Zhongtai Automobile Business Puzzle: Huge Loss 11 Billion 200 Million Earnings Authenticity Was Asked

In order to get the about 1000000 payment owed by Zhongtai automobile, a week ago, in June 24th, Mr. Ma, a dealer in Yibin, Sichuan, joined the 26 Zhongtai dealers in Shandong, Henan, Hebei, Inner Mongolia and Jiangsu to the Zhongtai automobile headquarters of Zhejiang Jinhua Jinhua.

In July 1st, Mr Ma told the twenty-first Century business news reporter that Zhongtai automobile had 26 dealers in arrears totaling about 30 million yuan, including the three party loans to dealers, the rebate of dealer accounts and the refund of three yuan to the main engine factory.

Mr. Ma told reporters that under the intervention of the relevant departments, "Zhongtai promised to start the car at the end of July, or to pay 10% of the arrears of the dealer account, and the remaining debts will be paid in installments by the Zhongtai manufacturers". However, 10 dealers, including him, were not satisfied with the consultative plan. They believed that there were signs that it was difficult for them to resume production.

"We have staff salaries waiting to be issued, there are loans to repay, at least take 50% debt back, let us live, we can continue to follow you." Mr. Ma reluctantly said.

In July 2nd, people in Thailand responded to the twenty-first Century economic report reporter, "the amount of arrears claimed by the dealer is not accurate", the source said. "The company is actively solving the problem of dealer arrears. Most dealers have negotiated and settled the repayment plan, and a small number of dealers have basically determined the repayment plan."

In addition to encountering dealers' collectors' debt collection, the 17 year old car business is going through a dark time.

In 2019, *ST (000980.SZ) suffered a huge loss of 11 billion 190 million yuan. In 2019, the annual report was issued by the international accounting firm, which was unable to express its opinion. The director, Lou Guo Hai, also said, "it is impossible to guarantee the authenticity, accuracy and completeness of the annual report in 2019".

Since the authenticity of the financial report has been questioned, *ST Zhongtai has been implemented from June 24th to deal with the "delisting risk warning".

In June 29th, the Zhejiang Securities Regulatory Commission issued a letter of inquiry to *ST Zhongtai, asking him to "address the shortage of capital flow at the present stage", explaining the implementation of the "company management's plan to revitalize the company's assets, start the company's project financing, and actively seek high-quality partners".

Dealers' demands

"One day before the Dragon Boat Festival (June 24th), we arrived at Zhongtai headquarters, and we received the chairman of Zhongtai, Kim chin Yong, and he said that the company had no money." In July 1st, Mr. Ma told reporters.

Mr. Ma signed a distribution agreement with Zhongtai automobile sales company in April 2019. In September 2019, he also participated in Zhongtai automobile organization's "bath fire reborn, up and up" - the launch of the 100 day battle of Yunnan Guizhou and Kawa Hide provinces. According to Mr Ma, "at that time, we encouraged everyone to fight for 100 days, so we kept the staff and rented the store," but Mr. Ma admitted that the dealer had difficulty in operating because he had never been able to get a car.

Another Heilongjiang dealer who interviewed himself claimed to be owed $360 thousand by Zhongtai, and was also dissatisfied with the consultation plan.

According to the request issued by the 10 dealers issued by the twenty-first Century economic news reporter, the total account details (including the balance of DMS account, the unaccounted amount of Zhongtai business policy, the public seal or the unconfirmed account amount) totaled about 11 million 780 thousand yuan, but the amount was not recognized by the public.

The journalist received another letter from a group of Thai dealers, which questioned the existence of many problems in Zhongtai automobile. "Since the beginning of 2019, more than a year has led dealers to have no car sales, operation difficulties, many shops rent and wages can not be paid". "After sales of spare parts are seriously inadequate, and the after-sale overall prevarication is serious, resulting in many customers' vehicles." Unable to enjoy quality assurance... " "Since the beginning of 2019, dealers have voluntarily paid three claims for car owners."

The dealers hope that Zhongtai will pay the full amount of the rebate, cash, margin, and claim amount in the dealer's account in cash.

In July 2nd, a Yongkang Economic Development Zone Administrative Committee member who participated in the coordination of the above disputes told the economic report reporters in twenty-first Century, "we urge and supervise Zhongtai automobile to carry out the consultation plan, and resume work and resume production." The source pointed out that "a number of dealer representatives believe that the plan is feasible, but it is not credible. I hope the government will make a guarantee. But after all, this is the economic dispute between enterprises. They are advised to take legal proceedings, and the government can only provide legal aid".

When it comes to the crisis of Zhongtai, these people only said, "I am not very clear about where the difficulties of Zhongtai are."

In addition, reporters from the Yongkang Economic Development Zone Management Committee Labor Law Enforcement Bureau learned that, "on the public car arrears of wages, there is (Yongkang) inside the special group responsible."

According to a quarterly report of *ST Zhongtai in 2020, as of the end of December 2019, the wages of employees in Zhongtai were 224 million yuan. As of March 31, 2020, the salaries of employees were increased to 315 million yuan, mainly due to the increase of unpaid staff salaries.

3 billion where does the bailout fund go?

The situation reflected by Zhongtai dealer has been corroborated to some extent in the audit report issued by Zhongtian International Accounting firm to Zhongtai 2019 financial report.

"By the macroeconomic impact, Zhongtai automobile business performance in 2019 declined sharply, with a loss of 11 billion 191 million yuan. The main subsidiary of Yongkang Zhongtai Automobile Co., Ltd. (hereinafter referred to as "Yongkang Zhongtai") is short of operating capital, resulting in vehicle shutdown, overdue payment of wages, overdue prosecution of suppliers and freezing of bank accounts. Accordingly, the accounting firm believes that there may be serious doubts about the sustainability of Zhongtai automobile.

From the operating data, Zhongtai's SR9 models are highly similar to Porsche Macan due to their appearance and are known as "Bao Shi Tai". In the most scenic days, its sales volume reached 330 thousand in 2017. However, in 2019, Zhongtai Automobile Co produced 16 thousand and 200 cars and sold 21 thousand and 200 cars, compared with the total number of 142 thousand and 900 cars produced in 2018 and 154 thousand and 800 vehicles sold, which fell by more than 80% year-on-year.

In addition, *ST Zhongtai director Lou Guo Hai stressed that "the authenticity, accuracy and completeness of the contents of the 2019 annual report" can not be guaranteed. The reason is "there is a big uncertainty in the company's ability to continue to operate. It is difficult for the TiFe group to fulfill its performance compensation, and the company is faced with numerous litigation and guarantee matters. Under such circumstances, it is impossible to reasonably estimate the amount of losses caused by the company's performance compensation and contingencies to the company, combined with the audit results issued by the auditors. "

Once a local star enterprise in Yongkang, why did Zhongtai automobile encounter a crisis?

Public information shows that the controlling shareholder of Zhongtai automobile is Taipu Group Co., Ltd. (hereinafter referred to as "iron cattle group"), the real controller Ying Jianren, holding two public companies of *ST Zhongtai and Tong Feng Electronics.

In 2016, Yongkang Zhongtai backdoor Jinma shares were listed. Taipu group's commitment to Yongkang Zhongtai's 2016, 2017, 2018 and 2019 audited net profit of not less than 1 billion 210 million yuan, 1 billion 410 million yuan, 1 billion 610 million yuan, and 1 billion 610 million yuan respectively.

In fact, Yongkang Zhongtai's actual performance in 2019 was a loss of 3 billion 310 million yuan.

Such a time node is worth reviewing.

In late August 2019, Zhongtai automobile production and operation conference was held in Yongkang headquarters, led by Zhejiang Commercial Bank. Bank of China, construction bank and Yongkang agricultural commercial bank decided to jointly issue 3 billion yuan relief fund loan to Zhongtai automobile.

At that time, Zhongtai automobile said in an interview with the media, "Zhongtai received 60 million yuan of subsidies for new energy vehicles and a total of 3 billion yuan from several banks, which relieved the financial difficulties of Zhongtai automobile to a certain extent."

However, contrary to expectations, even though the 3 billion bailout fund is "blood transfusion", Zhongtai automobile is still under operational pressure.

According to the 2019 annual report, *ST Zhongtai's balance of money was 2 billion 199 million yuan at the end of 2019, which was 49.05% lower than the 4 billion 315 million yuan at the beginning of the year, of which 960 million yuan ownership or right to use were limited. At the end of the first quarter of 2020, its book currency fund balance was only 761 million yuan.

In response, in June 29th, the Zhejiang Securities Regulatory Commission issued a letter of inquiry to *ST Zhongtai, asking it to "address the shortage of capital flow at this stage, indicating that the management of the company is going to revitalize the asset content and potential market situation" and ask for its reply before July 13th.

It is worth mentioning that in the audit report, Tian Yi international accounting firm pointed out that "there is a large amount of capital exchanges between Zhongtai automobile and some suppliers, and the annual payment amount exceeds the total annual order". At the same time, it does not comment on the special statement of Zhongtai automobile controlling shareholder and its affiliate fund usage.

In this regard, the Zhejiang securities regulatory bureau's inquiry letter also focuses on "the balance of other current accounts at the end of 2019", which requires Zhongtai automobile to "supplement the nature, content, whether it is related to your company, whether there is a case of fund lending" for the top five of the other balances.

According to China's implementation of the information disclosure network, Zhongtai automobile real controller Jen has been included in the Shanghai financial court to limit high consumption personnel. The filing date is March 18, 2020.

In addition, in June 17th, Jin Zheyong, chairman of Zhongtai automobile, was restricted by high consumption by the people's Court of Huicheng District, Huizhou City, Guangdong province.

In July 2nd, in twenty-first Century, the economic report reporters called *ST numerous times, but no one answered the phone.

As of July 2nd, the price of *ST Zhongtai was only 1.38 yuan / share, with a total market value of 2 billion 798 million yuan.

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