Lifan Crisis: 560 Thousand Arrears Triggered Application For Reorganization

In June 29th, 601777.SH issued a notice of "bankruptcy reorganization of creditors to the applicant company of the court", which once again brought back the former "domestic motorbike king" to the public view.

The announcement shows that creditors can apply to the court for reorganization of the company on the grounds that the company can not repay the debts due to maturity, obviously lack the solvency, but still has the value of reorganization. If the court accepts the application, the company will be declared bankrupt because of the failure of reorganization. If the company is declared bankrupt, it will be bankrupt and liquidated and face the risk of being terminated.

The news came to scare away investors. At the beginning of June 30th, Lifan shares were pressed on the limit board in the bidding section, and the limit was opened after opening, with a drop of over 4% at the close.

Just 10 days ago, Lifan shares were widely concerned about the rumors of "being bought by Geely Holdings" and gained a trading limit because the rumor was eventually denied by both sides.

The cold and hot capital market is just like the ups and downs of Lifan's stock market these years. The latest announcement shows that the company involved 392 litigation (Arbitration), involving an amount of 2 billion 906 million yuan. In the past, the "king of motorcycles" was no longer in sight.

Financial data show that in 2019, Lifan achieved a revenue of 7 billion 450 million yuan. - Gan Jun photo

560 thousand, 6 billion of the market capitalization companies?

What kind of debt dispute does it make creditors need to apply to the court for reorganization of Lifan shares?

It is sad to note that the reason why the creditor of Chongqing Jiali bridge and Light Co. Ltd. applied for reorganization is simply that 560 thousand of the shares of Lifan's shares were overdue.

According to the announcement, Chongqing Jiali and Lifan shares signed a motorcycle parts development agreement, according to the production line consumption quantity, before the end of each month, the company issued the corresponding value-added tax invoice, rolling payment in one month. The amount of spare parts supplied by the applicant in April is 563 thousand yuan. According to the contract, the company should pay the applicant within one month after the invoice is issued, and has not paid the bill up to now.

For a time, the market was mixed with emotion. This private top 500 enterprises now even even 560 thousand of the goods are overdue.

In June 30th, in twenty-first Century, the economic report reporter gave power sail shares to investors. The staff told reporters, "we can only say that we have received the notice of the court, and we need to issue a notice according to the regulations. Specifically, the company is not clear, because the other side did not communicate with the company, directly applied to the court.

Subsequently, the reporter called on the creditor of Chongqing Jiali to inquire about the specific circumstances of the overdue payment, and the staff members did not know clearly.

The announcement shows that if the court formally accepts the application for reorganization of Lifan shares, the company will be declared bankrupt because of the failure of reorganization. If the company is declared bankrupt, it will be bankrupt and liquidated, and the stock of the company is at risk of being terminated.

At present, Lifan shares have not yet received the court's ruling on the company's reorganization. Whether the applicant's application can be accepted by court or not is still uncertain.

However, Lifan shares said that the company will disclose the progress of the reorganization application in a timely manner. Whether or not to enter the reorganization process, the company will do its best in daily production management.

According to official website, Lifan has been selected as the top 500 Chinese enterprise for many years, and has been in the forefront of Chongqing auto and motorcycle industry for many years. In 2010, Lifan shares landed on A shares and raised 2 billion 900 million yuan, which is the first privately owned passenger car company listed on A shares in China. Closing on June 30th, Lifan shares reported 4.49 yuan / share, a decrease of 4.67%, with a market value of about 5 billion 899 million yuan.

Is Lifan shares really "unable to afford even 56?" The staff of the Lifan stock company obviously did not recognize this, saying that "our wages are issued."

But judging from the financial situation, the company's situation is indeed not optimistic.

According to the June 18th announcement, there are 392 cases involving litigation (Arbitration), involving an amount of 2 billion 906 million yuan. The company admits that there are risks of sustained losses, higher liabilities, larger passenger car business, large debt overdue, large assets being frozen, involving more litigation (Zhong Cai), lack of liquidity in controlling shareholders, and no return of fund-raising funds.

Financial data show that in 2019, Lifan achieved a revenue of 7 billion 450 million yuan, down 32.35% compared to the same period last year, and net profit loss of 4 billion 680 million yuan, down 1951% from the same period last year. In the first quarter of this year, Lifan achieved a profit of 564 million yuan, down 74.88% compared to the same period last year, and the net profit loss was 197 million yuan.

Car failure

Why did the "motorcycle king" with many auras become trapped in the crisis of restructuring?

Behind the high debt is the failure of the continuous bet on Lifan shares. In the process of cutting into the automotive industry from the motorcycle industry, Lifan shares seem to be on the "draught" frequently, whether it is traditional passenger cars, new energy vehicles, or big heat sharing cars.

In this process, we have to mention the key figure, Yin Mingshan, founder of Lifan shares.

In 1992, Yin Mingshan, who was 54 years old, founded the Li Fan group, mainly engaged in the production and sale of motorcycles, and sent Li Fan to the first private car listed company of A shares. According to Hurun rich list, Yin Mingshan has been on the richest position in Chongqing many times.

Although he started to build a motorcycle, Yin Mingshan always had a dream of building a car.

In 2006, Lifan entered the passenger car industry and stepped into the general gasoline business. However, the arrival of the financial crisis in 2008 led to a heavy blow to the export of motorcycle, and the car business was also affected.

In 2014, Lifan began to produce new energy vehicles. In 2015, Lifan holdings strategic investment vehicle, the latter for new energy vehicles sharing platform. New energy vehicles and shared cars are the dual outlets of the market.

But the complexity and capital requirements of the car are clearly beyond Yin Mingshan's imagination. It was also after 2014 that the net profit of the company began to drop head-on. The first net loss of non net profit in 2016 was 261 million yuan.

In the meantime, Lifan new energy also appeared to deceive the subsidy incident, the Ministry of Finance canceled the new energy vehicle subsidy qualification, the new model of the new energy vehicle production qualification has been canceled. After this incident, sales of Lifan new energy vehicle plummeted, and the brand of Lifan also suffered a heavy blow.

After unable to support the new energy vehicle business, Lifan shares had to break arm for help. In 2018, after transferring 150 thousand passenger vehicle production bases to 3 billion 300 million yuan, Lifan sold its subsidiary owned by fuel vehicles and new energy vehicles to 650 million yuan for cars and homes.

These assets were the few high-quality assets that Lifan shares were at that time. With the sale, the haemopoietic capacity of Lifan shares was further weakened.

In 2018, the loss of non net profit of Lifan shares expanded to 2 billion 150 million yuan, and the loss in 2019 expanded to 4 billion 400 million yuan.

In September 2017, Yin Mingshan, chairman of nearly eight days, formally resigned from office and gave the company to a team of professional managers led by Mou gang. Yin Mingshan's dream of building a car seems to have come to a dream.

As for the rise and fall of Lifan, Zhang Xiang, an independent analyst in the automotive industry, said that the failure of Lifan was mainly due to the miss of the golden period of auto industry development. When making money in this industry is easier, he focuses on the low-end car market. The main sales market is the western region with low consumption capacity. It has not been developing to the high end, and has not invested enough in the field of mobile Internet, speech recognition, artificial intelligence and so on.

"Lifan's current predicament has its own reasons, and there are also industry reasons. Besides the lack of competitiveness of automobile products, the operation channel is also weak, which leads to difficulty in vehicle promotion. Coupled with the sales decline of the entire automotive industry since 2018, the company has been under great pressure. Guo Hai, principal analyst of automobile industry, said Shi Jin.

From the point of entry into the automotive industry, Lifan also appears to be slow. Geely, who started with motorcycles as early as 1997, has entered the automotive industry.

Zhang Xiang recalled, "in the past two years of large-scale car show, Lifan car did not participate, or participate in the car five or six years ago. In fact, many domestic independent brands and joint-venture brands have little difference, but Lifan's work is obviously poorer. They imitate other brands and even have no car networking system. In the new round of competition in the automotive industry, Lifan has lost its competitiveness.

In May this year, production and sales express showed that Lifan's traditional passenger cars sold 322 units in the month, and sales of new energy vehicles amounted to 348 units. The total sales volume of the two vehicles this year amounted to only 1347.

Debt crisis to be solved

Back to the capital market, the termination of the 2019 Lifan share increase project also announced the failure of the effort in the automotive sector.

In 2018, Lifan shares received a fixed investment fund of 2 billion 480 million yuan, originally planned to invest in the field of new energy vehicles. But a year later, Lifan shares terminated the fixed increase project, raising the remaining 449 million yuan to permanently replenish the working capital.

Seeing that the road was difficult to build, Lifan shares made a decision to return to the main business of motorcycle.

The 2019 annual report shows that during the reporting period, Lifan concentrated resources to develop superior industries, and the motorcycle industry returned to the main business of the company. Taking the implementation of the four national standard as an opportunity to expand the production and sales volume of motorcycles and machines and enhance the hematopoietic function of the company through closed operation.

"Automobile investment in the early stage is very large. In view of various pressures and the overall environment of the car market, the company's auto business is tightening. The motorcycle business has a good foundation, and has never given up, realizing walking on two legs. Lifan shares staff told reporters frankly.

Comparing the data of the two businesses, in 2018, the income of motorcycles and accessories was 3 billion 113 million yuan, accounting for 28.26%, and the income of passenger cars and accessories was 6 billion 17 million yuan, accounting for 54.63%. In 2019, the former's income was 2 billion 649 million yuan, accounting for 35.55%, while the latter's income was 2 billion 796 million yuan, accounting for 37.54%.

As of May this year, Lifan motorcycle accumulatively sold 174 thousand units, produced 177 thousand units, and sold 292 thousand sets of motorcycle engines and produced 459 thousand units. Although it has declined compared with the previous year, the rate of decline is not large.

In fact, for Regan, the return to motorcycles is probably the most suitable. There is also a trend of obvious upgrading of the consumption of motorcycles. Lifan's deep ploughing in traditional advantageous areas is much easier than crossing the border to make cars, and the probability of success is much larger. Shi Jinman told reporters.

Zhang Xiang also thinks, "if Lifan divestiture all the business of the car, specializing in motorcycle business, the price performance is competitive. Motorcycles have a large market in Southeast Asia, and Lifan can build motorcycles with plenty of experience.

The biggest problem is actually returning to the thorny debt problem.

Data show that at the end of the first quarter of this year, the company had a net outflow of 120 million yuan in cash flow, 1 billion 61 million yuan in monetary capital and 13 billion 720 million yuan in current liabilities. Li Fan said frankly that the company's capital chain is tight and faces serious liquidity risks, and the operational risks have not yet formed any effective solution.

In Shi Jinman's view, this application for bankruptcy reorganization may be a way out for Lifan. "In a quarterly report, the company's asset liability ratio has reached 85%, and it may be faced with the risk of insolvency. At least, it can survive through debt restructuring."

The reporter learned from the staff of Lifan stock office that the Chongqing municipal government has established a debt Commission for the company and has been assisting the company in dealing with the debt problem.

Another news is that in April this year, the provisional shareholders' meeting of Lifan, Yin Mingshan's 25 year old granddaughter Yin Anni officially appeared as a supervisor, and was thought to take over the power of Lifan. Yin Mingshan introduced at the meeting, "now the enterprise is relatively difficult, so she was asked to return home to practice in the enterprise to help enterprises rescue."

Return to the motorcycle sector, inject fresh blood, debt restructuring, can Yin Mingshan play a series of combined effects? It remains to be tested by the market.

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