There was little suspense that LeTV’s net worth had failed to become a regular employee in its annual report and had to go to a standstill. On April 28, LeTV released its first quarter of 2019 report showing no sign of improvement. In the first quarter of this year, LeTV achieved revenue of 129 million yuan, down 70.54 percent from the same period last year, and a net profit loss of 177 million yuan, a loss of 42.26 percent over the same period last year. Earlier, LeTV released its 2018 annual report, the company’s 2018 audited shareholder net assets of listed companies are negative. This means that the suspension of the listing of LeTV is almost certain.
According to the rules governing the listing of shares on the gem of the Shenzhen Stock Exchange, LeTV shares have been suspended from the date of disclosure of the annual report (that is, April 26). The Shenzhen Stock Exchange will make a decision on whether to suspend the listing of the company’s shares within 15 trading days after the suspension.
Since then, LeTV stock price has been fixed at 1.69 yuan per share, with a total market value of 6.742 billion yuan, a sharp decline from the peak market value of 170 billion yuan. The previous day, in the last trading day, there was still 937 million yuan turnover pried open the board for three consecutive days. According to the first quarterly report of 2019, as of March 31, 2019, the number of shareholders in LeTV is still 257000.
According to LeTV’s annual report, in 2018, LeTV achieved total revenue of 1.558 billion yuan, a decrease of 77.83 percent over the same period last year, and the net profit attributable to shareholders of listed companies was-4.09 billion yuan, compared with-13.9 billion yuan in the same period last year, a decrease of 70.49 percent over the same period last year. The net assets of shareholders of listed companies are-3.026 billion yuan, a sharp decrease of 556.44 percent over the same period last year.
In 2018, the operating business (advertising and paying business) has a total operating income of RMB 8.54 billion, accounting for 54.82%; The distribution of copyright and the distribution of the TV series were 2.71 billion yuan, accounting for 17.43%. The above-mentioned income, compared with the same period in 2017, shows a significant downward trend, which is mainly based on the continued damage of the company’s brand reputation in 2018, and the company’s operation is in a low-ebb state.
For the reason of the loss, Le Vision stated that the loss of the bad debt of the related parties and the long-term asset amortization cost of the company’s prior purchase of the film and television copyright were amortized year by year, while the income scale was greatly reduced. The reduction of long-term assets due to a decline in income levels has led to an operational loss in 2018.
In addition, LeTV said that in the case of a large number of related party claims can not be repaid, a large number of interest-bearing debt can not be repaid and continue to generate financial costs, further increasing the impact of the loss.
In fact, even if the Shenzhen Stock Exchange decides to suspend the listing, from a procedural point of view, LeTV still has the possibility of resuming the listing. According to regulations, in the 2019 annual report after one year, if LeTV meets the conditions for resuming listing, including the audited net profit in the most recent fiscal year and the net profit after deducting non-recurrent profits and losses, the net asset at the end of the period is positive and the financial and accounting report is not qualified, and the audit report that cannot express or negate the opinion, etc., LeTV may submit an application for resumption of listing to the Shenzhen Stock Exchange.
At present, however, the management of LETV has not been improved in the first quarter report. LeTV said that in the first quarter of 2019, the Company’s advertising business income, member and distribution business income did not increase compared with the same period of the previous year.
In 2018, the traffic and coverage of LeTV video sites also decreased compared with the same period, and the average daily page views on PC and mobile were significantly lower than the average daily data in 2017.
In addition, Jia Yueting and its related parties and listed companies between the debt problem has not made progress. LeTV said in its annual report that so far, most of the related receivables have not been recovered. As of December 31, 2018, the balance of arrears of major shareholders and their substantive control enterprises to the merger scope of listed companies reached about 2.8 billion yuan.
It is worth mentioning that as Letv Holdings auctioned all its shares in Le Chuang Civic last year, Le Chuang Civic has been spun off from Letv holding system, and there is no such situation as default on debt, illegal external guarantee, occupation of funds by related parties, and so on. At present, Rongchuang China is the major shareholder of Le Chuang Culture and Entertainment, and the second largest shareholder of LeTV Network, so Le Chuang Civic and Le Vision are recognized as “other related parties”.
LeTV itself also faces huge debt and can’t be solved in the short term. As at December 31, 2018, notes payable and accounts payable within the scope of the consolidated statement of listed companies were 3.355 billion yuan, mainly due to suppliers and service providers. The long-term and short-term loans within the scope of the consolidated statements of listed companies were 555 million yuan, and other current liabilities were 3.304 billion yuan, which were mainly generated by the company borrowing from financial institutions and non-financial enterprises.
In the view of Shen Meng, executive director of Xiangsong Capital, LeTV may be destined to take the road of delisting. “No one is willing to accept LeTV’s mess at the moment, so there is little chance of injecting new assets into salted fish, so it is likely to delist. The speculative nature of the Chinese stock market, as well as the non-standardization of the market, have previously been delisted and relisted and skyrocketed, so investors who entered in the last few trading days are undoubtedly trying to speculate. “