Sale of assets at the end of the year

At the end of the year, the sale of 100% equity of Shaanxi Fangzhou Pharmaceutical Co., Ltd. (hereinafter referred to as “Fangzhou pharmaceutical”) by * ST Lanfeng (002513) triggered a heated discussion in the market. On December 8, the Shenzhen Stock Exchange also issued a letter of concern on the matter, pointing out whether * ST Lanfeng made profits at the end of the year to avoid the suspension of the listing of the company’s shares. < p > < p > it is understood that * ST Lanfeng recently disclosed that the company plans to transfer 100% equity of Fangzhou pharmaceutical to Beijing Zhongyu Diaolong Medical Information Technology Co., Ltd. (hereinafter referred to as “Zhongyu Diaolong”) with 450 million yuan. After the completion of this transaction, it will have a great impact on the net profit of the company in 2020. Based on the received equity transfer of RMB 450 million, the impact on the consolidated financial statements is expected to increase the transfer income by RMB 8-12 million, and the specific accounting impact data shall be subject to the results confirmed by the annual audit of the accountant. Behind the sale of assets by * ST Lanfeng, the company has made continuous losses in 2018 and 2019, and is facing the pressure of shell protection this year. In the concern letter issued by Shenzhen Stock Exchange, < p > < p > asked * ST Lanfeng to explain the impact of this transaction on the company’s operating performance in 2020 and its accounting treatment, and whether there was a sudden profit creation at the end of the year to avoid the suspension of listing of the company’s shares.

*ST LAN Feng is mainly engaged in agro chemical business and pharmaceutical business. Among them, Fang Zhou pharmaceutical is an important company in pharmaceutical business. It is mainly engaged in R & D, production and marketing of Chinese patent medicines, chemical drugs and raw materials, such as anti Alzheimer’s disease, anti tumor and anti infection. The main products include compound cantharidin capsules, Dan Zhi Xiaoyao capsules, Donepezil Hydrochloride Tablets, Yangyin Jiangtang tablets. Ejiao Danggui capsule, Yiqing tablet, etc. *St Lanfeng also pointed out in the 2019 annual report that the company’s pharmaceutical business is currently managed by its wholly-owned subsidiary, Fangzhou pharmaceutical. According to the financial data, from January to September in 2019 and from January to September in 2020, the operating income of Fangzhou pharmaceutical was about 87.1646 million yuan and 52.9428 million yuan respectively, and the corresponding net profit was about 10.8231 million yuan and – 21.8265 million yuan respectively. < p > < p > in this regard, the Shenzhen Stock Exchange also asked * ST Lanfeng to explain the reasons for the sale of Fangzhou pharmaceutical in combination with the company’s main business development and future development plan. < / P > < p > data show that * ST Lanfeng’s attributable net profit in 2018 and 2019 is about -875 million yuan and -517 million yuan respectively. In the first three quarters of this year, the attributable net profit of * ST Lanfeng was about 10.8493 million yuan, but the net profit of * ST Lanfeng in the first three quarters of this year after deduction was about 9.18 million yuan, and the actual profitability was not strong. < p > < p > Shenzhen stock exchange requires * ST Lanfeng to explain the main office location, main business, actual controller and main financial data of Zhongyu Diaolong in the latest year; if Zhongyu Diaolong is specially set up for this transaction, it shall supplement and disclose the main financial data of the actual controller or controlling party of the opposite party. In addition, for the transfer price of 450 million yuan, Shenzhen stock exchange requires * ST Lanfeng to explain whether it has the ability to perform the contract and whether it provides corresponding performance guarantee measures in combination with the available monetary funds and credit status of Zhongyu Diaolong and its controlling party. < p > < p > according to the data, the registered capital of Zhongyu Diaolong is 50 million yuan, and its establishment date is April 3, 2019. Its business scope includes technology development, technology consulting, technology transfer, technology promotion, technology services, etc. < / P > < p > it is worth mentioning that * ST Lanfeng also mentioned that the proceeds from the sale of assets will be used to supplement the company’s working capital and make up for the company’s capital occupied by shareholder Wang Yu. < / P > < p > according to the annual report of * ST Lanfeng in 2019, Wang Yu, the company’s shareholder with more than 5% shares, transferred the bank funds of Fangzhou pharmaceutical to the unit or natural person account related to Wang Yu in 2016-2017, forming a cumulative illegal occupation of the company’s funds. < / P > < p > * according to the evaluation report issued by St Lanfeng, the audit report issued by Tianye Certified Public Accountants (special general partnership) on November 30, 2020 is used in this evaluation. The audit report has issued an audit report with qualified opinions on the financial report of Fangzhou pharmaceutical in 2019, and the matters involved in the qualified opinions are the recoverable risk of Wang Yu’s illegal occupation of 340 million yuan In the assessment, we did not consider the impact of future recovery on the assessed value. < p > < p > in this regard, Shenzhen Stock Exchange asked * ST Lanfeng to add that the evaluation conclusion did not consider the reasons and rationality of possible future recovery events on the evaluation value, the impact on the evaluation result, and the fairness of the evaluation value; at the same time, it also added the possibility of recovery of follow-up funds, recovery methods and timing, and the company’s proposed countermeasures for the above matters. < p > < p > under the pressure of shell protection, * ST Lanfeng has already started to sell assets this year. On August 25 this year, * ST Lanfeng disclosed that in order to optimize the company’s resource allocation, it plans to sell a residential unit, a commercial apartment unit and Jiangsu Lanfeng biochemical Taicang Co., Ltd., a wholly-owned subsidiary of the company. In addition, * ST Lanfeng said on September 24 this year that it signed the equity transfer contract with Taicang yunzaifei Materials Trading Co., Ltd., and the company transferred 100% equity of Taicang Lanfeng Chemical Co., Ltd., a wholly-owned subsidiary of the company, with 10.75 million yuan. In view of the problems related to the company’s asset sale, a reporter from Beijing Business Daily called * ST Lanfeng’s office for an interview, but no one answered the phone. < p > < p > according to the trading quotation, * ST Lanfeng closed at the limit on December 8. The company’s share price was 4.37 yuan / share, with a total market value of only 1.486 billion yuan. < / P > < p > Disclaimer: the purpose of this article reprinted by CNFC is to convey more information, and it does not represent the opinions and positions of CNFC. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk. < p > < p > Chinanet is a state key news website under the leadership of the Information Office of the State Council and the management of China foreign language publishing and Distribution Bureau. Through 11 versions in 10 languages, the website publishes information 24 hours a day. It is an important window for China to carry out international communication and information exchange.