On August 31, ST Mingcheng released its 2022 semi-annual report. During the reporting period, the company achieved operating income of 805 million yuan, a year-on-year decrease of 1.20%; the net profit attributable to shareholders of the listed company was -362 million yuan, compared with -198 million yuan in the same period last year.
The semi-annual report shows that as of June 30, ST Mingcheng’s total assets were 7.194 billion yuan, total liabilities were 6.887 billion yuan, net assets were only 424 million yuan, and goodwill was formed as high as 2.576 billion yuan. Insolvency is just one step away.
ST Mingcheng said that due to the continued impact of the epidemic, the film, television and sports industries have shown an overall downward trend, and the impact of higher financial costs has led to a more serious cash flow shortage for the company, which has triggered a large number of factors. Litigation and arbitration matters arising from loan contract disputes.
Under the influence of the debt crisis of the company's major shareholder, Contemporary Group, how to "overcome the crisis" and be reborn has become the biggest question facing ST Mingcheng's future development.
The revenue from the sports sector has almost dried up
ST Mingcheng’s main business is the film and television media business and the sports business. In 2015, after Contemporary Group took over Contemporary Culture and Sports (the previous stock name of ST Mingcheng), it continued to invest heavily and acquired Qiangshi Media, Double-Edged Sword Sports and Xinying Sports, but in the end, ST Mingcheng's performance continued to suffer losses. From 2019 to 2021, ST Mingcheng continued to suffer losses after deducting non-net profits, with a cumulative loss of more than 3.4 billion yuan. In the first half of 2022, it even lost 362 million yuan.
To make matters worse, ST Mingcheng announced in 2018 that it had purchased the La Liga copyright, but the cooperation has been terminated early, and the company will no longer have the La Liga full media copyright business. ST Mingcheng said that La Liga currently accounts for about 30% of the company's copyright business revenue. If the two parties eventually terminate the contract, the company will lose the full media copyright of La Liga and may also face huge claims, involving an amount of approximately 679 million yuan.
Today, ST Mingcheng’s main income (sports sector) has almost dried up. In addition, the company is also facing major lawsuits, illegal guarantees and other issues.
On August 20, ST Mingcheng issued an announcement regarding major litigation involving the company and its holding subsidiaries, with the amount involved being RMB 66.6651 million and HKD 17.7518 million. On August 19, ST Mingcheng also "self-exploded" and self-inspected and found that there were 3 illegal guarantees worth 325 million yuan, accounting for 49.67% of the audited net assets attributable to the parent company in 2021, and accounting for 10% of the book monetary funds on March 30, 2022. 610.83%. ST Mingcheng said it expects the above-mentioned illegal guarantees to have a significant impact on the company's net assets and cash flow.
However, ST Mingcheng believes that the validity of the relevant illegal guarantee contracts is flawed. The announcement stated that the "Maximum Guarantee Contract" has not gone through any internal approval and decision-making procedures within the company. The legal seal of the then chairman of the company was found in the "Maximum Guarantee Contract" in the relevant litigation documents. The company's board of directors and shareholders' meeting formed this guarantee contract without knowing the relevant matters.
Lawyer Liu Lufeng from Hubei Dexin Law Firm believes that according to the judicial interpretation of the Supreme People's Court and similar precedents, if it is true that ST Mingcheng did not know the fact that the guarantee was previously unknown, the defendant would only be released from the defendant on June 30, 2022. Once the Dangdai Group Office learns the fact of the aforementioned illegal guarantee, ST Mingcheng will not bear the liability for the illegal guarantee; otherwise, ST Mingcheng will bear part of the guarantee liability.
What measures has the company taken to deal with the difficulties and problems currently faced by ST Mingcheng? What measures will it take in the future? In this regard, a reporter from the Securities Daily called the relevant person in charge of ST Mingcheng, and the other party said Unable to disclose.
Kang Yuqing, the founder of Lens Company, said in an interview with a reporter from Securities Daily that ST Mingcheng not only faces the problem of sustainable operation ability of its main business, but also faces serious corporate governance problems. It is difficult to solve the problem by relying solely on the company's internal strength. The key is to see whether external forces intervene to restructure debt and assets, so as to solve the debt problem and restore the company's sustainable operating capabilities.
Contemporary Group is in debt crisis
In order to save ST Mingcheng, Contemporary Technology, the controlling shareholder of Contemporary Group, once wanted to take over Wuhan State-owned Assets, but the matter fell through. Nowadays, the major shareholder Contemporary Group has too much to take care of itself, and ST Mingcheng has lost its life-saving straw.
Since this year, the debt crisis of Contemporary Group has broken out rapidly.
On April 6, Dangdai Group experienced a substantial default on its first tranche of 2019 medium-term notes. Subsequently, a series of bond and bill defaults followed, and its equity holdings in Renfu Pharmaceutical, Sante Cableway and ST Mingcheng were all frozen and marked by law.
The reporter found that in recent years, thanks to its capital accumulation in the pharmaceutical field, Contemporary Group has begun to expand its territory through expansion and mergers and acquisitions, and has successively deployed in real estate, tourism, culture and sports, finance and other fields. . However, radical expansion and diversified operations not only failed to achieve good growth for the company, but also saddled Contemporary Group with huge debts. Superimposed on the impact of the COVID-19 epidemic, the company's real estate, tourism and cultural and sports business development is facing unprecedented difficulties.
In addition to debt defaults, more than 5 billion yuan of financial products related to "Contemporary Series" are also overdue. According to people familiar with the matter, the local government is conducting an audit of the Contemporary Group, liquidating the assets and capital of the "Contemporary Department", and pursuing the direction of capital investment and unjust gains. At the same time, the Financial Debt Committee of Contemporary Group was established in mid-May this year, and as of late June, the estimated debt scale had reached 60 to 70 billion yuan.
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