August 30th news, yesterday, Taiwan's Datong Group's subsidiary, China National Panel Factory, China National Announcement Co., Ltd. (hereinafter referred to as "China National Announcement"), issued an announcement stating that, after the Taoyuan District Court ruled, China National Announcement declared bankruptcy, with a total liability of NT$241.833.557 million (approximately RMB 9.5 billion), and the first creditors' meeting will be held on October 28 this year.
Datong Group said that it holds a comprehensive stake in China Yingguan. China Yingguan has been declared bankrupt by the court and will elect three accountants Ma Guozhu, lawyer Liu Huijun and lawyer Yang Xiaobang as bankruptcy administrators. The debt declaration period starts from now until October 21 this year. The first creditors' meeting is scheduled to be held at 9:45 am on October 28, 2022 in courts 42, 43, 44, 45 and 46 on the fourth floor of Taoyuan District Court.
Datong Announcement stated that the assets of Zhonghua Yingguan were insufficient to compensate for the liabilities, and many creditors competed to apply for the court to enforce the various assets of Huaying Company's land, buildings, equipment, etc. Zhonghua Yingguan could no longer continue to produce and operate. Therefore, the board of directors of Zhonghua Yingguan requested the court to declare bankruptcy in accordance with Article 211 of the of the Company Law on September 18, 2010 so that employees and creditors can be paid fairly in accordance with the law. The court found that Huaying Company could not repay its due debts and its assets were not enough to repay all debts, so the court ruled to declare bankruptcy.
information shows that China Imager was established in May 1971 and is one of the "Five Panel Tigers" in the world's display manufacturing company and Taiwan's island. It is an important manufacturer of the early research and development of the key components of the video product, , and . Its display output was once the top three in the world, and therefore pushed Taiwan to the world stage of the "display kingdom". In 1997, Huaying introduced Japanese technology, kicking off the planarization of Taiwan’s displays. Some island media even called it "the Whampoa Military Academy of Monitors".
However, over the past decade, due to poor management and the impact of the strong rise of the mainland panel industry, China Screen Monitor's market share has continued to decline and its performance has also plummeted. Coupled with the series of impacts caused by the debt problems of China Yingguan, as well as asset impairment, increased operating costs of , and intensified market competition, Huaying Technology received its first loss since its restructuring in 2010, with a loss of RMB 4.966 billion in fiscal year 2018.
Qunzhi Consulting data shows that as of the third quarter of 2018, the global market share of China Imager feature panels was about 10.5%, the global market share of smartphone panels was about 5.4%, the global market share of tablet panels was about 15.8%, and the global market share of automotive display panels was about 7.4%.
On December 13, 2018, China Yingguan announced that it would file a reorganization and emergency punishment with the court in accordance with the relevant provisions of the Company Law to prevent creditors from placing false punishments (asset freezing).
It is reported that Zhonghua Yingguan and its 100%-owned subsidiary Zhonghua Yingguan Bermuda Company have both failed to repay the debt. The bank has the right to announce that Zhonghua Yingguan defaults and that the loans due must be repaid immediately, which will exacerbate the working capital gap and accelerate the debt collection of all creditors, which may lead to serious shortage of working capital and face a crisis of forced production, suspension of operations, or even suspension of business.
According to the self-concluded figures of individual financial reports released by China Film Corporation at that time, its total liabilities were NT$34.8 billion (about NT$7.76 billion). In order to ensure employee salaries and the payment of necessary operating expenses of the company, the company's board of directors signed a two-paper trust contract with lawyer Ye Dayin, with the total amount of the trust being capped at NT$600 million each.
In addition, Huaying Technology, which holds 26.37% of the shares, also received a notice from its second largest shareholder, Fujian Electronic Information Group, to repay Huaying Technology's RMB 3.3 billion yuan in payment, of which about RMB 2 billion has been overdue. On December 4, 2018, it issued a letter to urge it to request payment, otherwise legal action will be taken. Huaying Technology's move has caused Huaying Bermuda subsidiary, Huaying Bermuda, to make a loan of US$53 million from Hong Kong Minsheng Bank, which cannot be successfully extended. It will cause a loan default on December 18. In addition, China Huaying has not paid about 100 million yuan in payment to 11 suppliers in Taiwan and has received letters of deposit from the supplier.
On March 11, 2019, China Screening Management issued an announcement announcing that it would carry out large-scale layoffs in May 2019. At that time, there were about 4,500 employees, with a layoff ratio of about 44.44% to 55.55%, involving about 2,500 production line employees and staff. At the same time, in terms of panel production lines, China Image Tube will also be cut. In the future, only the 6th generation line will be retained, focusing on the most economical production lines of small and medium-sized panels. The other two 4.5 generation lines (one of which has been discontinued for production and is only for experimental lines), will be sold in the future, and rental is not ruled out.
On August 29, 2019, China Screening Management issued a statement saying that the application for reorganization was rejected by the court, and the order had been reduced to zero, and a large number of dismissals would be handled in accordance with the law. Due to huge electricity bills, the factory of Taiwan display panel manufacturer Huaying will be powered off on September 2 and may not be able to produce in the future. According to the layoff plan, more than 2,100 employees of China Architectural Engineering are expected to be left with only 50 people, which means that 97% of the company's employees will be fired.
In September 2019, all assets of the land, factory buildings, machinery and equipment of Zhonghua Yingguan were sealed by the court and could not continue to operate and produce, so he filed for bankruptcy.
Huaying Technology has also been dragged into the "quagmire"!
As a joint venture between China Yingguan in mainland China, Huaying Technology has been directly in trouble with Huaying Technology due to the huge amount of payment due to the former controlling shareholder Zhonghua Yingguan. As of the end of 2018, Huaying Technology's accounts receivable balance to its former controlling shareholder Zhonghuaying Guan was 3.131 billion yuan, mainly accounts receivable formed by Huaying Technology and its subsidiaries' sales of LCD display modules to Zhonghuaying Guan.
In addition, Huaying Bermuda, a subsidiary of China Huaying Pipe, also needs to comply with the performance compensation commitments made and should make up 3.029 billion yuan to Huaying Technology in cash. However, due to the specific losses caused to Huaying Technology by the original actual controller Zhonghuaying Management's application for reorganization and bankruptcy, it is a large value of the amount of the amount of the payment not received and the amount of the performance compensation commitment not fulfilled, that is, 3.029 billion yuan.
In this regard, Huaying Technology once stated that since Zhonghua Yingguan has applied to the court for bankruptcy and the court has not yet made a judgment on the performance compensation lawsuit, Zhonghua Yingguan and its related parties have not fulfilled their commitment to performance compensation. There is uncertainty about the amount of performance compensation that China Film and Television and its related parties need to fulfill their performance compensation commitments in the future.
In other words, Huaying Technology's performance compensation of 3.029 billion yuan may not be able to obtain Huaying Technology in the future.
In addition, it should be noted that as of the end of the first half of 2021, Huaying Technology still had a balance of accounts receivable to China Yingguan of 1.34 billion yuan, while Huaying Technology's balance of bad debt reserves for this account was 1.309 billion yuan, while the company's operating income during the same period was only 1.55 billion yuan, which was almost equivalent to the balance of bad debt reserves.
In other words, China Yingguan's overall debt to Huaying Technology reached 4.369 billion yuan. At present, the total liabilities of China Film and Television Corporation are as high as 9.5 billion yuan, which is already seriously insolvent. Therefore, Huaying Technology has almost no hope of getting all the huge debts back. It would be thankful that it would be possible to get a small part of it.
In order to solve the financial and operating crises, in 2021, Huaying Technology plans to raise a total of no more than 2.80 billion yuan in private placement of shares. After deducting issuance fees, the net amount of actual funds raised will be used to invest in the expansion of production lines of metal oxide thin film transistor liquid crystal display device (LGZO TFT_LCD) and the mass production projects of OLED experimental production, supplement working capital and repay bank loans.
However, in December and June 2021, the China Securities Regulatory Commission’s Issuance Review Committee rejected its application for private placement of shares.
From the perspective of performance, Huaying Technology has been in a loss state for 6 years. From 2016 to 2021, the company's non-net profits were -55.1702 million yuan, -331 million yuan, -5.004 billion yuan, -3.103 billion yuan, -1.199 billion yuan, and -550 million yuan, respectively, with a total cumulative operating loss in six years exceeding 10.2 billion yuan. Since Huaying Technology's audited net profit for two consecutive accounting years in 2018 and 2019 was negative, according to the relevant provisions of the Shenzhen Stock Exchange's "Stock Listing Rules", the company's stock transactions have been subject to a "delisting risk warning" since the opening of the market on April 29, 2020.The company's stock abbreviation has been changed from "Huaying Technology" to "*ST Huaying".
Subsequently, *ST Huaying achieved operating income of 2.194 billion yuan in 2020; the corresponding attributable net profit was 611 million yuan. The company's audited attributable net profit in 2020 was positive, and the situation of being implemented for delisting risk warning has been eliminated. Upon application by *ST Huaying, the Shenzhen Stock Exchange agreed to cancel the company's stock trading delisting risk warning. But if you look closely at its non-net profit, it still suffered a loss of 550 million yuan in 2020.
According to Huaying Technology's latest financial report for the first half of 2022, Huaying Technology achieved revenue of 1.42 billion yuan, a year-on-year decrease of 8.41%; net profit was -358 million yuan, a year-on-year decrease of 443.55%; net profit attributable to shareholders of listed companies was -366 million yuan, a year-on-year decrease of 393.76%.
Due to the continued deterioration of performance, in May this year, Huaying Technology announced the sale of its holding subsidiary Fujian Huaguan Optoelectronics Co., Ltd. (hereinafter referred to as "Huaguan Optoelectronics") 75% equity . On August 10, Huaying Technology issued an announcement stating that the 75% equity transfer project of Huaguan Optoelectronics has been successfully bid for, successfully recovering RMB 331.15 million. I just don’t know how long this money can last, after all, the panel industry is currently facing a continuous decline in demand and prices.
