I love my family's 6.6 billion backdoor 7 years, with a market value of only 4 billion, 2.6 billion debts, and 3.3 billion to speculate on stocks and financial management

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Shen Yourong

Well-known real estate agency I Love My Home (000560.HK) SZ) spent 6.6 billion yuan on backdoor borrowing for 7 years, with a market value of only 4 billion, and spent 3.3 billion yuan on stock speculation and wealth management with 2.6 billion debts, which caused market doubts.

April 25th. I Love My Home Releases 2023 Annual Report. The company's operating income was 12.092 billion yuan, a year-on-year increase from a decrease to an increase, and the net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") was a loss of more than 800 million yuan, a year-on-year loss widened.

So far, the company has lost money for two consecutive years. The loss in 2023 is related to the provision for asset impairment and the amortization of employee stock ownership plans.

I love my family, which has suffered a loss in operation, announced again that it will continue to invest 3.3 billion yuan for financial management and stock speculation.

A reporter from the Yangtze River Business Daily found that I love my family has billions of yuan in debt. As of the end of 2023, excluding lease liabilities, the company's debt exceeded 2.6 billion yuan.

In 2017, I Love My Home landed on the A-share market through backdoor trading, at that time, the target valuation was about 6.6 billion yuan, and now, the company's market value is only 4 billion yuan. After the target company completed its performance commitments, it did not maintain stable growth in operating performance as previously expected, and its net profit continued to decline.

At present, the actual controller of I Love My Home is Xie Yong, and the equity pledge rate of the company held by Xie Yong and his concerted actors exceeds 60%.

The losing streak was lower than expected

I love my family has been losing money in a row, which is significantly lower than previously expected.

According to the annual report, in 2023, the operating income of I Love My Home will be 12.090 billion yuan, an increase of 419 million yuan over the previous year, a year-on-year increase of 3.58%, and the net profit and net profit after deducting non-recurring gains and losses (hereinafter referred to as "deducting non-net profit") will be 848 million yuan and 752 million yuan respectively, with a year-on-year increase of 173.91% and 133.80%.

The loss was mainly concentrated in the fourth quarter, and the company's operating income in the quarter was 3.019 billion yuan, a year-on-year increase of 8.28%, and the net profit was a loss of 780 million yuan.

As for the loss in 2023, I love my home explained that it was due to the impact of five factors, including asset impairment provisions, changes in the fair value of investment real estate, increased marketing expenses, return of government subsidies, and amortization of employee stock ownership plans.

Among them, the company's asset impairment loss (including credit impairment loss) was 481 million yuan, and the amount of government subsidies returned was about 52.9489 million yuan.

In 2022, I love my family's performance will also be loss-making. In that year, the company achieved operating income of 11.673 billion yuan, a year-on-year decrease of 2.42%, and the net profit and non-net profit were 306 million yuan and 318 million yuan respectively.

In 2017, when I love my home went public through a backdoor listing, it described good expectations to the market.

In February 2017, Kunbaida A (now renamed as "I love my home") disclosed a major asset restructuring plan, the company intends to acquire 94% of the equity of I love my home for 6.182 billion yuan, and at the same time intends to accept 6% of the equity of let me love my home for 378 million yuan. As a result, I love my family has become a wholly-owned subsidiary of Kunbaida with a value of 6.56 billion yuan.

As of the end of 2016, the net book assets of I love my home were only 72.6892 million yuan, the appraised value was as high as 6.578 billion yuan, and the value-added rate reached 8949.49%. In the end, Kunbaida A acquired 84.44% of the equity of I Love My Home at a price of 5.553 billion yuan, forming a goodwill of 4.476 billion yuan.

At that time, the performance forecast of the appraisal agency disclosed by the company was that the operating income of I Love My Home in 2020 was 13.6 billion yuan and the net profit was 842 million yuan, and the revenue in 2021 was 15.029 billion yuan and the net profit was 1.006 billion yuan. Since then, we have entered a year of steady growth based on the data of 2021.

At present, the performance forecast of the assessment price is "unreliable". Up to now, the company has not had an annual operating income of 13.6 billion yuan.

In fact, from 2017 to 2019, the cumulative number of non-net profits deducted by the target company was 1.875 billion yuan, exceeding the commitment by 75 million yuan, with a completion rate of 104%. However, in 2020 and 2021, the actual operating income will be 9.575 billion yuan and 11.963 billion yuan respectively, and the non-net profit will be 320 million yuan and 122 million yuan, both of which are lower than the forecast, while in 2022 and 2023, there will be continuous losses.

Rely on stock speculation to break through the risk

I love my home tries to improve its profitability and achieve a breakthrough in performance through investment and financial management. This road is destined to be risky.

As one of the earliest national housing brokerage service companies in China, I Love My Home has gradually evolved into an Internet residential life service platform operator with residential transaction services as the core, focusing on providing digital industry solutions and integrated operation services. In the past two years, the company's housing brokerage and housing leasing business have contributed a total of about 80% of the company's operating income.

At present, the real estate market is still in the recovery stage, and it is expected that the operating performance of I Love My Home is under pressure, although the company said that the loss in 2023 was affected by some non-operating and one-time factors. In order to improve profitability, I love my family to invest heavily in financial management.

On the evening of April 25, I love my home announced that the company and its subsidiaries are expected to use part of the temporarily idle self-owned funds to invest in securities and wealth management products, with a total investment of no more than 3.3 billion yuan. Among them, 2 billion yuan will be used for entrusted management and securities investment (including new share placement or subscription, securities repurchase, stock and depositary receipt investment, bond investment, etc.), and 1.3 billion yuan will be used to purchase low-risk wealth management products and other risk-controllable wealth management products with a single investment period of no more than one year, and the income distribution will be in the form of cash distribution.

In fact, 3.3 billion yuan is used for investment and financial management, and I love my family will already use 3.3 billion yuan for investment and financial management in 2023. According to the company, this move is to improve the efficiency of the use of its own idle funds and increase capital income.

Do I love my family really have a lot of idle funds?

The annual report shows that at the end of 2023, the book money funds of I love my home will be 3.561 billion yuan, corresponding to short-term loans of 1.210 billion yuan, long-term loans (including interest) due within one year of about 367 million yuan, long-term loans of 1.058 billion yuan, and a total of 2.635 billion yuan of long-term and short-term debts.

In other words, the company's monetary funds are only 926 million yuan more than the debt.

In 2023, the company's financial expenses will reach 655 million yuan, of course, this expense is mainly the expenses arising from lease liabilities.

The above data shows that if the debt is paid off, the idle funds of I love my family will be less than 1 billion yuan, and this also includes the funds to maintain daily operations.

In the secondary market, since the backdoor listing, the share price of I Love My Home has also performed poorly. At the end of March 2017, the company's share price reached a maximum of 14.71 yuan / share, and on April 26 this year, the stock price was 1.73 yuan / share, and the stock price fell by about 80% after the resumption.

At present, the market value of I Love My Home is only about 4 billion yuan, which is less than the company's valuation of about 6.6 billion yuan when it was listed on the backdoor.

The stock price fell, and the pressure on Xie Yong increased. On April 24 this year, the company's controlling shareholder, Tibet Taihe Xianji Investment Management Co., Ltd. (hereinafter referred to as "Tibet Taihe"), pledged 30.1 million shares of the company to the Beijing branch of Zheshang Bank, accounting for 1.28% of the company's total share capital. Xie Yong is the actual controller of Tibet Taihe.

As of the date of the announcement, the pledge rate of the shares held by Xie Yong and Tibet Taihe, who acted in concert, was 62.86%.