Entering 2019, under the pressure of capital, Lianjian Optoelectronics frequently sells its subsidiary shares. On March 25, Lianjian Photoelectric announced that it would transfer its share-holding subsidiary Blue Sea to buy 25.88% of its shares for $102.8 billion. Following the transfer of the shares of Tibetan Boshi, the shares of the subsidiary companies are transferred again.
As a well-known domestic LED application enterprise, Lianjian Optoelectronics has acquired and acquired time-sharing media, Youtuo Public Relations, Easy Star, Precision Focus Focus, Shenzhen Lima, Huahan Culture, Litang Marketing, Ocean Media and other enterprises from 2014 to 2017. Through the way of "buy, buy and buy", Lianjian Optoelectronics has transformed into a digital marketing and communication enterprise, forming the business of digital equipment, digital marketing and digital outdoor.
Lianjian optoelectronics wants to expand its business sector through mergers and acquisitions, but it is dragged into the quagmire by the mergers and acquisitions companies. Then the SFC fines, falsifies its performance, impairs its goodwill, shareholding price plummets, and the stock pledge bursts. Finally, it has to sell its shares. To this end, Joint Optoelectronics started the slimming plan, gathered the main industry, and restructured performance.
Open the "Buy Buy" Mode
The main industry of Lianjian Optoelectronics is the manufacture of LED display screen, which was listed in 2011. After two years of listing, the performance growth is weak. Therefore, it is urgent for Lianjian Optoelectronics to seek new profit growth points through mergers and acquisitions. The company's development strategy has also become a parallel process through endogenous growth and epitaxy mergers and acquisitions. Finally, digital marketing and outdoor media have been continuously transformed from large-screen LED display equipment, thus focusing on digital marketing and outdoor Outdoor media began to buy.
From 2014 to 2017, Lianjian Optoelectronics first completed the acquisition of time-sharing media at a cost of 860 million yuan in 2014. In 2015, it acquired 100% equity, 100% equity and 28.4% equity of Youtuo Public Relations at a price of 460 million yuan, 489 million yuan and 76.68 million yuan respectively. By 2016, Shenzhen Lima's 88.88% equity, Huahan Culture's 100% equity, Litang's 100% equity and Ocean Media's 100% equity will be included at the price of 800 million yuan, 364 million yuan, 496 million yuan and 300 million yuan. The premium rates are 1245.93%, 108.03%, 73.53% and 98.2 49% respectively. In addition, Lianjian Optoelectronics has also made mergers and acquisitions of such enterprises as Precision Focus Focus, Tibet Potv, Shanghai Chengguang and Ep New Media.
Under the mergers and acquisitions, the joint venture photovoltaic business revenue is growing day by day, but it has fallen into the embarrassment of increasing revenue without increasing profits. In 2017, the net profit attributable to the shareholders of listed companies was only 405 million yuan, an increase of about 0.39% compared with the same period last year. The performance of 2018 is even worse. In 2018, the total operating income of Joint Construction Optoelectronics reached 4.102 billion yuan, an increase of 3.79% compared with the same period last year; the net profit of shareholders belonging to listed companies was - 2.806 billion yuan, a decrease of 2791.10% compared with the same period last year.
The main reason for the company's weak net profit growth is that in the past few years, Lianjian Optoelectronics has made mad acquisitions by means of performance gambling, and accumulated a lot of goodwill. And under the huge goodwill, many mergers and acquisitions companies have not fulfilled their performance commitments, and there is a risk of goodwill impairment.
Performance commitments are empty talk
In 2018, the operating profit, total profit and net profit attributable to the shareholders of the listed companies of Joint Construction Operations declined substantially. In response, Lianjian Optoelectronics said that due to the overall economic environment of the market and the adjustment of business development planning of major customers, the demand for advertisements and the ability to pay for customers were weakened, which led to a certain gap between the performance of some M&A subsidiaries and the promised performance at the time of acquisition. In addition, due to such factors as case investigation and tightening of bank, the company's operating capital is tight, which limits the expansion of subsidiary business.
To this end, Joint Optoelectronics will test the impairment of goodwill of asset groups of acquisition subsidiaries related to goodwill. It is estimated that the impairment of goodwill of acquisition subsidiaries will be estimated at about 2.7 billion yuan. Among them, Sichuan time-sharing advertising is about 440 million yuan, Shenzhen precise focus media is about 150 million yuan, Xi'an green media is about 190 million yuan, Shanghai Chengguang advertising is about 120 million yuan, Shenzhen Easy Store is about 120 million yuan, Shanghai Youtuo public relations is about 170 million yuan, Shanxi Huahan culture is about 240 million yuan, Shanghai Litang marketing is about 280 million yuan, Shenzhen Lima network is about 450 million yuan, Beijing Yuanyang Ling is about 450 million yuan. About 150 million yuan, and about 390 million yuan for Beijing Epp New Media.
Judging from the accomplishment of performance commitments of joint-venture photoelectric mergers and acquisitions enterprises, the performance commitments of the combined companies in 2015, 2016 and 2017 are 212 million yuan, 435 million yuan and 551 million yuan respectively, and the accomplishments are 234 million yuan, 433 million yuan and 409 million yuan respectively, which can be said that one year is worse than one year. It also conforms to the characteristics of most M&A companies. The first year is usually the honeymoon period, after which the contradiction will become more and more serious.
According to the annual report of 2017, the total loss of goodwill impairment is 558 million yuan, mainly the acquired companies with big difference in performance completion. Lima Network, Litang Marketing and Time-Sharing Media have raised 181 million yuan, 134 million yuan and 117 million yuan of goodwill impairment respectively.
Such a large amount of goodwill impairment, in theory, the company will lose a lot of money, but in 2017, Lianjian Optoelectronics still achieved net returns of 104 million yuan, after deduction, a loss of 243 million yuan.
As for the reasons for the difference, Wang Feng, the Secretary of Lianjian Optoelectronics, said, "In 2017, the cumulative reserve for impairment of goodwill was 795 million yuan, and the loss of impairment of long-term equity investment was 740 million yuan. According to the relevant agreement, the original shareholders of the subsidiary company shall bear the corresponding compensation income for the subsidiary company whose performance fails to meet the standard during the gambling period and shall be included in the non-operating income.
Can we survive in desperation under great losses?
In the evening of Feb. 27, Lianjian Optoelectronics issued a performance bulletin. During the reporting period, the total operating income of the company was 4,102,004,723.36 yuan, an increase of 3.79% over the same period last year. The net profit attributed to shareholders of listed companies was - 2,806,436,981.11 yuan, a decrease of 2791.10% over the same period last year. Lianjian Optoelectronics believes that the decline of relevant financial indicators is mainly due to the provision for impairment of goodwill and other reasons.
Since the end of 2017, the company's financing has been affected by the filing investigation and external financing environment. To this end, the joint venture has successively transferred the shares purchased by Boshi and Blue Sea in Tibet. This is conducive to enhancing the effectiveness of management, strengthening the management of equity investment, reducing management costs, further optimizing the asset structure, and alleviating the pressure of operating funds.
Lianjian Optoelectronic said that in 2019, the company will further focus on LED display business, outdoor large-screen media resources operation, and integrated marketing services on the Internet. Through the transfer of equity, the purpose is to further optimize the company's industrial allocation, in the integration of outdoor media resources network, further focus on the layout and operation of large-screen brands, divest business with low business relevance, and resolve goodwill risk.
In the case of huge loss of performance, Joint Construction Optoelectronics continues to divest part of its business, gather its main business, and restructure its performance. In the future, how about the development of joint photovoltaic? We will wait and see!