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The evening of May seventeenthPspcrashbandicoot* ST Tianchuang Disclosure announcement, received a regulatory inquiry letter on the company's 2023 annual report issued by the Shanghai Stock Exchange, covering sales expenses, inventory, accounts receivable, current accounts, investment real estate, transactional financial assets, monetary funds, cash flow and other matters.

On the evening of May 16th, * ST Tianchuang just replied to the inquiry letter of April 29th of the Shanghai Stock Exchange and replied to the non-standard opinions of the 2023 annual report. Since the resumption of trading on May 6th, * ST Tianchuang has continued to fall sharply, falling by the limit for six consecutive trading days. As of May 17, * STT generated income of 3 yuan per share, with the latest market capitalization of 12Pspcrashbandicoot60 million yuan.

Receive a regulatory inquiry letter again

* ST Tianchuang 2023 annual report shows that in 2023, * ST Tianchuang achieved operating income of 12.Pspcrashbandicoot74 million yuan, basically the same as the previous year, and sales expenses were 595 million yuan, down 5.99 percent from the same period last year, accounting for 46.70 percent of the operating income. Of the sales expenses, shopping malls and e-commerce deducted 244 million yuan, an increase of 4.64% over the same period last year. The inquiry letter believes that it is inconsistent with the changing direction of the overall sales expenses.

In terms of inventory, at the end of the reporting period, * ST Tianchuang inventory has a book value of 322 million yuan, with a large amount, of which 291 million yuan is in stock, accounting for 90.38% of the inventory. From 2021 to 2023, the provision for the decline in the price of goods in stock at the end of the period accounted for 3.55%, 10.41% and 5.45% of the book balance respectively, and the proportion fluctuated greatly.

With regard to accounts receivable, the annual report shows that at the end of the reporting period, * ST Tianchuang had a book balance of 123 million yuan, of which 108 million yuan was provided for bad debts according to the combination, and the proportion of provision for bad debts was reduced from 3.64% to 1.93%. In this regard, the Shanghai Stock Exchange asked to explain the main reasons for the change in the proportion of provisions for bad debts at the end of the reporting period, and whether there was insufficient provision for bad debts for accounts receivable.

In addition, the Shanghai Stock Exchange also inquired about transactions, investment real estate, transactional financial assets, monetary funds, cash flow and other matters, and required * ST Tianchuang to reply in writing and fulfill its information disclosure obligations within 10 trading days.

Letter cloak violation was punished

* ST Tianchuang is a well-known brand of women's shoes, which landed on the Shanghai Stock Exchange in 2016. But since 2020, the company has been operating at a loss. In 2023, * ST Tianchuang achieved operating income of 1.274 billion yuan, an increase of 0.06% over the same period last year; the net profit attributed to shareholders of listed companies was-30.1573 million yuan, and the net profit in 2022 was-179 million yuan.

It is worth noting that * ST Tianchuang 2023 audit report was unable to express its opinion, internal control audit report was negative, and three independent directors abstained from voting on the company's 2023 annual report and summary, 2023 internal control evaluation report and 2023 financial final report. Since May 6, the company has been implemented delisting risk warning and other risk warnings.

On the night of the disclosure of the annual report, * St Tian Chuang received a regulatory inquiry letter issued by the Shanghai Stock Exchange, requiring detailed disclosure of relevant non-standard opinions. On the same day, the company also received a "decision on order and corrective measures" issued by the Guangdong Securities Supervision Bureau. According to the decision, * ST Tianchuang did not go through the related party transaction review procedures for Shenzhen Jiusong's acquisition of Kuaimei makeup technology equity, nor did it disclose it to the public in a timely manner, and the Guangdong Securities Regulatory Bureau decided to take administrative regulatory measures to order the company to correct in accordance with the law.

Strange transactions attract regulatory attention

According to * ST Tianchuang annual report, financial statements and audit report, on November 10, 2022, * ST Tianchuang holding subsidiary Shenzhen Jiu Song Yufan Investment Center (referred to as "Shenzhen JiuSong") signed an agreement with the natural person Wu Mou and Shenzhen Kuaimei make-up Technology Co., Ltd. (referred to as "Kuaimei make-up Technology"), the actual controller of Shenzhen Kuaimei make-up Communication Co., Ltd. Shenzhen Jiusong transferred 8.8712% equity of Kuaimei Cosmetic Technology held by Wu Mou, a natural person, for 40 million yuan.

Audit firm PricewaterhouseCoopers found that in June 2022, Wu bought 8.8712% of Kuaimei Cosmetic Technology from the equity investment partnership in Pingtan at a transfer price of 13.2 million yuan. On December 31, 2023, * ST Tianchuang recognized the investment as other non-current financial assets measured at fair value of $35.6 million and recognized a fair value loss of $4.94 million in 2023.

It is worth noting that when Jiuxong in Shenzhen bought a stake in Kuaimei makeup technology from Wu, Pingtan was a legal person that held more than 5% of the equity of * ST Tianchuang, and the above transaction penetrated into a related party transaction. However, * ST Tianchuang failed to review and approve as required and disclosed to the public, and there was a question of reasonableness in recognizing the investment as the valuation of other illiquid financial assets measured at fair value.

PricewaterhouseCoopers also noted that another shareholder of Fast Beauty Technology transferred its stake in October 2023 at a much lower price than the share price of * ST Tianchuang's stake in Fast Beauty Technology transferred from Wu.

At a time when the annual report is about to be disclosed, * ST Tianchuang signed with natural person Wu Mou, actual controller of Kuaimei make-up Technology, Fast Beauty make-up Communication and Fast Beauty make-up Technology on April 23.PspcrashbandicootInvalid agreement on equity transfer agreement of Shenzhen Kuaimei Cosmetic Technology Co., Ltd., and received 40 million yuan of equity transfer money returned by natural person Wu on April 24th.

(article source: China Securities News)