Impairment Of Goodwill By 1.914 Billion Yuan, Causing Performance Losses

The prosperity index of electronic industry is still continuing. A latest research report of Minsheng Securities pointed out that in 2021, the first quarter revenue growth rate of the electronic industry was 60%, the growth rate of net profit attributable to the parent company was 179%, the gross profit rate was 22%, and the net interest rate was 8.3%.

Wuhan Liyuan Information Technology Co., Ltd. (hereinafter referred to as "Liyuan information", 300164. SZ), one of the leading enterprises in the distribution field of the electronic industry, saw a slight increase in its share price in the past three days. As of the closing date on May 13, the share price of the company increased by about 3% in three days.

"If the impairment of goodwill is not considered, the net profit of the company in 2020 will be 180 million yuan." Recently, Wang Xiaodong, director, deputy general manager and Secretary of the board of directors of Liyuan information, said in an interview with the reporter of 21st century economic news that the self-developed chips of the company in recent years mainly focus on the research and development, testing, promotion and sales of small capacity memory chip EEPROM and power device sj-mosfet.

In Wang Xiaodong's view, the technical requirements of these two products are not high, but they are widely used“ Making chips requires the layout of the entire industry chain. At present, every chip company is in the chain, and the upstream and downstream need to be coordinated. We hope to make this road smooth and smooth. In the future, our self-study direction will be in MCU series products. "

According to the financial report data of Liyuan information, the operating revenue in 2020 will reach 10.360 billion yuan, a decrease of 21.10% compared with the same period of last year. Under the condition of calculating the impact of goodwill impairment provision, the attributable net profit loss is 1.735 billion yuan; Excluding the impact of goodwill impairment provision, the attributable net profit was 180 million yuan, down 37.99% compared with the same period of last year. In the first quarter of 2021, the company realized operating revenue of 2.749 billion yuan, with a year-on-year growth of 4.65%. The net profit attributable to shareholders of the listed company was 70.2706 million yuan, up 27.52% year on year. The net profit attributable to shareholders of the listed company after deducting non recurring profit and loss was 70.2099 million yuan, up 33.95% year on year.

The sword of goodwill falls

On the evening of January 26, Liyuan information disclosed the information of goodwill impairment in the performance forecast of 2020. The next day, the company's share price fell by 19.91%. At the same time, Shenzhen Stock Exchange issued a letter of concern on Liyuan information's plan to make provision for impairment of goodwill formed by the acquisition of Wuhan Patai electronics, Nanjing Feiteng electronics and Shenzhen Dingxin infinity.

"Because the net assets formed by goodwill belong to unidentifiable assets, unlike identifiable assets such as cash deposits, inventories, land, real estate, means of production, etc., which are convertible, they have fair value. Goodwill is virtual, and the impairment of goodwill will not affect the cash flow of operating activities. Although the impairment of goodwill reduces the net assets in the financial statements, the same increase in P / B ratio and roe in return on net assets needs to be understood dialectically. " Earlier, Wang Xiaodong said in reply to investors.

In 2020, affected by the U.S. government's blockade of China's high-tech industry, the sales revenue of Liyuan information decreased by about 21% compared with that in 2019, among which, the sales revenue of Sony CMOS chip decreased by about 3.3 billion yuan. At the same time, due to the influence of epidemic situation and other factors, customer demand in downstream industries slowed down, market competition in the distribution industry intensified, and the company's gross profit margin declined.

Liyuan information was listed on the gem in 2011 and is the first A-share listed company in the industry. In 2013, the company's revenue was 337 million yuan, with a net profit of 17.075 million yuan. In 2013 annual report, the company clearly put forward the strategic planning for the development of extensive M & A for the first time. In the next four years, based on its platform strategy, the company acquired and integrated several peer companies, and the overall scale and industry influence of the company increased rapidly.

From 2014 to 2015, the company acquired 100% equity of Shenzhen Dingxin infinite, a technology-based distributor in the industry; In October 2016, the company completed the acquisition of 100% equity of Nanjing Feiteng electronics, an energy Internet technology solution provider; In March 2017, the company completed the acquisition of 100% shares of Wuhan Patai.

In addition, Liyuan information shares in Shanghai Yunhan core city, with a shareholding ratio of 10.25%. According to the information from Shanghai regulatory bureau, Guojin securities, the listing guidance agency of Yunhan Xincheng, has been put on record for listing guidance on February 18, 2021.

This kind of large-scale merger and acquisition also brings the pressure of goodwill impairment for Liyuan information. According to the annual report, as of December 31, 2020, the original book value of goodwill was 2.337 billion yuan, and the impairment of goodwill in the current period was 1.914 billion yuan. In addition to the previous provision of 124 million yuan, the book value of goodwill was 299 million yuan. Among them, the original value of goodwill formed by the acquisition of Wuhan Patai Electronic Technology Co., Ltd. was 1.988 billion yuan, and the impairment of goodwill in the current period was 1.654 billion yuan; The original value of goodwill formed by the acquisition of Nanjing Feiteng Electronic Technology Co., Ltd. was 221 million yuan, and the impairment of goodwill in the current period was 203 million yuan; The original value of goodwill formed by the acquisition of Shenzhen Dingxin infinite Technology Co., Ltd. is 128 million yuan, and the impairment of goodwill is 57 million yuan in the current period.

However, people in the industry also say that most enterprises will adopt two legs after listing, that is, while focusing on the main business, the extension development mode of merger and acquisition can also help enterprises to grow bigger and stronger rapidly. This way of merger and acquisition will bring certain goodwill pressure to each enterprise, but it can quickly complete the rapid growth of enterprises and the expansion of the upstream and downstream of the industrial chain, After the goodwill accrual of Liyuan information is completed, the enterprise can go to battle with light equipment more quickly.

New market demand under the situation of core shortage

After the completion of goodwill impairment, Liyuan information accelerates the upgrading of the company's core R & D capability. As an integrated circuit distribution enterprise, Liyuan information has started the road of independent research and development. According to the annual report, despite the impact of the epidemic, in 2020, the company's revenue from self-developed chips and other businesses increased by 23.87% over the same period. In addition, the company has increased capital and employed more R & D personnel for its wholly-owned subsidiary Wuhan Liyuan Semiconductor Co., Ltd., and strengthened the R & D capability of the company's self-developed chips. It has carried out the research and development of MCU series products, and will launch the first MCU product with its own intellectual property rights in the second half of 2021. According to Wang Xiaodong, "the product has excellent reliability and cost performance, which can cover the mainstream application needs of industrial and consumer categories, and is widely used."

At the shareholders' meeting, Liyuan information management said: "from the perspective of the development history of chip enterprises, domestic leading chip enterprises basically start from the downstream of the industrial chain, and then continue to transfer to the field of scientific research, so as to promote the transformation and upgrading of enterprises. In the past, the company has accumulated a lot of experience in the process of long-term distribution business, and understands the development law and demand of the market. In the future, the company will continue to improve its independent research ability. " According to the annual report, the R & D investment of Liyuan information was 46.719 million yuan, up 16.33% year on year.

The industry wide "lack of core" problem will also bring new performance growth point to Liyuan information. In 2021, semiconductor supply and demand will enter a new shortage cycle. The contradiction between supply and demand is tense, and shortage will become the normal for a period of time. In Wang Xiaodong's view, the impact of the epidemic is still continuing, foreign manufacturers' production capacity is declining, and the isolation policy makes life and work more online, so as to increase the demand for electronic components; Secondly, trade friction between China and the United States leads to supply chain confusion; Third, bitcoin is still at a high level, and the demand for mining machines continues to grow. Based on the above analysis, he said: "the shortage problem may continue to exist in the next year, many orders of the company can not be realized, and the lead time is extended. But there is still room for market demand to rise, and the company's performance is expected to improve in the coming year. "

Pan min and Xu Junfeng, analysts of Tianfeng securities, also pointed out in their research report that the increase of global smartphone shipment led to the downstream manufacturers' active stock preparation, thus boosting the demand for chips. At the same time, the existing integrated circuit capacity can not meet the downstream demand, resulting in a global shortage of chips. In the past few months, Samsung, Xiaomi and other smart phone factories have shut down some models in some countries. At present, a number of semiconductor companies have announced price increases for some products, such as automobile, mobile phone, PC, home appliances and game console industries. Almost all electronic products using chips in the world are more or less affected by stock shortage.

The electronics industry, which has been pushed up by insufficient supply, has been accelerating its growth in the near future. According to statistics by Liu Kai, an analyst of Everbright Securities, in the first quarter of 2021, the revenue of 365 companies in the whole industry (A-share) in the electronic industry was 834.464 billion yuan, a year-on-year increase of 41.9%, and the net profit of the whole industry was 47.596 billion yuan, with a year-on-year increase of 176.9%. The first quarter financial data of Liyuan information also confirmed this point.

However, pan min and Xu Junfeng also pointed out that if the prosperity of downstream application markets such as automobiles, mobile phones, PCs, home appliances and game consoles is lower than expected, the prices of chips, PCBs, passive components and display devices are lower than expected, and the production capacity of integrated circuit OEM and electronic components is insufficient, the imbalance between supply and demand may also be alleviated.