ESG Negative Sample Observation: A A Failure Caused By "Governance Failure"

Nanji Chi Chi, twenty-first Century economic report, the southern responsible investment action research team launched the ESG survey of listed companies. Based on the three dimensions of environment, social responsibility and corporate governance, the evaluation system of A share listed companies was formulated, and 100 positive observation lists and 20 negative observation lists were formed respectively.

This period focuses on the negative sample of corporate governance, the "A share game first share" long game (600652.SH): a high premium M & A, if there is not enough governance capability, it may bury the company's development.

In April 3rd, once the first share of A share game, the market value of long tour Games was less than 1 billion 800 million yuan. More tricky, because the two consecutive years of loss and wearing cap, if 2019 is still a loss, long swim games will be faced with the risk of being suspended from listing.

"A lot of old game companies, because there are no new products in two or three years, then the whole team has broken with the market, and it's hard to connect them again." In April 3rd, a game industry analyst said this.

Net profit in 2017 and 2018 was 422 million yuan and 905 million yuan in losses, plus a loss of 11 million 277 thousand and 700 yuan in the first three quarters of 2019. Since May 6, 2019, Yu Long game stock has been implemented as a risk warning for delisting.

But in January 18th, there was a turnaround, and the game was expected to earn about 16 million yuan in 2019.

It is a great surprise that the loss of the performance of the long tour game is largely due to the sale of 8 properties in Pudong New Area, Shanghai, which is mainly due to 155 million yuan. It is estimated that the net profit will be increased by about 80 million yuan. In addition, the bank financial income and the fair value of the trading financial assets held will increase its net profit by about 14 million yuan.

Bizarre profit evaporating point

Yu Long game was formerly Shanghai's first batch of listed "old eight stocks" Ai Shi shares.

In November 2014, Ai Shi completed 1 billion 180 million yuan acquisition of the 100% stake in Yu long time (Beijing) Technology Co., Ltd., whose main business changed from single coal mining and sales to coal mining sales and online game operation in parallel, and renamed "swim long game", and became "A share game first share".

Yu Long's predecessor was the game information website, which was once called "China's Warcraft RGP official website".

At the beginning of January 2012, Qihoo 360 announced that the joint venture with Yu Long net was "360 tours for a long time", Qihoo 360 held 80%, and Shaanxi swim long Digital Technology Co., Ltd. held 20%.

But in October 2013, the 360 tour company team bought part of the Qihoo 360's shareholding, thus breaking away from Qihoo 360's "holding" situation and officially renaming it for a long time.

At that time, AI made the share premium to buy a long time premium of more than 40 times, creating the highest record of A share mergers and acquisitions.

Correspondingly, the acquisition also created a 1 billion 207 million yuan goodwill for listed companies, an increase of 1 billion 161 million yuan before the merger.

Although the net profit in 2013 was only 39 million 410 thousand yuan, the net profit of 2014, 2015 and 2016 was no less than 100 million yuan, 120 million yuan and 144 million yuan respectively.

The results show that in the past 2014-2016 years, the net profit in the past 149 million years was 1.04 yuan, 137 million yuan and 149 million yuan respectively, and the completion rates were 105.51%, 116.03% and 103.46% respectively.

Due to over fulfilled commitments, Liu Liang and Dai Lin, the original shareholder of the long time tour, also won 17 million 618 thousand and 800 yuan reward.

However, the performance of the gambling period is over. Since 2017, the profits of the long tour era seem to evaporate instantaneously.

In 2017 and 2018, they lost 86 million yuan and 95 million yuan respectively.

In the 2017 annual report, Yu Long game said, "as the original version of the game product is in the preparatory stage, the operating cost continues to rise; while the pre game reserve products need further grinding, debugging and optimization, the related products are postponed", resulting in a sharp decline in the profits of the core game industry.

In 2018, the game was further explained in the annual report. "The new games that were originally planned to be released in the long era" were not fully on-line, and they continued to run over the years, a few new online games and media information platforms. Among them, the heavy hand tour "Jun Lin world" was launched into the late product life cycle because of the long launch time; some products stopped testing and no longer operated according to plan; the new lightweight games had a weak ability to generate income, resulting in a year-on-year decrease in operating income.

Then there is goodwill "exploding thunder". In the past 2017-2018 years, the listed companies had prepared 312 million yuan and 776 million yuan for the impairment of goodwill respectively.

"The difference is that the impairment of goodwill of listed companies is generally aimed at the affiliate subsidiaries and joint ventures, but the impairment of goodwill of the Games is aimed at the core operating assets of the listed companies." In April 3rd, the chief financial officer of a company in Shanghai analyzed this.

"Card position" investment everywhere

As a matter of fact, since 2016, the long game has become the "card position" Pan entertainment industry chain. It has invested in many companies such as electronic competition, webcast content production, net red entertainer brokers, VR production, H5 games, and overseas game distribution.

Coincidentally, almost no exception falls into the "vicious circle" of losses.

The financial pressure is so huge that at the end of March, investors on the interactive platform directly asked the company, "have you had any financial risks in recent years?"

In December 29, 2019, Yu Long game decided to transfer the 19% stake of Taicang PI AI athletic Network Technology Co., Ltd. (Pi Aiyou), which was a share holding company, to 0 yuan to Beijing Jie Bai Hui science and Trade Co., Ltd., and its shareholding ratio dropped to 2% after the completion of the transaction.

PI AI Hao is a game company founded by Suzhou tour Optical Network Technology Co., Ltd., which split shares in its electric business in October 2015. However, PI AI continued to lose money, and its long game in 2017 and 2018 respectively prepared 39 million 926 thousand and 900 yuan and 13 million 571 thousand and 900 yuan for its impairment.

At the end of 2019, the other action of tour Games was to transfer the 45% stake of Shanghai Bo Sheng Yi Yi Technology Co., Ltd. (Bo Sheng Jia Yi) to 80 million 60 thousand and 900 yuan to another shareholder.

Coincidentally, many companies that invest in this game have made preparations for asset impairment.

In March 31, 2016, Sun long Shanghai sun key information technology Co., Ltd. invested 60 million yuan to acquire 20.69% stake in Shanghai Sheng Yue Network Technology Co., Ltd. (Sheng Yue network).

In 2016, after the net profit of 21 million 940 thousand yuan was completed against the gambling target (20 million yuan), in 2017, the monthly net profit of Sheng Yue network was only 6 million 368 thousand and 500 yuan, far from the target of 30 million yuan in the whole year.

In 2017, Yu Long game offered 31 million 550 thousand yuan for the long term equity investment of Sheng Yue network.

Similar situation is also staged in Shanghai cherry culture media Co., Ltd.

In July 2016, Shanghai purple key won the 20% stake in Shanghai cherry culture media Co., Ltd. ("cherry") in 50 million yuan, and arranged the field of artiste broker.

However, the performance of cherry is not as good as expected. In 2017, it lost 25 million 550 thousand yuan, and the long game had to prepare 41 million 370 thousand yuan for its long-term equity investment.

In addition, in 2016, Shanghai's purple key received 10% stake in Beijing durian entertainment culture transmission Co., Ltd. in 15 million yuan, and in 2017 and 2018, it made provision for impairment reduction of 7 million 500 thousand yuan and 6 million 540 thousand yuan.

Industry challenges

Even in 2019, the sale of "protect the shell", postponed the crisis of capital market, and at the end of the industry, this veteran game enterprise also faced challenges.

In particular, A shares head game company performed well in 2019.

In 2019, 002602.SZ entered the net profit of 2 billion 550 million yuan, an increase of 89.49% over the same period last year.

Everbright Securities in research report analysis, Sheng fun game has "legend", "legend world", "Dragon Valley" and other trump card games IP. In addition, the game revealed that the future will focus on releasing "Dragon Valley 2", "Qingyu years", "code name: Expedition", "gem Fantasy: light reappearance", "cherry bay summer" and other 20 products.

37 mutual Entertainment (002555.SZ) net profit of 2 billion 115 million yuan in 2019, an increase of more than 100%. In the domestic mobile game distribution market, the 37 mutual entertainment share reached 10.44% in 2019, second only to Tencent and NetEase.

Gamma data calculation, 37 mutual entertainment in 2019, not less than seven self research products monthly water billion, is the only Tencent in addition to more than seven monthly water billions of Chinese game enterprises.

In contrast, many people in the industry responded by saying that the impression of "long game" is that they do not know much about the company's products.

In the annual report of 2019, we have not yet disclosed the 2019 annual report. In the annual report of 2018, we have mentioned that during the reporting period, we have mainly maintained the on-line "Jun Ying world", the joint issue of single player mobile games, the origin of species, the operation strategy of Q, the operation of the game products of "star tread" and "magic black magic".

Yu Long game also said, "the main business income depends on the heavy hand tour", "Jun Lin world" entered the product life cycle late, the income gradually declined, the fourth quarter also fell into disputes and disputes; mild hand travel profitability is relatively weak, unable to quickly fill in the income and profit side.

Reporters found that there are 15 game product information on the official website of the long game, including "Jun Lin world", "the origin of species", "heroes of the tower of magic," "interstellar conflict", "the expedition of gods" and so on.

"Jun Li world" has ceased operation because of disputes and disputes, and other game products of the company will be disclosed in the 2019 annual report. In April 3rd, people in the securities business department of Yu Long game responded.