High Priced Assets Of Industrial Leather Were Sold At Low Prices Before Listing

The originally valuable assets were sold at a low price by shareholders during the share reform; investment The income of the project is growing rapidly, but the source of the project income is from the mysterious associated company... This is Xingye Leather, which is preparing to sprint to the main board science and technology Co., Ltd. (hereinafter referred to as "Industrial Leather").

The reporter found that in Xingye Leatherwear Among the profit statement details in, there is an amazing growth rate of the project, which is the investment income of the company. Industrial Leather said that it is mainly from the investment in associates and joint ventures. However, the high investment income is quite different from the poor management and small-scale investment of Industrial Leather's joint-stock company. In addition, during the share reform, Industrial Leather also had the defect of transferring assets at a low price.

Mysterious associates

The Development and Examination Committee of the CSRC is scheduled to review the initial application of Industrial Leather Technology Co., Ltd. on December 28. Industrial Leather plans to issue 60 million shares this time, with a total capital stock of 240 million shares after the issue, and is planned to be listed on the Shenzhen Stock Exchange. The main business of the company is engaged in the development, production and sales of middle and high grade cattle head upper leather. Its main products include Napa series, natural wrestling series and special effect leather series. The products are widely used in manufacturing leather shoes, bags, leather goods, etc.

Like all enterprises planning to go public, the performance of Industrial Leather has grown rapidly in recent years. Opening the company's application materials, we found that in the three years from 2008 to 2010, the operating income of Industrial Leather was 824 million yuan, 820 million yuan and 1.042 billion yuan respectively; The realized net profits also amounted to 66.22 million yuan, 80.47 million yuan and 107 million yuan. From the perspective of revenue, Industrial Leather fully meets the performance requirements of the main board listing.

The reporter noticed that in the profit statement details of Xingye Leather, there is one project whose growth rate is amazing, that is, the investment income of the company. According to the consolidated income statement, from 2008 to 2010, the investment income of Industrial Leather was 1 million yuan, 1.25 million yuan and 562500 yuan respectively. By the first half of this year, this indicator had soared to 3.375 million yuan. As for the company's rapid investment income, Industrial Leather said that it mainly comes from the investment in associates and joint ventures.

According to this idea, the reporter reviewed the situation of the subsidiary of Industrial Leather. Before the public offering, Industrial Leather had only two joint-stock companies, Fujian Ruisen Leather Co., Ltd. (hereinafter referred to as "Ruisen Leather") and Fujian Jinjiang Rural Cooperative Bank (hereinafter referred to as "Rural Cooperative Bank").

The application materials show that Ruisen Leather is a limited company established in Zhangpu County, Fujian Province on April 11, 2006, with a registered capital of 40.0866 million yuan, which is engaged in the processing of raw leather, wet blue leather with new technologies, and the processing of leather finishing with new technologies. According to the capital verification report, as of the end of 2010, the total assets of Ruisen Leather were 38893100 yuan and the net assets were 38789300 yuan, but the company lost 458400 yuan last year. This situation has continued until this year. Data shows that in the first half of this year, Ruisen Leather still lost nearly 440000 yuan.

The other joint-stock company, Rural Cooperative Bank, contributed 13.5 million yuan, with a shareholding ratio of only 1.915%. As of June 30, 2011, the total assets of the Rural Cooperative Bank were 16.372 billion yuan, the net assets were 1.623 billion yuan, and the net profit from January to June 2011 was 116 million yuan. If the equity ratio is close to 2%, and the profit of rural cooperative bank, the investment income of Industrial Leather in this project is only about 2.3 million yuan.

Comparing the profit data of these two subsidiaries with the materials provided by Industrial Leather, there are still differences. What is the reason for the sharp increase of investment income of Industrial Leather? The reporter tried to interview for confirmation, but the company's staff responsible for media publicity were on business trips, and the reporter could not contact the company.

Assets are sold at a low price

Not only is the authenticity of the investment project questionable, but there are also many loopholes in the process of Xingye leather restructuring, and even worse, there has been a vicious act of selling the company's assets at a low price.

The predecessor of Xingye Leather is Fujian Jinjiang Anhai Xingye Leather Products Factory (hereinafter referred to as "Leather Products Factory"), which was founded in 1992. It is a collectively owned enterprise with a registered capital of 750000 yuan. The business scope is mainly leather products, and the legal representative is Wu Huachun. Since then, with the development of the company, Xingye Leather has experienced several capital increases. At the end of 1997, Anhai Andong Village Committee and Wu Huachun in Jinjiang City increased their capital by nearly 10 million yuan.

From 2001 to 2004, Industrial Leather implemented the stage of share cooperation. On February 20, 2001, Wu Huachun, Wu Huajie, Ke Xianyu, Ke Rongxian and Ke Rongmiao signed the Shareholders Agreement. Wu Huachun increased the capital of the company by 20.75 million yuan with physical assets, and Wu Huajie, Ke Xianyu, Ke Rongxian and Ke Rongmiao each contributed 1 million yuan to the leather products factory, becoming the new shareholders of the leather products factory. After the capital increase, the registered capital of the leather products factory was changed to 35 million yuan.

On April 7, 2002, the shareholders' meeting of the leather products factory passed the Resolution of the Shareholders' Meeting on the Transfer of Land Payment to Investment by Wu Huachun, which decided that 15 million of the land payment of 15006400 yuan paid by Wu Huachun on behalf of the company would be used as Wu Huachun's new investment fund, and the company's registered capital would be increased to 50 million yuan.

In 2004, Xingye Leather experienced a major change - changing into a limited liability company. On September 17, 2004, through the resolution of the shareholders' meeting of the leather products factory, the leather products factory was transformed from a joint-stock cooperative enterprise into a limited liability company. On September 21, 2004, the leather product factory held a shareholders' meeting and made a supplementary resolution, agreeing to take the audited net asset value of the leather product factory as of August 31, 2004 as the basis, and the amount of capital contribution and equity ratio of the original shareholders remain unchanged.

However, compared with the net assets of 65.88 million yuan, the actual contribution of each shareholder of Industrial Leather was only 50 million yuan, so once the transfer was made, the assets of Industrial Leather were sold at a low price.

Doubt about the identity of foreign capital

After the joint-stock reform, Industrial Leather tried to develop in the direction of foreign capital.

Since November 2005, the company plans to go public overseas. The shareholders of the leather products company plan to adjust the equity structure of the leather products company and establish a return investment structure. The specific process is as follows: Wu Huachun, Wu Huajie, the shareholders of the leather products company, some employees of the leather products company at that time Wu Huachun's business partners set up Xianhua Company and Jinmao Company respectively in the British Virgin Islands, and then Xianhua Company and Jinmao Company jointly funded the establishment of Jiasheng Company; The original shareholders of the leather products company transferred all their equities to Jiasheng Company. After the transfer, the shareholders of the leather products company were changed to Jiasheng Company, and the nature of the enterprise was changed to a wholly foreign-owned enterprise.

On April 7, 2006, through the resolution of the shareholders' meeting of the leather products company, it was agreed that Jiasheng Company would purchase all the contributions made by the shareholders of the leather products company with HK dollars equivalent to 52 million yuan, and all the creditor's rights and debts would be inherited by the foreign-invested enterprises after the change; All shareholders waive the preemptive right.

After the equity change, Industrial Leather became a wholly foreign-owned enterprise. However, it is obvious that the actual control of the company is still in Wu Huachun, Wu Huajie and some employees of the leather products company at that time. The overseas registered company is just a cover for listing.

Since then, the action of Xingye Leather has also verified this view. In 2009, Jiasheng Company transferred all the equity of Industrial Leather held by Jiasheng Company through equity transfer. Before the public offering, Industrial Leather also had a foreign shareholder - Huajia Company, and the nature of Industrial Leather has changed into a Sino foreign joint venture.