*ST Jin Yu (000803): On The Reorganization, The North Control Department Will Welcome The Second Inspection After The Helm.

In May 28th, the twenty-second meeting of the Commission on mergers and acquisitions (CSRC) of the CSRC examined the issue of shares issued by *ST and payment of cash and related transactions. This is the second time that the "North control system" has taken the helm of *ST Jinyu.

Securities Times e reporter noted that *ST Jinyu's latest success is 2017, when the North control system successfully entered the main market, it succeeded in helping *ST Jinyu to achieve its protection through leading acquisition of Chi Lin Electric. However, the listed company failed to step on the deal and had many sequelae. 3 years later, the "North control system" once again led the reorganization, where will the fate of *ST Jinyu go?

Controlled Shareholding ended in 3

In the first half of 2017, the "North control department" increased its *ST holdings 15 times in a month and increased its shareholding ratio to 17.72%.

In November of the same year, the "North control department" took the opportunity to conclude a joint action with Nanchong state investment. The two sides jointly held 38 million 142 thousand and 500 shares of *ST Jin Yu, with a shareholding ratio of 29.86%. As a result, the shareholding ratio of "North control" has surpassed that of Jinyu holdings, which has been in control of *ST Jinyu for 15 years (23.51% stake). It has been promoted to become the largest shareholder of *ST Jinyu, and now the "North control department" of the listed company chairman Kuang Zhiwei has been stationed in the listed company.

With the gradual admission of the "North control system", the transformation of the listed companies and the control of shareholding between the shareholders have been officially launched.

The dispute between major shareholders has also led to a halt to the listing companies. By the end of 2017, the planned growth plan launched by *ST Jinyu had been delayed for a long time until the expiration of the scheme at the end of December 2018.

Jinyu holdings, the former controlling shareholder, has publicly pointed out that the "North control department" had made a commitment to the market capitalization of *ST Jinyu in 2017, and the promise of "first years' market capitalization to 10 billion and third years to 30 billion" has not been fulfilled. But in response to this situation, North control photovoltaic and Nanchong state investment jointly issued a clarification statement, saying: "no cooperation on the market value and related matters of listed companies has been made in any field".

Finally, because of its own debt, Jinyu holdings can only withdraw. Back in June 7, 2017, Jinyu holdings, in order to meet the needs of operational capital, applied for loans to Beijing Lian you Business Consulting Co., Ltd., and provided hypothecation guarantees to 30 million 26 thousand listed shares of the listed company.

In January 13, 2020, the intermediate people's Court of Zigong, Sichuan province ruled that the 30 million 26 thousand shares of *ST Jin Yu stock held by Jinyu holdings, the executor, were priced at 446 million yuan, and the application executor Beijing Lian you was deducted to repay the debt of 446 million yuan.

The above shares were registered in January 15, 2020. Jinyu holdings no longer holds shares in listed companies. Beijing Lian you holds 30 million 26 thousand shares of *ST Jinyu shares, accounting for 22.18% of the total share capital of the company. At this point, the contention of control rights of listed companies ended with the victory of the "North control system".

Shell Ceng Cailei

After the entry of the "North control system", *ST Jinyu is facing a serious problem of shell protection. Under the guidance of the "North control system", the listed company acquired the 55% stake in Chi Lin Electric in August 2017 and officially opened its business transformation.

However, only one year, Chi Lin's performance quickly changed its face. At that time, the dealer promised 2018 net profit of not less than 90 million yuan, while the actual profit given by Chi Lin Electric Company was only 369 thousand and 600 yuan, which was quite different from the promised amount.

*ST Kim Yu has publicly apologized and responded to the Shenzhen Stock Exchange's annual enquiry letter, indicating that the cash flow of Chi Lin Electric is expected to be stable, but there is still a possibility that the performance pledge will not be fulfilled in 2019.

In the past year's report, Chi Lin Electric Co., Ltd. achieved a net profit of 64 million 788 thousand and 600 yuan in 2017, and reluctantly completed its annual performance pledge. However, in 2018, Chi Lin's business performance was plunged. The annual net profit of 369 thousand and 600 yuan was only 240 yuan.

In response to the "change of face", *ST Jinyu told the securities times e reporter that the decline of Chi Lin's electrical performance was mainly caused by the "531 photovoltaic New Deal" and other industry factors. Chi Lin electrical performance can not be completed, performance has been compensated according to the agreement, and do impairment.

*ST Jin Yu said that despite the efforts of Chi Lin electric management, business management remained basically stable. At the same time, with the launching of the fourth batch of "leader" related work of the national energy board at the end of 2018, the landing of the related policies of "parity Internet" and the gradual improvement of industry mobility and the company's own efforts, the smart cash flow is likely to be stable. There is still a possibility that performance commitments will not be fulfilled in 2019.

At the end of 2019, *ST Jin Yu terminate the agreement with the original shareholders of Chi Lin Electric Company through litigation and eventually transferred the shareholding of Chi Lin electric appliance to the former shareholder. The listed company no longer held the shares of Chi Lin Electric Co., and Chi Lin Electric was no longer included in the merger.

On the whole, after the "North control system" came into operation, although *ST Jinyu realized losses in the end of 2017 to achieve "shell protection", there was still no change in the daily operation level of the listed companies.

In 2018 and 2019, *ST Jinyu business performance was still bad, achieving net profit of 8 million 139 thousand and 700 yuan and -1.93 billion yuan respectively, down 51.67% and 2467.39 compared with the same period last year. In the first quarter of 2020, *ST Jin Yu even lost 13.7% yuan, even though its net profit increased 13.7%.

Delisting edge

Due to huge losses, the net assets of *ST Jinyu in 2019 were -1.11 billion yuan, and the listed company has been pushed to the edge of delisting. Today, *ST Jinyu seems to have only one last straw, that is to start asset restructuring.

In November 2019, *ST Jinyu intends to issue shares and pay cash to buy ten party ring to 86.34% stake, and China Yuan Chuang energy 60%. At the same time, *ST Jinyu intends to raise matching funds to ten specific investors, including North controlled PV.

Statistics show that the ten party ring is mainly engaged in the harmless treatment of urban and rural organic wastes and the high value utilization of resources. The main business includes comprehensive utilization of landfill gas (biogas), harmless treatment of kitchen waste and resource utilization. In 2017, 2018 and the first three quarters of 2019, the ten party rings could achieve net profit of 17 million 853 thousand and 500 yuan, 28 million 704 thousand and 500 yuan and 20 million 223 thousand and 600 yuan respectively.

The main business of China Yuan Chuang energy is the development, production, sale and garbage sorting and disposal of organic waste disposal and resource utilization equipment. In 2017, 2018 and the first three quarters of 2019, China Yuan Chuang realized net profit of 13 million 754 thousand and 800 yuan, 10 million 961 thousand and 500 yuan and 11 million 720 thousand and 100 yuan respectively.

However, *ST Jinyu's way to protect its shell is not going smoothly. Over half a year since November 2019, the reorganization plan has been adjusted several times.

According to the latest announcement of the May 20th announcement, only two specific investors of the North control PV and Yu Ze fund are expected to participate in the total amount of the total supporting funds not exceeding 290 million yuan, and the remaining strategic partners who have planned to participate in the matching fundraising have all withdrawn. Among them, North control photovoltaic is *ST Jinyu controlling shareholder, Yu Ze fund manager Tibet Yuze Department North control photovoltaic control enterprise, for the listed company controlling shareholder related party.

*ST Jinyu's key asset of the asset restructuring has also been adjusted. China Yuan Chuang can be excluded. Only the ten party ring can acquire 86.34% stake, and the transaction price is 394 million yuan.

The sky eye showed that the ten party ring can be established in 2005, with a registered capital of 59 million 560 thousand yuan, with a staff size of less than 50 people, with only 23 insured persons. According to the announcement, in September 30, 2019, the interests of the ten party ring were 420 million yuan. Among them, the nominal value of the Ji'nan ten Party's non current liabilities is 41 million 420 thousand yuan, which is a government subsidy related to assets. It will be classified into the current profits and losses according to the amortization of the kitchen items, without repayment.

According to the draft of the transaction: the ten party ring performance commitment period is 3 years, that is, 2020, 2021 and 2022. The other party agrees that the net profit of the ten party ring can be more than 0 yuan per Annex in each accounting year.

It is worth noting that part of the operational qualification of the ten party ring will expire in the next 3 years, mainly including the ten party ring ring "Shandong municipal public utilities business license", Ji'nan ten party "sewage permit", Qingdao ten party and Taiyuan Yuantong mobile pressure vessel filling license.