[The Epoch Times, January 12, 2022](The Epoch Times reporter Liu Yi comprehensive report) On January 12, Shanghai State-owned Enterprise Shanghai Industrial Development Co., Ltd. (SIIC Development) issued an announcement stating that its subsidiary had 2.6 billion receivables. There is part of the risk of non-recovery. The news has caused surprises to more than 30,000 shareholders, and some said that this is the first black swan in the new year.
SI Development stated in the announcement that the company has recently received a supervisory work letter from the Shanghai Stock Exchange, and the supervisory work letter requires that the company’s subsidiary, Shanghai SI Longchuang Smart Energy Technology Co., Ltd. Self-inspection work has been carried out on the issue of payment, and the above-mentioned verification work is currently in progress.
The announcement stated that after preliminary self-examination, as of December 31, 2021, the unaudited receivables of SI Longchuang totaled approximately RMB 2.615 billion, some of which may involve financing trade. There may be a risk of irrecoverable accounts receivable, and the company is stepping up further verification of the specific amount involved.
According to Baidu’s public information, financing trade refers to the fact that all parties involved in the trade rely on property rights such as cargo rights and accounts receivable in the process of value exchange of goods and services. Comprehensively use various trade means, financial instruments and guarantee instruments to achieve the purpose of obtaining short-term financing or increasing credit holdings, thereby increasing the cash flow of trading entities.
“Nanfang Daily” reported in 2014 that the purpose of financing trade is financing, which is mostly manifested in the combination of private enterprises and large and medium-sized state-owned enterprises. After obtaining financing, it will be divided with state-owned enterprises.
Baidu’s public information shows that financing trade has shown great risks since 2014. Guangdong Province has explicitly prohibited state-owned enterprises from engaging in false trade businesses such as false invoicing for financing purposes and no real goods transactions.
“Daily Economic News” reported on January 12 that in August 2019, the State-owned Assets Supervision and Administration Commission of Zhenjiang City, Jiangsu Province issued a document stating that city-owned state-owned enterprises and subsidiaries at all levels should regulate trade business behavior, and it is strictly forbidden to carry out trade business in the name of business. In fact, it is a financing trade business that lends funds and has no commercial substance.
After the news of SI Development was released, it caused a great response from netizens. Some netizens said: “The first black swan of the new year”, and some people said “stop and run”.
The latest data shows that there are about 35,000 shareholders of SIIC Development, each holding a market value of RMB 219,700.
The actual controller of SIIC Development is Shanghai State-owned Assets Supervision and Administration Commission, and its main businesses include real estate investment, real estate management, property services and smart city operations.
In the first half of 2021, both SIIC’s operating income and net profit declined, with operating income of RMB 4.025 billion, a year-on-year decrease of 10.4%; net profit of RMB 344 million, a year-on-year decrease of 19.84%.
The 2021 semi-annual report of SIIC Development also shows that SIIC Longchuang lost 152 million yuan, and its cash flow from operating activities was -585 million yuan.
As of the close on January 12, SIIC Development closed at RMB 3.99 per share, down 5.23%, and its latest market value was RMB 7.729 billion.
Responsible editor: Li Muen#