets of the chemical company, the provision for bad debts and the impairment of assets are prepared. Accordingly, the amount of bad debts prepared by Saline Lake shares in Saline Lake magnesium industry and Haina chemical industry is 33 billion 148 million yuan and 5 billion 641 million yuan respectively, and the impairment of assets package of the chemical branch company is 7 billion 866 million yuan, and the total assets impairment loss is 46 billion 655 million yuan.

*ST Saline Lake believes that the disposal of assets in the bankruptcy reorganization process is necessary and reasonable. After the reorganization of the Saline Lake magnesium industry and Hainer chemical industry, and the start of the public assets auction by the managers of the Saline Lake shares, the risks brought by the reorganization of the subsidiary companies and the disposal of assets caused by the managers may lead to the disposal of large assets. The company continued to make a phased risk warning in the announcement of the major impact of the reorganization of the subsidiary on the company, the announcement of all the restructuring progress and the previous asset auction announcements, so as to fully reveal the investment risks and effectively protect the legitimate rights and interests of the investors. There is no case of insufficient information disclosure.

Continuous profitability after disposal of assets

For *ST, Saline Lake plans to divestiture Saline Lake's magnesium industry and Haina chemical and other asset loss packages. The Shenzhen Stock Exchange also requires it to explain the business of potassium chloride and lithium carbonate and whether it has continuous operation and profitability after disposing of assets.

Data show that the main revenue and profits of *ST Saline Lake came from KCl and lithium carbonate products. Among them, the proportion of potassium chloride was the highest. From 2016 to 2018, the proportion of revenue from KCl was 65.42%, 50.57% and 41.65% respectively, and the gross profit accounted for 108.38%, 97.34% and 114.42% respectively.

In the first half of 2019, the company produced 2 million 476 thousand and 300 tons of KCl products, and the revenue of KCl products reached 3 billion 916 million yuan, accounting for 39.43% of the total revenue of each product, and the gross profit of KCl products was 2 billion 923 million yuan, accounting for 109.26%.

The Saline Lake magnesium industry and Haina chemical industry are the main losses. From 2016 to 2018, the net profit of Saline Lake's magnesium industry was -0.94 billion yuan, -31.98 billion yuan and -47.2 billion yuan respectively. Haina chemical's net profit was -6.1 billion yuan, -15.57 billion yuan and -12.14 billion yuan respectively.

For the reasons for losses, *ST Saline Lake said that due to environmental protection, limited supply of production factors and high cost of raw materials, the above projects failed to achieve production and profits in accordance with the initial design and planning of the project, but eroded the company's profits due to the formation of potassium chloride and lithium carbonate, which caused the company to get into trouble.

"If we do not consider the loss of assets such as Saline Lake's magnesium industry and Haina chemical and other assets, the performance of Saline Lake's shares will be completely reversed, and we will be able to achieve sustained profitability. After the disposal of assets is expected to be completed, the company will focus on the business of potassium chloride and lithium carbonate, get rid of the operating burden of the loss assets, and maintain stable income and profits, so as to continuously create value for shareholders of listed companies. *ST Saline Lake said.

As for the advantages of KCl and lithium carbonate, *ST Saline Lake said that after divestiture, the company will return to the well operated KCl and lithium carbonate business and restore profitability. The company is the largest potash fertilizer producer in China. Currently, its capacity is ranked seventh in the world and second in Asia. It has a strong market position and voice. At the same time, the company's lithium carbonate business will be built step by step on the basis of the 10 thousand ton project that has been completed and put into operation. The output of Future Ltd lithium carbonate will also be in the leading position in China. In the context of the continuous growth of demand for potash and lithium products, the company's production and sales of KCl and lithium carbonate will remain stable and will continue to generate profits for the company.