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Shenzhen Stock Exchange issued an inquiry letter to Lingnan (002717) on May 22nd: to provide additional details of the debt due within one year, including, but not limited to, the term of the loan, interest rate, borrower, maturity date, whether it is overdue, etc., and explain in combination with the situation of maturing debt, cash flow, financing, etc.PokersaintWhether your company's solvency is adequate and whether there is liquidity risk. Lingnan shares fell to an all-time low of 1.68 yuan at 10:17 in intraday trading.

In response, Deng Xinhui, a lawyer from Beijing Weiheng (Guangzhou) Law firm, told Investment KuaiBao that according to Article 80 of the Securities Law of the people's Republic of China, when a listed company is not yet aware of a major event that may have a great impact on the stock trading price, the company should immediately submit an interim report and make an announcement. The Shenzhen Stock Exchange sent a letter of inquiry to Lingnan shares directly pointing to the concerns of 13 investors. Lingnan shares should be disclosed truthfully, accurately and completely, and there should be no false records, misleading statements or major omissions. It is understood that lawyer Deng's Hengcai rights protection team has received advice from Lingnan share investors on whether they can make a claim. According to the requirements of the Shenzhen Stock Exchange, Lingnan shares should be submitted to the regulatory authorities and disclosed by May 29, 2024, so that investors in the company can keep an eye on it.

The revenue of Lingnan shares continued to decline and the net profit was negative for two consecutive years.

According to the inquiry letter, the company's operating income during the reporting period was 2.13 billion yuan, down 17.08% from the same period last year; the net profit attributed to shareholders of listed companies was-1.096 billion yuan, an increase of 27.38% over the same period last year; the net profit belonging to shareholders of listed companies after deducting non-recurring profits and losses was-1.075 billion yuan, an increase of 29.63% over the same period last year. Net cash flow from operating activities-279 million yuan, an increase of 24.44% over the same period last year. The company's operating income has continued to decline since 2018, the net profit has been negative for two consecutive years, and the net cash flow generated by operating activities has been negative for three consecutive years.

In this regard, the Shenzhen Stock Exchange requires to explain the specific reasons for the inconsistency between the changing trend of operating income and net profit in each quarter; the reasons for the continuous decline of operating income, and whether there is a significant difference in the rate of income decline compared with the situation of companies in the same industry? whether there is intertemporal recognition of income; the reasons for the sharp decline in operating income in West China, East China and Central China; the reasons for the long-term negative cash flow of operating activities and its impact on sustainable operating capacity.

Liquidity risk is questioned in solvencyPokersaint?

The inquiry letter mentioned that the company's financial report for 2023 was issued with an unqualified opinion with a paragraph of significant uncertainty about continuing operations. As of April 29, 2024, the total amount of new litigation and arbitration matters not disclosed by the company and its holding subsidiaries in 12 consecutive months is about 160 million yuan, accounting for 7.59% of the latest audited net assets belonging to the parent company; the overdue debts of the company and its subsidiaries in banks, commercial factoring companies and other financial institutions totaled 225 million yuan, accounting for more than 10% of the audited net assets in the most recent period. The company has been added to the list of people who have been executed in breach of trust. At the end of the first quarter of 2024, the company's monetary fund balance was 247 million yuan, the short-term loan balance was 2.24 billion yuan, and the balance of non-current liabilities due within one year was 1.662 billion yuan. It is difficult for the company's monetary funds to cover short-term liabilities.

In this regard, the Shenzhen Stock Exchange requires clarification as to whether the company's solvency is sufficient, whether there is liquidity risk, whether there is a risk of default, whether the obligation of information disclosure has been fulfilled in a timely manner, whether there are major bank accounts frozen so as to touch other risk warnings stipulated in the Stock listing rules; the adequacy and reasonableness of the expected liability provision at the end of the reporting period Fully remind the risk that the company may face in future operation, including but not limited to production and operation risk, delisting risk, litigation risk and so on.

Is there a case of fictitious business to falsely increase revenue and operating costs?

The inquiry letter also mentioned that the book value of the company's accounts receivable at the end of the reporting period was 2.589 billion yuan, and the current provision for bad debts was 815 million yuan. According to the combination, the company divides the accounts receivable from the provision for bad debts into local government / local state-owned enterprise customers, real estate enterprise customers, other related party customers and other customer combinations.

The Shenzhen Stock Exchange requires to explain whether the company has a longer age of accounts receivable and slower repayment; explain the arrangements for the repayment of the main project contracts in the reporting period, the actual payback situation in the past five years, the balance of the major project accounts receivable and the provision for bad debts in the past five years, and explain whether the provision for bad debts in the current and previous years of the above-mentioned project reporting period is sufficient. Explain the confirmation process and rationality of the proportion of bad debts corresponding to different combinations of accounts receivable in each age; explain whether the company's credit policy to the main customers, the amount of accounts receivable, the age and the credit policy match; whether there is a situation to increase business income by relaxing credit policy; explain whether the company falsely increases operating income and operating cost through fictitious business in the early stage.

In addition, the inquiry letter also asks to explain whether the company has a large area of overdue accounts payable; whether the provision for impairment of goodwill is accurate and sufficient, and whether it conforms to the provisions of the Accounting Standards for Enterprises; explain the reason and rationality that the total amount of guarantee far exceeds the net assets; whether the guarantee risk is controllable and whether there is a situation that harms the interests of listed companies The follow-up treatment plan of the overdue guarantee, the impact on the company and the countermeasures; the reasons for the sharp decline in the number of R & D personnel during the reporting period, whether there are labor disputes or potential risks, whether the remaining R & D personnel can maintain the R & D level required for daily operation, whether production and operation are significantly affected and countermeasures; to confirm whether the basis for deferred income tax assets is sufficient and whether they comply with the relevant provisions of the Accounting Standards for Enterprises.