Dehao Runda “circle money” sucking Dafa: government subsidies and refinancing

Recently, Dehao Runda (002005.SZ), which has been widely concerned with the original actual controller's disputes and resentment of NVC Lighting (02222.HK), was disappointing in its first half results.

According to the semi-annual report disclosed on August 28, Dehao Runda not only reduced its net profit by 23.36% compared with the same period of the previous year, but also deducted non-EPS earnings and even lost RMB 0.01.

It is worth noting that Dehao Runda's net profit for the first half of the year was only 38.725 million yuan, and the non-loss was 12.072 million yuan. The government subsidy for the current profit and loss was as high as 64,430,900 yuan.

"In recent years, the government has subsidized the LED industry more, and the peers have received different levels of financial subsidies." Dehao Runda staff told reporters.

Government grants 1.1 billion whitewash main business <br> <br> since 2009 to enter the LED industry, government subsidies have become a major source of profit for BDO Runda.

According to the statistical reports of the 21st Century Business Report, from 2009 to the first half of this year, Dehao Runda’s government subsidies for the profit and loss of the final report totaled 110.084 million yuan, and the accumulated net profit for the same period was only 846.5217 million yuan. The former is actually 1.31 times the latter.

"This year's government subsidies can reach the amount of last year, can not be expected, but the government subsidies included in the profit and loss in the first half of this year are higher than the more than 50 million yuan in the same period last year." The aforementioned Dehao Runda staff said. According to the annual report, Dehao Runda's government subsidy for profit and loss in 2013 was 232.04 million yuan, although it was lower than the 31.204 million yuan in 2011, but slightly higher than the 2012's 2,222.4 million yuan.

Dehao Runda has obtained a large number of government subsidies. In addition to asset-related funds such as major industrialization projects for LED chip production projects related to the LED industry, subsidies for research and development subsidies for MOCVD equipment, and subsidies for LED production lines, it also involves provincial and municipal finance. Subsidy subsidies, import equipment subsidies, import equipment subsidies and other income-related subsidies, and more than 10 types of government financial subsidies.

The government subsidy has supported Dehao Runda for more than five years, but its LED industry development has always been unsatisfactory. Although the LED business sales revenue reached a record high in the first half of the year and exceeded the small household appliance business for the first time, its gross profit margin fell by 4.55%.

And Dehao Runda received 92 MOCVD machines with high government subsidies, and currently only 58 units are in production (including 6 R&D machines).

"Because of the fierce competition in the market for positive-loaded chips, the gross profit margin is not high, and the remaining machines of the company will be mainly used for the production of flip-chips." Dehao Runda’s secretary-general Deng Fei said in a research conducted by the reception agency.

However, the organization seems to have doubts about the future development of flip chip business in Dehao Runda. In the first half of the survey, it also questioned whether flip chip is a niche product and how to improve market acceptance to ensure capacity utilization.

Dehao Runda, whose own LED industry is not profitable, has begun to seek to “grab” the channel strength of NVC Lighting, which is the nation's number one. It has bought and transferred equity through the secondary market. As of the first half of this year, it has invested a total of 215,637,140 Hong Kong dollars. Obtained 27.03% control of the latter.

NVC Lighting, which is now caught in the spiral of stakeholder disputes and public opinion, has also brought book income to Dehao Runda. In the first half of this year and 2013, the profit and loss of this equity investment of Dehao Runda was RMB179.634 million and 4725.66 respectively. Ten thousand yuan, together with a steady stream of high government subsidies, decorated the "holes" of Dehao Runda's main business.

More than 5.1 billion refinance "painting cakes"

Dehao Runda, which regards government subsidies as the “main business”, is also the “circle money” master of the capital market. According to public information, from 2010 to now, Dehao Runda has implemented three fixed refinancings and became a rare refinancing professional of A shares.

On October 19, 2010, Dehao Runda 9.54 yuan/share issued a non-public offering of 160 million shares to 4 specific targets, with a net fundraising of 150,637,800 yuan; on March 19, 2012, it was again at 15.61 yuan/share. 8 specific investors issued 100,000 shares in non-public offerings, with a net fundraising amount of 152,224,560 yuan; on June 6, 2014, a non-public offering of 230 million shares to two specific targets at 5.86 yuan/share, net proceeds It is 1337.3 million yuan.

In addition to the above-mentioned total fixed-income refinancing of 4.366 billion yuan, Dehao Runda also issued corporate bonds in March 2013, and obtained a net fundraising of 791.2 million yuan.

However, Dehao Runda, which has accumulated more than RMB 5.1 billion in refinancing, despite its claim to have built eight industrial bases and formed a LED industry chain, has attracted investment projects to “paint a cake”.

According to the 2013 annual report, DHL Runda will increase the investment in LED chips, LED packaging, LED lighting, LED epitaxial wafers and other four projects, all of which have not achieved the expected benefits, and three of them lost a total of 104,131,200 yuan last year.

Not only that, Dehao Runda also used its unused funds of RMB 12,163,833,000 to permanently replenish liquidity, LED chip projects, LED lighting projects and other savings on the grounds that LED packaging projects and LED epitaxial wafer projects have a serious oversupply capacity. The 4,277,900 yuan raised was also used to permanently replenish working capital.

DeHao Runda’s use of refinancing to supplement its working capital has also reached an impressive stage. In addition to the above-mentioned changes in fundraising, its issued 791.2 million yuan corporate bonds and this year’s fixed capital increase of 1337.3 million yuan are all used. In order to supplement the working capital, and the previous increase in the fundraising, there have been 304.4491 million yuan to supplement the working capital.

The competition for control of NVC Lighting by Dehao Runda is also interpreted as the practice of copying and obtaining capital operation paths such as government subsidies, additional financing and debt issuance.

However, for the future government subsidies, Dehao Runda staff said that although the policy subsidies are uncontrollable, the company can apply for government subsidies such as special science and technology and emerging industries.

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