Jiangsu Sunshine provides guarantee for the controlling shareholder for 14 years. The related party contributed 20% of the revenue and arrears of 70% of the purchase price.

Changjiang Commercial News News â–¡ Reporter Shen Yourong Intern Wan Shaoqing

The Hareon Solar, which was controlled by Su Keping, is about to be suspended. Another company controlled by Jiangsu Sunshine 600220, the stock (600220.SH) also has potential operational risks.

Jiangsu Sunshine recently announced that the company provided a guarantee of RMB 200 million for the loan of the controlling shareholder Sunshine Group to Zheshang Bank. So far, since 2017, the company has provided guarantees for Sunshine Group amounting to 500 million yuan.

The Changjiang Business Daily reporter found that Jiangsu Sunshine provided guarantees to the controlling shareholders quite frequently. According to Wind data, Jiangsu Sunshine has long provided guarantees for Sunshine Group's loans for 14 years from 2004 to the present. In addition, an overview of its operating performance since its listing, growth for several years and then a few years of decline, the net profit achieved in 2017 is basically the same as in 1999.

It is worth noting that company related transactions are frequent. In addition to related guarantees, the company's related sales and related parties' accounts receivable are high. In 2017, the company's sales to related parties were 576 million yuan, accounting for 26.68% of the company's operating income, while related parties' accounts receivable reached 254 million yuan, accounting for 75.36%.

The financial pressure of Jiangsu Sunshine, which has unsatisfactory business performance, is not small. According to the data of the first quarter of this year, as of the end of March, the company's monetary funds decreased by 158 million yuan at the beginning of the year, accounts receivable increased by 111 million yuan, and the current assets of 2.242 billion yuan could not cover the current liabilities of 2.510 billion yuan.

On the afternoon of May 23, the Changjiang Business Daily reporter repeatedly called Jiangsu Sunshine on the issue of frequent related transactions, and no one answered.

The increase in performance will not increase profits, and the loss in the first quarter will be 12,249,400.

In the past 20 years since its listing, Jiangsu Sunshine’s business performance has not been able to get out of the tepid circle.

Jiangsu Sunshine, which cultivated worsted woolen fabrics, landed on the Shanghai Stock Exchange in 1999 and was one of the clothing and apparel companies that entered the capital market in China in the early days.

At the beginning of the listing, Jiangsu Sunshine's business performance was still beautiful. Data show that from 1999 to 2002, the company's operating income was 522 million yuan, 509 million yuan, 804 million yuan, 925 million yuan, the net profit for the same period was 115 million yuan, 120 million yuan, 126 million yuan, 1.35 yuan 100 million yuan. Although operating income has fluctuated, net profit has steadily increased slightly.

From 2003 to 2005, the company's operating income rose rapidly, but the increase in income is not obvious. During this period, the operating income increased rapidly from 925 million yuan to 2.5 billion yuan, and the net profit decreased from 135 million yuan to 0.18 billion yuan.

Facing the dilemma of declining business performance, since 2006, the company has entered the photovoltaic industry and established subsidiaries such as Ningxia Sunshine Silicon. In the eyes of the industry, Jiangsu Sunshine Investment Polysilicon industry stepped on the right time, but its investment and production progress dragged its feet.

According to public information, Ningxia Sunshine has been successfully tested in 2008, but by the end of 2009, polysilicon has not yet been put into production. It was officially put into operation in 2010 and was affected by multiple factors such as the business environment for three years.

At that time, Lu Keping, the head of Sunshine Group, also controlled Hareon Solar through its subsidiary Zijin Electronics, and led Hairun Photovoltaic to land on the motherboard at the end of 2011.

The photovoltaic industry has caused Jiangsu Sunshine to be injured. In 2012, it suffered a huge loss of 1.361 billion yuan. Ningxia Sunshine was declared bankrupt by the court in 2013. Hairun PV is also a huge loss, and Lu Keping retreats midway. The company will now be suspended from the market at the end of this month.

With the divestiture of photovoltaic assets, Jiangsu Sunshine continued to plough into the main business and its operating conditions improved slightly. From 2013 to 2016, the company realized operating income of 2.342 billion yuan, 2.265 billion yuan, 2.50 billion yuan, 2.092 billion yuan, net profit of 107 million yuan, 179 million yuan, 111 million yuan, 153 million yuan.

However, starting in 2017, the company's profitability has begun to decline. In the same year, the company achieved operating income of 2.151 billion yuan, a year-on-year increase of 2.80%, and net profit of 121 million yuan, down 20.86% year-on-year.

The operating results in the first quarter of this year were even more bleak. In the first three months of this year, the company achieved operating income of 402 million yuan, an increase of 10.72%, while net profit plummeted 1204.34%, with a loss of 124.594 million yuan.

The company explained that the increase in raw material prices and the exchange rate loss exchange rate increase, resulting in the company's first quarter loss.

The first largest customer contributed 566 million revenue but owed 253 million in purchases

Jiangsu Sunshine, which is not financially savvy, still has a reliance on connected transactions, and the collection of accounts receivable under huge connected transactions will be very difficult.

Jiangsu Sunshine's latest announcement shows that the company provides a guarantee of RMB 200 million to Zhejiang Bank's loan to the controlling shareholder Sunshine Group, and Sunshine Group provides counter guarantee, and the two bear joint guarantee responsibility. Since 2017, the company has provided a guarantee of RMB 500 million for the loan of Sunshine Group. The guarantee period is May 22, 2019.

In fact, since 2004, Jiangsu Sunshine has provided as many as 32 guarantees to Sunshine Group.

Not only are the associated guarantees frequent, but also related transactions in the business. Take 2017 as an example, specifically look at the related transactions of Jiangsu Sunshine.

According to the annual report, in 2017, there were as many as 12 related parties in the business, including Sunshine Building, Sunshine Fashion, and Sunshine Clothing.

In 2017, Jiangsu Sunshine purchased goods from related parties and received labor services totaling 17.26 million yuan, accounting for a relatively small proportion. The company's sales of goods and services to related parties totaled 576 million yuan, accounting for 26.86% of the company's operating income for the year.

There are a total of 10 related customers selling goods, among which, as the company's largest customer, Sunshine is also a related party of the company. Previously, the company had held 75% of Sunshine apparel and then transferred it. According to regulations, it is still a related party.

In 2017, the company's sales to Sunshine apparel reached 546 million yuan, accounting for 94.46% of the total associated sales, accounting for 25.38% of the company's operating income, more than a quarter.

The huge amount of related sales brought to Jiangsu Sunshine also has a huge amount of related accounts receivable. As of the end of 2017, the book balance of accounts receivable of the company's related parties was 254 million yuan, accounting for 75.36% of the company's accounts receivable of 362 million yuan. Among them, Sunshine apparel accounts receivable of 253 million yuan, accounting for 69.79% of the company's accounts receivable.

It can be seen that the first major customer Sunshine Apparel is also the largest customer of the largest arrears, and nearly half of the goods sold by the company have not received the payment in time. In the current period, the company's provision for bad debts for Sunshine Clothing was 12.658 million yuan.

The controlling shareholder's equity pledge ratio is as high as 98%

Operating results are not very satisfactory, refinancing is zero, and Jiangsu Sunshine returns investors are also very limited.

The Changjiang Business Daily reporter found that in addition to the initial fundraising of 839 million yuan, Jiangsu Sunshine has not been refinancing since it was listed in 1999. Its frequent debt issuance and bank borrowing have led to high financial costs, with an average annual financial cost of over 100 million.

Refinancing is zero, and Jiangsu sunshine dividends are also extremely limited. According to the data, the company conducted weak cash dividends for three consecutive years from 2000 to 2002, with a cumulative dividend of 88 million yuan. In the 15 years from 2003 to the present, the company has not made cash dividends.

Refinancing channels are limited, and the company's financial pressure is not small. According to financial data, as of the end of the first quarter of 2018, the company's current assets were 2.242 billion yuan, of which 679 million yuan was monetary funds, accounts receivable was 445 million yuan, and inventory was 892 million yuan. Current liabilities amounted to 2.51 billion yuan, exceeding current assets.

From the perspective of short-term solvency indicators, the current ratio and quick ratio are 0.89 times and 0.54 times respectively, indicating that the company has weak short-term solvency. In the first quarter, the profitability of the company has dropped sharply, and the company has certain debt repayment pressure.

The company's funds are not sufficient, and the controlling shareholder's equity pledge ratio is high, and there is a risk of liquidation.

Jiangsu Sunshine recently disclosed a shareholding pledge announcement that on March 7 this year, shareholder Yu Qinfen pledged 106 million shares (5.93% of the total share capital) of the company's unrestricted shares to the Evergrande Bank Wuxi Branch. As of the announcement date, Yu Qinfen held a total of 144 million shares, with a shareholding ratio of 8.09%, a cumulative pledge of 143 million shares, and a pledge ratio of 98.75%.

Up to now, the real control person of Jiangsu Sunshine is Lu Keping, Yu Qinfen is his spouse. Sunshine Group, the company's chairman Chen Lifen and Sun Ningling are acting in concert, holding a total of 535 million shares, accounting for 29.99% of the total share capital, 525 million shares pledge, accounting for 29.45% of the total share capital, and the equity pledge ratio is as high as 98.21%.

Editor: ZB