[First, when the Queens Machine withdraws from the market and sells the equity of the CY Group, when can the Shenyang Machine Tool get through the winter? In the past few months, it was not calm for the Shenyang Machine Tool Group.
Shenyang Machine Tool Group is the largest machine tool manufacturing enterprise in China. It owns many powerful subsidiaries including Shenyang Machine Tool, Kunming Machine Tool and Zhongjie Machine Tool. However, Shenji Group has been losing money in recent years due to the sluggish machine tool market.
According to the statistics, in 2015, Shen Machinery Group's net profit was -7.77 billion, 2016 net profit was -1.676 billion yuan, net profit was -5.88 billion yuan in 2017, and a total loss of 3.057 billion yuan in three years. As of the first quarter of 2018, the Shen Group’s net assets were 3.799 billion yuan, and the asset-liability ratio was 90.59%.
The loss year after year has caused Shenji Group to become muddy. In order to help Shenji get out of the quagmire of losses, in November 2017, the eight national ministries and commissions jointly issued a comprehensive reform plan to support Shenji Group's “bleeding, blood transfusion, and hematopoiesis†and carried out comprehensive reforms. However, as Shen Dapeng, Minister of Strategy and Planning of Shenji Group stated, “The road to freshmen still has a long way to go. It is like a patient who has just undergone major surgery and needs a strong recovery process.â€
So far, the winter of this giant machine tool still seems to have not passed.
First, Kunming Machine Tool A stock delisting
Kunming Machine Tool Co., Ltd. was one of the leading machine tools companies in the country during the peak period. It was one of the leading companies in the machine tool industry in China in 1985 when it manufactured China's first precision machining.
However, due to poor management after the 1990s, Kunming Machine Tool Co., Ltd. has been losing money. By the end of 2005, Shenji Group had invested in Kunming Machine Tools, which became a subsidiary of Shen Machinery Group.
During the period from 2006 to 2011, the Kunming Machine brought a lot of revenue to the Shenji Group during the prosperity of the domestic machine tool market. However, after 2011, the market went down, and the Kunji Machine subsequently went from bad to bad, losing money year after year. Since 2014, the annual losses of Kunming Machine Tools have been RMB 204 million, RMB 196 million, RMB 209 million and RMB 350 million respectively. By the end of 2017, the net assets of Kunming Machine Tools had been -382.210 million.
Afterwards, the Kunming machine tool was again burst for many years of financial fraud. On November 15, 2017, the financial supervision of Kunming Machine Tool Co., Ltd. was faithful. According to the investigation results of the China Securities Regulatory Commission, Kuncheng Motors inflated revenue by RMB 483 million in 2013 through 2015 through interim revenue recognition, unrealized revenue, and inflated contract prices. The increase in profit was RMB 29.61 million, and the inventory data disclosed in the 2013-2015 annual report had false records. The China Securities Regulatory Commission believes that Kunji’s information disclosure violations lasted for a long period of time. They used special methods such as concealment and fabrication of important facts. The amount involved was extremely large, and the illegality of the involved personnel was serious.
Year after year losses and financial falsification ended the A-share trip to Kunji. As a result of its delisting system triggered by losses for three consecutive years, coupled with the negative impact of violations of the capital market, the Shanghai Stock Exchange announced on May 22, 2018 that based on the review opinions of the Listing Committee, Shenji Group Kunming Machine Tool was determined. The stock of a company limited by shares was terminated. This also means that Kunming Machine Tool was officially "kicked out" of the capital market.
Second, the sale of Yunnan CY Group shares
On May 29, the website of the Shanghai United Assets and Equity Exchange pre-disclosed that Shenyang Machine Tool Group Kunming Co., Ltd. will sell a 70% stake in Yunnan CY Group Co., Ltd.
The predecessor of Yunnan CY Group is the Yunnan Machine Tool Factory, which was established in 1961. It is one of the key machine tool companies in China. The main products include CY lathe series, PQ lathe series, and MO lathe series export-oriented general vehicles and CNC lathes. In December 2004, Yunnan CY Group and Shenji Group implemented a strategic reorganization. Shenji Kunming, a subsidiary of the Shenji Group, owns a large number of shares in Yunnan CY Group.
In the same situation as Kunji, by 2012, Yunnan CY Group still achieved an operating income of 470 million yuan and a net profit of 6,063,800 yuan. But then it suffered a substantial loss. In 2016, Yunnan CY Group's net profit was a loss of 97.2 million yuan. In the first quarter of 2018, the net profit was a loss of 26.06 million yuan.
In consideration of financial issues and at the same time, in order to solve the problem of internal competition in the industry, Shen Ji decided to sell 70% of the shares of Yunnan CY Group with a listing price of approximately RMB 310 million.
In addition, relevant persons of the transaction trustee institution listed and sold by CY Group in Yunnan also pointed out that the sale of Yunnan CY Group in the settlement of this machine can alleviate the loss and recover some of the investment funds.
All along, Shenyang Machine Tool Group is a leader in China's machine tool industry. When the acquisition of Kunji was completed in 2005, Shen Group’s revenue was close to RMB 4.6 billion, making it one of the top ten companies in the world's machine tool industry. At the time, it was the best in the industry. However, with the advent of the “long winter†in the machine tool industry, Shen Ji did not prepare for “cold resistanceâ€.
It is understandable that traditional large-scale enterprises “turn around slowly†when they are in danger. However, failures in succession can cause people to question whether they are returning to glory. Judging from the current state of survival of domestic machine tool companies, there are still many companies that have fallen into the quagmire, such as the Shen Machine. There are also many companies that have climbed out of the quagmire.
For these quagmire companies, how to embrace the market and spend the cold winter will be the most important issue for them in the future.
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