Huilv Ecological Field Survey: Seedling Base Is Also True And Illusory, Land Transfer Impacts Farmland Red Line, And "Zombie Stocks" Resurrected In 16 Years

The listed companies that have been delisted for 16 years have been revived.

The news that huilv ecology will return to the A-share market within three months has exploded the capital circle, which means that the A-share market will usher in the third delisting company after Changhang oil transportation (now China Merchants Nanyou) and SINOCHEM.

On August 20, 2021, the Shenzhen Stock Exchange, in accordance with the stock listing rules, the implementation measures for delisting companies and other provisions, as well as the review opinions of the listing committee, made a decision to approve the re listing of huilv ecological stock.

The Shenzhen Stock Exchange said that, referring to the IPO audit standards, the Shenzhen stock exchange conducted a comprehensive audit on huilv ecology's compliance with the re listing conditions, the company's sustainable operation ability, operation legality and compliance, and management stability, etc., completed multiple rounds of inquiries, and twice requested relevant institutions to conduct on-site inspection on the company, so as to play an active regulatory role. At the same time, the company organized several business departments to check the whole process, comprehensively strengthened the quality control of audit business, and ensured that all processes were standardized and rigorous. Therefore, huilv ecological was determined to meet the re listing requirements and decided to approve its re listing.

Since July 4, 2005, the Shenzhen Stock Exchange announced its decision to terminate huilv ecological listing. The company, which had been delisted for 16 years, resolutely "revived" in the A-share market, which not only created a new legend in the A-share market, but also aroused great concern in the market. Up to now, huilv ecological re listing report, re listing recommendation, Shenzhen Stock Exchange inquiry feedback and other announcement documents have not been disclosed. Huilv ecology, which is about to return to the A-share market, has been covered with a mysterious veil.

After two weeks of investigation, the 21st century economic reporter found that although the curtain of huilv's 16-year Nirvana rebirth legend has been opened, its survival in the Red Sea competition, the nursery stock base is also real and illusory, and its 2300 Mu nursery stock land transfer has impacted the cultivated land protection red line, which makes people doubt the prospect of huilv's re listing.

16 years of delisting and rebirth

The predecessor of huilv ecology, Wuhan liuduqiao department store, was established in 1990. It mainly deals in general merchandise, hardware and electrical appliances, needle textiles, gold and silver jewelry, medical equipment, building materials, mechanical and electrical equipment, etc. it was listed on the Shenzhen Stock Exchange in November 1997. The securities are referred to as "liuduqiao", and the securities code is "000765".

It is worth noting that as early as 1997, the performance of 600 group has declined due to the diversion of customers from new business districts such as Jiefang Avenue in Hankou, Zhongnan road in Wuchang, Xudong, etc., the rise of new formats such as supermarkets and exclusive stores, and the traffic bottleneck in the old urban area. In the year of listing, the performance of 600 group has declined. In the year of listing, there was an operational dilemma in which the employees could not normally receive wages.

In 1998, the government of Jianghan District of Wuhan city decided to transfer 19.06 million shares (26.684 million shares, accounting for 38.1% of the total share capital) to Wuhan Huazhong Information Technology Group Co., Ltd. (hereinafter referred to as Huaxin group). Huaxin group became the largest shareholder of the listed company of 600 group.

On March 30, 2000, the abbreviation of liuduqiao securities was changed to "Huaxin shares".

Huaxin group is a state-owned enterprise with high-tech, real estate development and hotel catering as its pillar industries. Huaxin group once made Liudu bridge a fire of hope, but due to the national macroeconomic tightening policy and other reasons, Liudu bridge still failed to recover its declining fate.

Since then, due to three consecutive years of losses, the company's shares were suspended from March 22, 2004, and terminated from July 4, 2005. After delisting, the shares were traded in the National SME share transfer system.

Since the termination of listing in 2005, the company has successively obtained 100% equity of huilv Garden Construction Development Co., Ltd. (hereinafter referred to as huilv garden) through bankruptcy reorganization, two major asset restructuring, and equity separation reform, and completed the reorganization plan in May 2016. The main business of the company was changed to landscape engineering construction, landscape design and seedling planting.

Huilu ecological announcement said that after the restructuring, the company's debt scale has been greatly reduced, the capital structure has been significantly improved, and the main business changes have significantly enhanced the profitability and anti risk ability of the company. From 2018 to 2020, the company realized operating revenue of 741 million yuan, 769 million yuan and 814 million yuan respectively, and the non net profit attributable to parent deduction was 80.9492 million yuan, 82.7554 million yuan and 86.7891 million yuan respectively, At the end of 2020, the net asset is 1.111 billion yuan, the operation is stable and good, and has good sustainable operation ability. In the past three years, the company's main business has not changed, the control right has not changed, and the operation and management level has not changed significantly, showing a stable sustainable operation ability.

On June 19, 2019, huilv ecological submitted its re listing application to Shenzhen Stock Exchange. The Shenzhen Stock Exchange reviewed that the equity structure, financial indicators, sustainable operation ability, corporate governance, compliance requirements and other indicators of huilv eco met the re listing standards, so it decided to approve its listing application.

According to the re listing regulations of Shenzhen Stock Exchange, the company shall complete all preparations for re listing and conduct listing and trading within three months from the date when the Shenzhen stock exchange makes the decision to approve the re listing of its shares. In case of special circumstances, the company may apply to the Shenzhen stock exchange for an extension of the time limit. Not surprisingly, huilv ecology, a "zombie stock" that has been delisted for 16 years, is about to re-enter the A-share market.

Mystery of curve listing

In fact, before participating in the restructuring of Huaxin shares, huilv ecology had appeared in the capital market, and finally chose to be listed on the curve. The reason is worth pondering.

On June 20, 2014, huilvyuanlin submitted the IPO application draft, and then suddenly cancelled the listing application. The reason given was that the queue was relatively backward. In the year when the listing application was cancelled, all the original shareholders of huilvyuanlin, as the restructuring party, participated in the bankruptcy reorganization of Huaxin shares.

In fact, according to the investigation of 21st century economic report, there are other implications behind the cancellation of direct listing.

According to the prospectus at that time, during the reporting period from 2011 to 2013, the company's revenue was 730 million yuan, 797 million yuan and 551 million yuan, and the net profits were 79.9514 million yuan, 94.307 million yuan and 52.2714 million yuan respectively. In 2013, the company's revenue decreased by 24.46% compared with 2011, and the net profit decreased by 34.62% compared with 2011.

At the end of each reporting period, the net book accounts receivable of huilvyuan forest were RMB 90.5268 million, RMB 138 million and RMB 235 million respectively, accounting for 13.81%, 13.18% and 22.52% of the total assets. At that time, the company directly said that it faced the risk of delayed collection or uncollectible accounts receivable. At the same time, the company's net cash flow from operating activities continued to deteriorate, reaching 66.4162 million yuan, 11.0824 million yuan and - 153 million yuan respectively, far lower than the net profit of the same period.

At the end of each reporting period, the outstanding construction balance of the company (i.e. the contract assets after adjustment of accounting standards) was high, which was 355 million yuan, 602 million yuan and 468 million yuan respectively, accounting for 57.25%, 60.64% and 54.65% of the company's current assets.

Analysts said that the performance of huilv garden was deteriorating, the accounts receivable continued to be high, the financial data was not beautiful enough, and the cash flow was tight, which may be the main factors for the company to withdraw from the direct listing. Huilvyuanlin's listing this time, in fact, is similar to the "backdoor listing" reverse acquisition restructuring.

According to the re listing regulations at that time, companies delisted from the old third board could apply directly to the exchange for re listing, without IPO queuing, and without implementing the auditing standard of backdoor listing equivalent to IPO.

An analyst from a head securities firm in Beijing told the 21st century economic report that the procedures for non listed companies to acquire listed companies and backdoor listing are complex, which requires the review of regulatory authorities at all levels and the deliberation and approval of the general meeting of shareholders of both sides. However, there is no serious obstacle to the acquisition of delisted listed companies by laws and regulations, and the procedure is relatively simple.

Backdoor listing on the old third board seems to be a shortcut to A-share, but in practice, huilv garden has fallen into the deadlock of listing. In the newly revised re listing rules, the requirement of re listing delisted companies is equivalent to IPO audit.

Time has changed. In 2016, huilv ecology purchased huilv garden's equity in the form of non-public offering shares, gave up direct listing and backdoor listing, and chose to take a detour to delist. Behind the reorganization and listing of the company, huilv ecological still faces the strict audit of a number of financial, operational and compliance issues of the company.

In the inquiry letters from the 21st century economic report survey, the focus of the inquiry is still the core business issues such as the authenticity of the company's performance, the compliance of landscape engineering bidding, the authenticity of inventory, the authenticity of accounts receivable accrual, and the compliance of land lease. At present, the company's problems such as high accounts receivable and large amount of bad debt provision are still the risks that the company must face.

Hard life in the Red Sea

From 2018 to 2020, the company's revenue is 741 million yuan, 769 million yuan and 814 million yuan respectively, and the net profit is 89.9152 million yuan, 88.4973 million yuan and 89.9023 million yuan respectively.

The performance of the past three years seems to be beautiful, but compared with 2016 and 2017 after the restructuring, the revenue and net profit of huilv ecology have both declined significantly.

In 2016, the company's revenue was 859 million yuan, and the net profit was 106 million yuan. In 2017, the company's revenue was 927 million yuan and the net profit was 123 million yuan.

In 2020, engineering construction will be the main source of huilv's income, accounting for 95.06% of the whole year's engineering construction income, and 4.94% of the revenue from design, seedling and other business.

The main customers of huilv ecology are government departments or their affiliated infrastructure investment and construction entities. Most of the projects promoted are PPP (government and social capital cooperation) and BT (construction transfer) projects. The biggest problem it faces is the long payback period and the difficulty in payment collection.

In recent years, the state-owned assets system platform, especially the local investment and financing platform financing, debt issuance supervision has become increasingly strict, some municipal infrastructure investment projects are facing the plight of fund shortage or even suspension, and the contract assets and accounts receivable of relevant contractors are even facing the risk of all bad debts.

For example, huilv ecological won the bid in December 2011 of Wuxi City "Changguangxi Wetland Park Phase II construction project", which was originally scheduled to start in November 2012 and complete within two years. Due to the design change of construction drawings, the construction of area C and D of the project was suspended from 2015 to 2019 due to land acquisition, policy treatment and other factors. In 2019, Wuxi urban investment company said that the project still needs to be coordinated and solved by relevant factors before it can be resumed.

There are six or seven similar projects listed in the reply to the inquiry letter, which not only causes great loss of the company's contract assets, but also causes long-term uncollectible accounts receivable due to project suspension and construction delay.

According to the investigation of 21st century economic report, there are nearly ten accounts receivable aging more than 6 years in huilv by the end of 2020, with a total receivable balance of 36.613 million yuan, and the company's estimated loss is as high as 24.0347 million yuan.

Among them, "Chengdu Jinniu high tech Industrial Park project" cooperated with Chengdu Jinniu District Construction Bureau, "Sanya egret park landscape improvement project" cooperated with Sanya garden environmental sanitation bureau, and "Qingdao high tech Zone Planning No. 4, No. 8 and other 14 road greening construction bid section II" cooperated with Qingdao high tech Zone investment company are expected to lose more than 50%.

Compared with the financial data of IPO in that year, the financial operation of huilv ecological Co., Ltd., which is ready to be reorganized and listed, is still difficult to be optimistic.

By the end of 2020, the book balance of huilv's contract assets was 973 million yuan, and the amount of provision for impairment of contract assets to be withdrawn in the same period was as high as 10.2128 million yuan; The book balance of the company's accounts receivable is 431 million yuan, and the expected credit loss is 75.1206 million yuan; The book balance of long-term receivables is 304 million yuan, and the expected credit loss is 316800 yuan. The amount of bad debt provision is almost equal to the net profit of the year.

After the bad debt loss is withdrawn, by the end of 2020, the net accounts receivable of huilv ecology is 356 million yuan (of which the long-term receivables are as high as 304 million yuan), and the contract assets are up to 962 million yuan. The risk of large amount withdrawal is still not small.

In addition, the current assets of the company were only 480 million yuan, including 310 million yuan of monetary capital and 122 million yuan of inventory value, while the current liabilities of the company were as high as 1.1 billion yuan, including short-term loans of 383 million yuan, accounts payable of 575 million yuan and notes payable of 59.9274 million yuan.

From the perspective of financial data, huilv has high accounts receivable, large amount of bad debt provision, accounts receivable, monetary capital and other current assets can not cover current liabilities, which can be seen in the company's cash flow tension.

The securities analysts pointed out to the 21st century economic report that 22 landscape engineering companies have been listed, and the overall business situation of the industry is not good. Among them, St Yuntou, * ST Meishang, St huawang and other companies have faced delisting risks.

In the first half of this year, nearly half of the listed companies in the industry suffered losses. Most of the joint operation problems faced by the industry are stagnation of cooperation projects, high bad debts of accounts receivable and high assets and liabilities.

According to the investigation of 21st century economic report, since March 2017, the original "urban greening regulations" that "the construction of urban greening projects should be entrusted to the units with corresponding qualification certificates" was revised and deleted, holding the first-class qualification of urban landscaping enterprises is no longer a hard condition for undertaking landscape engineering construction business.

This means that there will be more and more enterprises participating in the landscape engineering industry, and more and more local competition. The industry market has already fallen into the homogeneous Red Sea competition, and the pressure of huilv ecological development market and sustainable operation is self-evident.

Nursery stock base is also true and illusory

According to the investigation by 21st century economic reporter, huilv ecological Co., Ltd. has two subsidiaries: Hubei Lvquan, whose registered address is located at No. 108, Mashan Avenue, Mashan Town, Liangzihu District, Ezhou City, and Hubei Yuanyuan, whose registered address is located in the activity room of Wushu village, Baisha Town, Xiaochang County, No staff.

The registered address of Hubei green spring is actually the seat of the government of Mashan town. The staff of the local town government questioned the reporter of the 21st century economic report that "there is no Hubei green spring company in the office building of the town government. How can the industrial and commercial bureau register the company with the government office place?"

However, the registered address of Hubei headspring, the activity room of Wushu village, Baisha Town, Xiaochang County, has not been found in the investigation. According to the guidance of many villagers, there is only one "Shudian village Party member and mass service center" which is a regular activity room, which is quite different from its registered address name.

The 21st century economic reporter has made a lot of investigations and found that huilv ecology has production bases in the above two places. Through the transfer of collective land of liushaofengzhuang and other villages in Mashan Town, there are about 4500 mu nursery stock bases in the local area, and 2300 mu of production base in Wushu village, Baisha Town, Xiaochang County.

According to the 21st century economic report, the real name of "Xiaochang ecological nursery stock base" operated by Hubei Yuanyuan is located in Baisha Town, Xiaochang County, with a total investment of 200 million yuan and a design area of 3000 mu. It will be constructed in three phases. In the first phase, the nursery stock plantation will be built to plant large arbor areas such as Podocarpus grosvenorii, pseudoacacia pseudoacacia, Sapindus mukoraiensis and Koelreuteria; In the second phase, a science popularization exhibition area will be built to create an efficient agricultural exhibition area, a fine nursery stock area and an aquatic plant exhibition area; In the third phase, the leisure and entertainment area will be built, and the recreational functions such as cycling, camping, sightseeing and catering will be integrated into the nursery tree belt.

Huilv ecological Xiaochang nursery stock sightseeing park has transferred 2300 mu of land in Wushu village, Shudian village, Wangshan village and Lishan village, planted 2000 mu of seedlings, and invested 95 million yuan.

The 21st century economic reporter's on-the-spot investigation found that the nursery stock base in Lvquan, Hubei Province, has been built for many years. The age of seedlings is generally between 3 and 5 years old, and there has been no large-scale transplantation and sales; The nursery stock Sightseeing Park operated by Hubei Yuanyuan has been in operation for two or three years, and the seedlings have just entered the cultivation period.

However, under such circumstances, huilv ecological has had a large amount of related party transactions with the two companies.

According to the annual report of huilv ecology in 2020, the current account between huilv ecology and Hubei Yuanyuan is 29.1 million yuan, and that with Hubei Lvquan is 18.7 million yuan. In the case of no expansion of other nursery stock bases, the company's expendable biological assets and other inventories will suddenly increase by 41.92% in 2020.

The 21st century economic reporter noted that the tax law stipulates that agricultural producers, including planting, breeding, forestry, animal husbandry and aquatic products, are exempt from value-added tax; Income from the cultivation and planting of trees by enterprises shall be exempted from enterprise income tax.

According to the tax law, Huilu garden, Jiangxi Huilu, Jishui Huilu, Hubei Lvquan, Hubei Yuanyuan and Jinxi Huaxin, the subsidiaries of huilv ecology, enjoy the tax preference of exemption from value-added tax on the sales of self-produced seedlings, and enjoy the tax preference of exemption from enterprise income tax for the income from forest cultivation and planting. However, huilv ecology and its subsidiary huilvyuanlin need to pay 25% of the enterprise income tax, while Wuhan landekell, Chengdu landkell, Ningbo lining environment and other subsidiaries need to pay 20% of the enterprise income tax.

Some industry insiders have pointed out that if the income of huilv ecology and its non seedling planting subsidiaries can be transferred to Hubei Lvquan, Hubei Yuanyuan and other nursery stock base companies, the company can easily enjoy more than ten million tax incentives in the form of reasonable tax avoidance every year. Whether the large amount of capital flow between huilv ecology and the nursery stock company is supported by substantial transactions needs to be verified by the regulatory authorities.

Land transfer impacts the red line of cultivated land protection

The 21st century economic reporter learned from the villagers of Wushu village, Baisha Town, Xiaochang County that the 2300 mu of land transferred by huilv ecology may have touched the red line of farmland protection, which was issued by the state at the end of 2020 to prohibit "non grain" and "non-agricultural".

A villager surnamed Shu in Wushu village told the reporter of the 21st century economic report that he had transferred 5 mu of land to Huilu ecology, at a price of 450 yuan per mu. The land transferred was high-quality paddy field and basic cultivated land. The quality of land was not good, and Huilu ecology did not transfer.

"About 200 yuan / mu of barren mountains and wasteland with substandard land leveling." Shu, a villager with the surname of Shu, who has transferred more than 80 mu of wasteland to plant trees and vegetables and set up a family farm, told reporters that huigreen ecology only needs good land.

The reporter of 21st century economic report later confirmed from Baisha Town government that Huilu ecology has transferred about 2500 mu of cultivated land in the local area, and most of them are high-quality and good farmland.

In recent years, the problem of "non grain" and "non-agricultural" of cultivated land is serious. Many cultivated land is not planted with grain, but is planted with trees and trees, ponds and fish. Driven by greater interests, a lot of capital is transferred to rural cultivated land to grow economic crops such as medicinal materials and characteristic fruits, seedlings, flowers and grasses, and even some new business entities are planting non grain crops at the same time, On the one hand, it also enjoys the national grain subsidy, which greatly aggravates the phenomenon of "non grain" of cultivated land. In this regard, the state has constantly strengthened the management of cultivated land.

At the end of 2020, the general office of the State Council successively issued the notice on resolutely stopping the "non-agricultural" behavior of cultivated land and the opinions on preventing cultivated land from "non-agricultural" and stabilizing food production, emphasizing that illegal occupation of permanent basic farmland, planting trees and digging ponds, illegal occupation of cultivated land for afforestation, special protection and use control of cultivated land, and strict control of farmland conversion into forest land, were issued by the general office of the State Council at the end of 2020 Garden land and other types of agricultural land.

The No.1 document in 2021 emphasizes that the red line of 1.8 billion mu of cultivated land should be firmly maintained. Illegal occupation of cultivated land and violation of natural laws for afforestation and lake landscaping should be strictly prohibited. Cultivated land occupied by non-agricultural construction should be strictly controlled, and the "non-agricultural" of cultivated land should be resolutely curbed. The new administrative measures for the circulation of rural land contractual management right, which was implemented in 2021, emphasizes once again that "non grain" and "non-agricultural" are prohibited in rural land circulation.

In February 2021, Hubei Province also launched a special clean-up of cultivated land "non grain", resolutely corrected the large-scale transfer of cultivated land without planting grain. It clearly required that no illegal construction of planting and breeding facilities and farmland forest network should be allowed in the grain production functional areas. Once the industrial and commercial capital violated the industrial development plan, large-scale transfer of cultivated land without grain production should be resolutely corrected, And stop enjoying relevant supporting policies.

Special protection and use control shall be implemented for cultivated land, and the conversion of cultivated land into forest land and garden land shall be strictly controlled. Permanent basic farmland shall be mainly used for developing grain production, while general cultivated land shall be mainly used for grain, cotton, oil, vegetables and other agricultural products as well as forage grass and feed production.

According to the farmland classification planning of Hubei Province, the reporter of 21st century economic report preliminarily verified that the 2300 mu land transferred by huilv ecology in Baisha Town of Xiaochang County belongs to high-quality paddy field, and the transferred land in marshan town of Ezhou city also belongs to the circulation of high-quality cultivated land.

In Hubei, huilv ecology not only selects high-quality paddy fields for circulation and leasing, but also arranges for the construction of nursery stock bases and nursery stock plantations. It also plans to build a popular science exhibition area and a leisure and entertainment area. Whether its "non grain" farmland transfer behavior conforms to the current cultivated land protection policy needs to be gradually implemented and confirmed.

The 21st century economic reporter learned from a staff member of Baisha Town Government of Xiaochang County that due to the rectification action of Hubei Province, the remaining 700 mu land transfer plan of "huilv ecological Xiaochang nursery stock Sightseeing Park" has been stagnated, and whether the land transferred in the early stage will be rectified and returned has not been concluded.

      Yan Jinming, a professor in the Department of land management of Renmin University of China, said publicly that in the process of high-speed urbanization, industrialization and modernization in China, the phenomenon of "non-agricultural" of agricultural land and "non grain conversion" of cultivated land occurred. This problem involves a wide range of areas and has a great impact. In the process of rectification and implementation, it needs to be carefully studied and solved step by step. In his opinion, the current rectification policies should be scientifically studied, with planning as the leading factor, and then implemented accordingly. In terms of cultivated land, attention should be paid to the differentiation of cultivated land policies. The natural conditions and social and economic development of various places in the country are extremely different, and the corresponding policies should be refined.

It is worth noting that at present, the "non grain" rectification of cultivated land has been carried out nationwide. It is also necessary to investigate whether Huilu ecological has trampled on the red line of "cultivated land" in the seedling bases of tens of thousands of Mu in Zhejiang and Jiangxi Province. If all the transferred land needs to be rectified and withdrawn, Huilu ecology may face hundreds of millions of yuan of biological inventory loss, and the company's profit may fall sharply.