300,000 stockholders are confused! 100 billion “big white horse” sudden shortfall, or loss of 8.3 billion over last year’s net profit twice

The market value of hundreds of billions of “big white horse” weekend suddenly exploded lightning!

Shanghai Electric (601727, SH)’s holding subsidiary accounts receivable is generally overdue, a large amount of accounts receivable can not be collected, in extreme cases may eventually cause 8.3 billion yuan of losses to the net profit of the listed company …… and last year’s annual net profit of only 3.758 billion yuan. In other words, the listed company’s risk exposure is more than twice last year’s annual net profit!

Shanghai Electric monthly trend image source: Oriental wealth terminal screenshot

Once the news came out, the stock bar instantly exploded! What exactly happened? How do the listed companies’ share prices move today?

Listed companies may lose 8.3 billion yuan net profit

On the evening of May 30, Shanghai Electric issued a major risk alert announcement, the company’s consolidated statements within the scope of the holding subsidiary of Shanghai Electric Communication Technology Co.

Image source: Screenshot of the announcement

As of the date of the announcement, the balance of accounts receivable of Communication Company is RMB8,672 million, the balance of inventory on the books is RMB2,230 million, the balance of loans from commercial banks of Communication Company is RMB1,252 million, and the total amount of loans from shareholders of the Company to Communication Company is RMB7,766 million, all of which are subject to significant risk of loss.

As of December 31, 2020, the carrying value of the Company’s shareholders’ equity in Communication Company was NT$526 million. If Communication Company experiences significant losses such as uncollectible accounts receivable and unrealized inventory, it will result in a full loss of the parent company’s equity investment, thereby reducing the Company’s net profit attributable to the parent by NT$526 million; in addition, because Communication Company may not be able to repay the shareholder’s loan provided by the Company to it in the amount of NT$7.766 billion In addition, the above extreme scenario may ultimately result in a loss of NT$8.3 billion to the Company’s net income attributable to the parent company (i.e., loss of shareholders’ equity and loss of shareholder loans to Communication).

In addition, there is also a risk that Communications Company’s borrowings of RMB1.252 billion from commercial banks will not be repaid as agreed.

According to the announcement, the above risk matters will have significant adverse impact on the Company’s profit for the current period or post-period profit. The Company is making every effort to verify the reasons for the large amount of overdue accounts receivable of Communication Company and related circumstances, and concentrating its efforts to deal with the aforementioned risk matters with full efforts. As of the date of this announcement, the court has accepted the relevant litigation filed by Communication Company in relation to the accounts receivable in accordance with the law. The Board of Directors and the management of the Company will take all feasible measures and means to do their utmost to reduce losses, exercise due diligence, safeguard the stable operation of the listed company and make every effort to safeguard the interests of the shareholders.

SSE sent an urgent regulatory work letter

On the same night of the announcement, Shanghai Electric received a regulatory work letter from the Shanghai Stock Exchange, with clear requirements on related matters as follows.

Image source: Screenshot of the announcement

First, your company is requested to verify as soon as possible the actual situation of the business development of the holding subsidiary Communication Company, including the type of business, business model, major customers and suppliers as well as the flow of funds, etc., to find out the specific reasons for the general overdue of its accounts receivable and the responsible persons, whether there are other matters that should be disclosed but not disclosed, and whether there is any act of encroachment on the interests of the listed company, and to make an announcement as required.

  1. Your company is requested to make a comprehensive and prudent assessment of the possible impact of the aforesaid matters on the listed company, to reveal the risks to investors in a timely and adequate manner, and to make an announcement in strict accordance with the ASBE
  2. Your company is requested to fulfill its information disclosure obligations in a timely and continuous manner and ensure that the information disclosed is true, accurate and complete, and fully protect the investors’ right to know regarding the progress of the investigation and disposal of this risk matter.
  3. Your company and all directors, supervisors and senior management are requested to perform their duties diligently and actively in a responsible manner to investors, take effective measures to safeguard the legitimate rights and interests of the listed company in accordance with the law and regulations, minimize the adverse impact arising from the relevant risk matters, and make every effort to ensure the stable operation and standardized operation of the listed company. At the same time, sort out possible problems in internal control and corporate governance, and actively rectify them to avoid the recurrence of similar incidents.

Netizen: It’s over, it’s over, it’s over

Data show that as of March 31, the total number of shareholders of Shanghai Electric was 298,200 households, an increase of 2.35% over the previous period. Weekend sudden thunderstorm, the stock bar completely exploded ……

Shanghai Electric shareholder number change image source: Oriental Fortune

As of press time, Shanghai Electric stock bar has soared to third place in popularity.

Image source: stock bar screenshot

Some netizens said.

“Just came in on Thursday, thunderstorm, hey”

“Tomorrow (Monday) is afraid of the rhythm of the drop”

“finished finished finished, dad do not fall stop ah, let me cut meat.”

“Tomorrow (Monday) the full position of the meltdown”

“Mamma yea, 200,000 repositioned ……”

“Tomorrow (Monday) can run?”