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Another listed company has "stepped on a mine" with private bonds.

On the evening of August 7, Jingyi Shares (002295.SZ) announced that as of August 6, the company had not received the redemption of the remaining principal of 85.5 million yuan and part of the income from the "21 Shangshi 01" bonds that were due.

There were already signs that Jingyi Shares' bond investment was overdue. In August 2021, Jingyi Shares purchased 90 million yuan worth of "21 Shangshi 01" bonds, with a high coupon rate of 7% per annum. Starting from 2022, due to the failure of Shangshi Financial Leasing Co., Ltd. (hereinafter referred to as "Shangshi Company") to repurchase as agreed in the agreement, Jingyi Shares had taken the company to court and later reached a settlement.

The overdue bond investment that failed to be recovered may have a certain impact on Jingyi Shares' finances. In recent years, the company's net profit has been declining year by year, and the amount of overdue private bonds that have not been recovered has exceeded the sum of the company's net profits for 2022 and 2023.

On August 8, First Financial Daily called the company's securities department on behalf of investors, and the person in charge said that the matter currently has no impact on the company's daily operations, and the financial impact will have to wait for the audit results, but it is estimated that it will be disclosed at the time of the annual report.

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"Stepping on a mine" over 80 million yuan

There were already signs that Jingyi Shares had "stepped on a mine" with the "21 Shangshi 01" bonds.

First Financial Daily found through sorting out that the company has reserved hundreds of millions of yuan for securities investment every year. On April 27, 2021, and every April from 2022 to 2024, the company disclosed plans to invest in securities with its own funds, with the corresponding amounts for each year being 400 million yuan, 400 million yuan, 150 million yuan, and 100 million yuan.

Compared with net assets, the proportion of funds used by Jingyi Shares for investment is relatively high. Taking 2022 as an example, by the end of that year, the company's net assets were 1.3 billion yuan. From April 2021 to April 2022, the company used 400 million yuan for securities investment, accounting for more than 30%.

Part of the above investment quota was used to invest in "21 Shangshi 01". According to the disclosure, starting from August 2021, Jingyi Shares applied for and held 90 million yuan worth of "21 Shangshi 01" bonds, with a high coupon rate of 7% per annum.High returns have not yet been fully "booked," yet the principal is facing a default crisis.

Public disclosures show that in 2022, due to the failure of Shangshi Company to repurchase at the agreed time as per the agreement, Jingyi Shares filed a lawsuit with the Shunde District People's Court of Foshan City, demanding the defendant to pay a total of 90.525 million yuan for principal and returns. In February 2023, the two parties reached a mediation, and Shangshi Company should repurchase or designate a third party to transfer the bonds with a face value of 4.5 million yuan held by Jingyi Shares according to the "Settlement Agreement," and the remaining bonds with a face value of 85.5 million yuan should be repurchased or transferred by Shangshi Company or a third party designated by Shangshi Company before May 28, 2024.

However, Shangshi Company did not fulfill the agreement. As of August 6, Jingyi Shares has only transferred the "21 Shangshi 01" bonds of 4.5 million yuan, and the principal of 85.5 million yuan that has not been paid off is still overdue. During this period, Jingyi Shares has received a total of 12.4205 million yuan in investment returns related to these bonds.

In response to the above situation, Jingyi Shares stated in its announcement that the company has communicated with the issuer and will closely monitor the progress and disclose it in a timely manner.

In addition, Jingyi Shares has officially initiated legal proceedings, and the case has been filed and heard in court, with the first-instance judgment pending. During the litigation process, Jingyi Shares has applied to the court for property preservation, freezing part of Shangshi Company's account funds and 45% of the equity held by Shangshi Company in Shangshi Commercial Factoring Co., Ltd.

Public information shows that "21 Shangshi 01" (196755.SH) is a private placement bond issued on the exchange, which started interest on August 3, 2021, with a term of 3 years and maturity on August 3, 2024. The interest payment frequency is once a year, with an annualized interest rate of 7%. On August 7 of this year, Shangshi Company announced that it failed to pay the bond principal and interest on time. Currently, the total amount of bond principal and interest that the company should pay is 428 million yuan.

In addition to Jingyi Shares, Shangshi Company also has disputes with the A-share listed company ST Metro (600834.SH). According to the first-quarter report, ST Metro submitted a lawsuit to the Pudong New Area Court of Shanghai in March this year, demanding Shangshi Company to repurchase the company's 27.5% equity in Shangshi Commercial Factoring Co., Ltd. (with the company having exercised a pledge of 137.5 million yuan as the consideration).

What impact does this have on operations?

For Jingyi Shares, what is the impact of stepping on the default of private placement bonds?

In the past three years, the net profit of Jingyi Shares has been declining year by year. According to the financial statements, the company's net profit for 2021-2023 was 59 million yuan, 29 million yuan, and 24 million yuan, respectively. The overdue bond amount of 80 million yuan has exceeded the total net profit of the company for the two years of 2022 and 2023.As of the end of the first quarter of 2024, Jingyi Shares' cash and cash equivalents balance was 218 million yuan, a significant decrease from 367 million yuan at the end of 2023. During the same period, the company's total liabilities amounted to 671 million yuan, of which current liabilities totaled 577 million yuan.

However, regarding the impact of the overdue bonds that the company has invested in and failed to recover, a person from the company's securities department stated that this matter currently has no impact on the company's daily operations, and the financial impact is estimated to be known only when the annual report is published.

Jingyi Shares also stated in an announcement that the overdue bonds purchased have uncertain impacts on the company's current and future profits, with the specific situation being subject to the annual audit results. The company is currently in good operating condition with a sound financial status, and this matter does not affect the company's continuous operation and daily operational funding needs.

Since 2020, Jingyi Shares has disclosed 8 times of entrusted financial management and securities investment plans, with investment targets including medium and low-risk financial products, new share allotment or application, securities repurchase, stock and depositary receipt investments, bond investments, etc.

What is the current status of these investments?

Annual report data shows that at the end of 2021, the company's securities investments included 130 million yuan in "19 Shishi Subordinate" (159405.SH) and 90 million yuan in "21 Shishi 01". At the end of 2022, in addition to "21 Shishi 01", the company also invested 25 million yuan in government bond repurchase. By the end of 2023, only "21 Shishi 01" remained in the company's securities investments, with a book value of approximately 87.79 million yuan.

Jingyi Shares previously disclosed that it still plans to use a higher proportion of funds for financial management and securities investments this year. The company disclosed on April 27th that it intends to use up to 100 million yuan of its own funds for securities investments; it plans to use up to 400 million yuan (inclusive) of its own funds to purchase bank financial products, with the investment being in bank financial products that have high liquidity and are of medium and low risk.

Regarding the aforementioned preliminary plan for the direction of investment and whether there are other products from Shishi Company, the person from Jingyi Shares' securities department stated, "Currently, it's just those (products) mentioned in the (announcement)."