The procurement of hundreds of millions of yuan failed to boost the main business, but brought the listed company into the abyss. Beijing Dahua International Accounting Firm (hereinafter referred to as "Dahua") audited the effectiveness of the internal control of Oriental Fashion's 2023 financial report and issued an "Internal Control Audit Report" with a negative opinion. According to the relevant regulations, the company's shares have been subject to delisting risk warning since May 6, and the company's securities abbreviation has been changed to "ST Dongshi". As of the close of trading on May 16, the company's shares have gained 8 "word boards" in the 9 trading days after the resumption of trading.
Oriental Fashion was issued a "non-standard" opinion involving five matters, one of which is particularly eye-catching in a group of equipment procurement matters. The company had previously purchased 3,179 VR intelligent car driving training simulators from Beijing Qianchong Phantom Technology Co., Ltd., a subsidiary of Oriental Fashion Investment Co., Ltd., for a total of more than 300 million yuan. In the 2022 annual report, the company said that it had completed deliveries as of April 2023, but in the 2023 annual report, it changed its tune and said that there were still 2,809 units undelivered by the end of 2023. Similarly, for the delivery status of the above-mentioned VR equipment, Dahua Law Firm gave diametrically opposed determinations in the audit reports of the two annual reports.
Thousands of phantom-related VR devices are stored in a warehouse in Langfang, Hebei China Securities Journal and China Securities Taurus reporter Yu Mengmeng/photo
A reporter from China Securities Journal and China Securities Taurus recently visited the warehouse where the relevant VR equipment was stored and found that the above-mentioned equipment had been idle for a year, and some of the lines were exposed on the fuselage and could not meet the delivery requirements. The person in charge of the warehouse said that the equipment was theoretically in Oriental fashion, but the latter needed to pay for the goods before it could be pulled away.
So where did the more than 300 million yuan of goods that Oriental Fashion announced earlier go? On May 15, the reporter called to interview Oriental Fashion, and the company did not respond positively to the relevant issues in the written reply, only saying that the company's board of directors attaches great importance to the matters involved in the qualified audit report and negative internal control audit report issued by the accounting firm, and is actively taking effective measures to eliminate the impact of the above unfavorable factors on the company as soon as possible.
Missing payments
This VR equipment purchase took place in 2022. At that time, since March 2022, Oriental Fashion has purchased 3,179 VR intelligent car driving training simulators from thousands of phantoms in 5 times. According to the payment arrangement, the above payment will be basically completed in 2022. Oriental Fashion's 2022 annual report disclosed that during the reporting period, the company's related party transactions with thousands of phantoms involving the purchase of VR simulators and accessories amounted to 321 million yuan.
Dahua issued an unqualified opinion on the standards for Oriental Fashion's 2022 annual report, saying that as of December 31, 2022, Qianxiang Phantom had completed the delivery of 454 units to Oriental Fashion. As of the disclosure date of this report (April 22, 2023), all equipment deliveries have been completed.
Strangely, a year later, Dahua said something different. In the audit report of Oriental Fashion's 2023 annual report, Dahua said that the other receivables were partially incomplete due to the incomplete delivery of 3,179 VR intelligent car driving training simulators purchased by Oriental Fashion from Qianzhu Phantom in 2022. As of December 31, 2023, a total of 2,809 VR intelligent car driving training simulators have not been fully delivered. The above matters have been confirmed by Thousand Phantoms, and the delivery plan and arrangement of the above-mentioned 2,809 VR intelligent car driving training simulators have been provided to Oriental Fashion.
Why was the equipment that was originally identified as delivered in the 2022 annual report overturned in the 2023 annual report? With these questions, a reporter from the China Securities Journal recently rushed to a warehouse in Langfang, Hebei Province, where 2,809 VR intelligent car driving training simulators are stored.
At the scene, the reporter noticed that the entire warehouse area is equivalent to the size of a standard football field, and nearly three-quarters of the area is used to store equipment. Li Rui (pseudonym), a staff member in charge of the warehouse, said that there are less than 3,000 pieces of equipment in the warehouse, and the shelves are basically packaged equipment, and the equipment stacked on the ground is mainly in the process of commissioning. A closer look shows that the VR simulator stacked on the ground lacks components such as the main engine, display screen, automotive simulation parts, and electrical equipment.
Multiple VR simulator lines are exposed China Securities Journal China Securities Taurus reporter Yu Mengmeng/photo
When the reporter asked whether the equipment in the warehouse belonged to Oriental fashion, the staff member's reply was intriguing. "These things are to put it bluntly, and giving money is oriental fashion. According to normal logic, these devices have been included in the assets of Oriental Fashion, but (Oriental Fashion) has never been pulled away. ”
Li Rui revealed that in March last year, just before the disclosure of Oriental Fashion's 2022 annual report, thousands of phantoms worked overtime to catch up with the delivery of VR equipment. However, the Thousand Phantoms have not received payment so far, and the above-mentioned equipment has been idle in the warehouse for nearly a year. Thousands of phantoms are affected by this, and the current capital chain is under great pressure. If Oriental Fashion's funds are in place, this batch of equipment can be delivered.
Why did the books show that more than $300 million had been paid for the goods but not fall into the pockets of thousands of phantoms? Eastern Times has not yet responded positively to this question.
Dahua's statement in Oriental Fashion's 2023 audit report is also intriguing. "Through the audit procedures that have been performed, we are unable to obtain sufficient and appropriate audit evidence on whether the above-mentioned transactions involve the occupation of funds by related parties, whether Thousand Phantoms can complete the delivery in accordance with the plan submitted to Oriental Fashion, the recoverability of the relevant payments, and the adequacy and accuracy of the provision for bad debts."
Secret relationships are clear and unclear
In addition to the VR simulator, Oriental Fashion's earlier purchase of nearly 3,000 new energy training vehicles is also full of doubts.
According to the announcement, Oriental Fashion signed a new energy vehicle procurement contract with Beijing Tonglong Automobile Sales Co., Ltd., and from 2020 to 2021, Oriental Fashion purchased a total of 3,900 new energy vehicles from Tonglong Automobile (3,898 were actually delivered, and the other 2 were returned). Among them, the contract stipulates that 1,294 new energy vehicles need to be installed with AI intelligent equipment worth 54,000 yuan.
This purchase of a training car has the same plot as the aforementioned VR simulator transaction. Oriental Fashion said in its 2023 annual report that the company conducted a comprehensive inventory of the above assets in 2023, and as of December 31, 2023, all new energy vehicles in the transaction have been delivered, 350 AI intelligent driver training systems have been delivered, and the remaining 944 have not been delivered. The company reported the undelivered AI intelligent driver training system amount of 49.8578 million yuan as other receivables and made bad debt provisions according to the aging method, 623,700 yuan of bad debt provisions at the end of 2020 according to the proportion of 5%, 2.6865 million yuan of bad debt provisions according to 10% at the end of 2021, 5.8031 million yuan of bad debt provisions according to 20% at the end of 2022, and 10.3588 million yuan of bad debt provisions according to 30% at the end of 2023.
Tonglong Automobile has confirmed the above matters and promised to complete the complete delivery of the above-mentioned 944 AI intelligent driver training systems by December 31, 2024.
Why has Tonglong Automobile failed to deliver 944 AI intelligent driver training systems?
The reporter noted that the relationship between Oriental Fashion and Tonglong Automobile is extraordinary. According to the industrial and commercial registration information, Tonglong Automobile was established in December 2019 with a registered capital of 100 million yuan, and the legal representative is Rongwei, who holds 99.9% of the shares. The two external contact phone numbers announced by Tonglong Automobile in 2020 and 2021 correspond to 15 companies, and the above-mentioned entities are basically Oriental Fashion Investment Co., Ltd., the controlling shareholder of Oriental Fashion, and related parties. In April 2020, Tonglong Automobile moved its registered place to 119, 1st Floor, Building 4, No. 19 and No. 19 Yard, Jinxing West Road, Daxing District, Beijing, which is the office of Oriental Fashion and its affiliates. In the 2020 semi-annual report, Oriental Fashion listed Tonglong Automobile as a related party, and the leasing income generated by it reached 200,000 yuan.
After a lapse of 4 months, this relationship was discarded. In January 2021, the sponsor Guosen Securities claimed that the disclosure of Oriental Fashion's semi-annual report was a disclosure error, and Tonglong Automobile was not a related party of the company. Oriental Fashion also issued a correction announcement at the same time. It should be pointed out that in November 2020, Oriental Fashion signed a new energy vehicle procurement contract of 96.715 million yuan with Tonglong Automobile. This transaction is part of the aforementioned purchase of 3,900 new energy vehicles from Tonglong Automobile.
Regulators have also taken note of the relationship between Oriental Fashion and Tonglong Automobile. Oriental Fashion explained that Tonglong Automobile gave priority to serving customers nearby when relocating, and it was more convenient to communicate and dock matters in future work. As for the same telephone number, Tonglong Automobile used the same industrial and commercial agency as Oriental Fashion and its affiliates, "Full Registration and Registration Agency (Beijing) Office", when filing the annual report registration, and the latter filled in the same contact number as Oriental Fashion and its affiliates when filing the annual report for Tonglong Automobile.
Is that really the case? The reporter's investigation found that the relevant rhetoric of oriental fashion could not be reasonably explained. According to the data, Rong Xuefeng, the supervisor of Tonglong Automobile, and Rong Wei, the legal representative of Tonglong Automobile, are sisters and brothers. Coincidentally, the person with the same name as Rong Xuefeng is also the legal representative of Beijing Tonglong Investment Consulting Co., Ltd. Tonglong Investment was established in November 2010, and the three email addresses it has used so far are basically the same as those of Oriental Fashion's affiliated companies, and three of the four telephone numbers it has declared so far are consistent with those of Oriental Fashion's affiliated companies.
In fact, Tonglong Investment still has a relationship with Oriental Fashion. The prospectus of Oriental Fashion has disclosed that the company hired Tonglong Investment to provide land consulting services for the company, which involved a cost of 2.6 million yuan in 2012 and a cost of 10 million yuan in 2013.
For more than 10 years, Tonglong Company, which is shown to be under the name of the Rong siblings, has successively traded with Oriental Fashion in the form of land appraisal and car sales, and the two parties have multiple identical phone numbers and email addresses. If only the reason for the declaration is based on the industrial and commercial agency, it is obviously difficult to explain the aforesaid coincidence.
Oriental Fashion insisted in the announcement earlier that the company had made a case-by-case judgment on the relationship between Tonglong Automobile and the company, and that Tonglong Automobile and the company had no related relationship.