China plays a pivotal role in the global industrial chain. What is the impact of the new crown pneumonia on China's foreign trade enterprises?

Nanfang stock (600250.SH) is the earliest foreign trade listed company in Nanjing. Previously, it was mainly engaged in the import and export business of textile, silk, knitting, clothing, machinery and electrical equipment, light industry, chemical industry, medicine and other more than 10 categories, but its main business was hard to make money, and its gross profit margin of textile and garment industry was even less than 2%. As a result, Nanfang shares are seeking transformation, merging companies in the fields of consumption, real estate and credit, and began to get rid of the deficit in 2016.

The China Times reporter called the Nanfang share certificate generation department as an investor, and the relevant staff said that the company does not now deal with the epidemic protection products. Whether the new crown pneumonia will cause obstacles to the export of the company is not well predicted, but this is a problem that many enterprises will face.

The gross profit margin of trade is less than 2%.

The name of Nanfang shares is "Nanjing textile import and export Limited by Share Ltd", which is concerned by the capital market during the new crown pneumonia. In the Shanghai Stock Exchange investor interaction platform, since February 6th, many investors have presented to Nan Fang stock manager "whether the company's business is related to the necessary protective products" and "whether there are pharmaceutical products".

On the two tier market, Nanfang share price fell on the first trading day of Lunar New Year (February 3rd), and then did not follow the outbreak of the concept stocks. As of February 20th, the company's range decreased by 6.01%.

The main business of Nanfang shares has gradually shrunk in recent years, and its profit margins are small, mainly relying on investment income to support performance. In 2016 -2018, the company's investment income totaled 533 million yuan, 1.8 times the net profit of 3 years. Among them, in 2017 and 2018, the joint venture company's poetry group contributed 189 million yuan and 235 million yuan in investment income, which greatly increased the company's profits.

It is worth mentioning that in 2018, the annual report shows that the gross profit margin of the main industry's import and export trade of Nanfang textile company is only 1.74%, which is 0.45 percentage points lower than that of 2017, while the gross profit margin of domestic trade is only 0.3%, which is 0.02 percentage points higher than that of 2017. Such a small gross profit margin will be counted on all the expenses and expenses.

From the perspective of product category, the gross profit margin of the textile and garment industry in Nanfang group is only 1.72% (52.63%).

Nanfang stock's "main business can not be done, and the sideline industry has come together" has continued to this day. The latest report shows that in the first three quarters of 2019, Nanfang shares earned 656 million yuan, down 18 and 94% compared to the same period last year, and net profit of 20 million 826 thousand and 800 yuan to the parent company, an increase of 18.13% compared to the same period last year. However, the net profit after deducting the net profit was -1204.46 million, compared with 2 million 546 thousand and 800 yuan in the same period in 2018.

A long road to transformation

Since 2016, Nanfang shares merged with the companies in the fields of consumption, real estate and credit, and began to get rid of the deficit. The biggest part of it was in 2017, the wholly owned subsidiary of Nanfang Textile Co., Ltd., which invested 1 yuan in total price, which was granted by Hong Kong listed companies, a wholly owned subsidiary of Lang Shi Group, to share 190 million 900 thousand shares of the world's real estate (accounting for 4.87% of its total share capital). In May 2017, a wholly owned subsidiary of Xinda investment and long Shi Group signed a share transfer agreement on the 90 million 904 thousand and 700 shares of the equity transfer plan (2.32% of its total share capital), which also contributed to its performance in recent years.

On the evening of December 20, 2019, Nanfang shares announced that the company had completed the registration procedures for the transfer of 51% shares of Nanjing Qinhuai scenery, and Qinhuai scenery became a controlling shareholder of Nanfang stock company.

Nanfang shares intend to march into Wen brigade. After the acquisition plan, Nanfang shares intends to buy 51% stake in Qinhuai scenery and 80 million yuan fundraising by issuing shares. As a new three board listed company, Qinhuai scenic spot registered capital of 50 million yuan, mainly engaged in water tour, pre packaged food retail business.

As of April 30, 2019, the pre trial value of Qinhuai's scenery assets was 95 million 785 thousand yuan, and the value of the company's shareholders' equity was estimated at 533 million yuan, and the appreciation rate was 456.94%. The 51% purchase price of the company was 272 million yuan.

The acquisition also brought the inquiry letter of the Shanghai Stock Exchange, asking Nanfang shares to explain the related business problems of the water tourism business after the transformation, as well as the high valuation of the bid winning enterprises before and after the acquisition, and whether the performance commitments could be completed.

Nanfang shares said that Future Ltd should put these high-quality assets into the platform of listed companies step by step, and the company will become a large holding group in the tourism industry, thus completing the transformation from foreign trade enterprises to cultural tourism enterprises.

In the transformation process of Nanfang stock, it was hindered by the termination of the controlling shareholder's right to control the company in 2019. In January 24, 2019, Nanfang textile announced that the controlling shareholder Nanjing tourism group (formerly Nanjing trade group) originally intended to collect the 29.96% shares of the company held by the public in the form of publicly collecting the transferee, and changed the controlling rights of the company. Due to the fact that the transferee failed to meet the conditions of the transferee, the tour group decided to terminate the assignment.

Be concerned for fraud

Nanfang shares are known by investors in capital markets because of fraud cases.

In March 26, 2012, Nanfang textile company was investigated by the China Securities Regulatory Commission on suspicion of violating securities laws and regulations.

In August 13, 2013, Nanfang Textile Co., Ltd., because of its export documents for 2010-2011 years, 54 documents were false and were required to return the tax refund of 10 million 337 thousand and 400 yuan.

Up to 2 years of filing inspection in May 16, 2014 came out, Nanfang shares issued a notice that the Commission issued the "administrative penalty decision" issued by the Commission, enterprises and related responsible persons were punished, financial fraud was real hammer.

The decision shows that in the 2006-2010 years, Nanfang shares respectively made profits of 31 million 91 thousand and 500 yuan, 42 million 233 thousand and 300 yuan, 151 million 998 thousand and 300 yuan, 60 million 531 thousand and 800 yuan and 58 million 641 thousand and 200 yuan respectively. Deducting fictitious profits, the profits of the company during that time period are -668.65 yuan, -1430.59 million yuan, -13620.47 million yuan, -4470.4 yuan and -5969.01 million yuan respectively.

In this regard, the SFC issued a warning to Nanfang shares in accordance with the law, and imposed a fine of 500 thousand yuan, giving Dan Xiaozhong, 12 relevant responsible persons warning, and fines ranging from 30 thousand yuan to 300 thousand yuan, and Dan Xiaozhong and others were identified as the securities market prohibition.

However, through the way of financial fraud, Nanfang shares, which had been losing 6 consecutive years, avoided the crisis of delisting.