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How long will the struggling Cool Group continue to lay off workers, borrow, sell assets?

via:博客园     time:2018/12/6 21:18:24     readed:225


This article is from Wechat Public Number: Economic Observer (ID: eeo-com-cn), by Li Huaqing.

With only one month left in 2018, Cool Group (2369.HK) has not yet been able to announce its annual report for 2017. It announced its performance for 2017 on December 5, and its business situation is still unsatisfactory. According to the performance announcement, Cool Group's revenue in 2017 was HK$3.378 billion, down 57.61% from the previous year. The loss of listed companies was HK$2.674 billion, and the loss narrowed by 38.93%.

In the revenue structure of Cool Group in 2017, sales of mobile phones and related accessories accounted for 96.62%, wireless application services accounted for 2.55%, and financing services accounted for 0.83%.

Only in April 2018 did Cool Group announce its 2016 annual report, which showed a loss of HK$4.401 billion in 2016.

According to the annual report of 2016, the net asset value of Kupai Group was HK$3.538 billion by the end of 2016, while the performance data of 2017 showed that by the end of 2017, the net asset value of Kupai Group was only HK$789 million. If Kupai Group could not get out of its business predicament in time, its net asset value would soon be negative.

Cool groups are struggling, laying off workers, selling assets and lending, all of which are self-help tools.

Management dilemma

Cool Group is still in suspension, suspension time has been more than a year, Cool Group said that the company has been working with third-party institutions in order to resume trading.

Once with Huawei as the domestic mobile phone industry

By the end of 2017, the trade accounts payable of Cool Group were HK$756 million and notes payable were HK$45.93 million. It had to borrow new debt to repay old debt. Some creditors had sued Cool Group for overdue payment. In 2017, the suppliers of Cool Group filed a civil appeal demanding that Cool Group immediately repay the overdue accounts payable of HK$205 million. So far, the arbitration procedure for the civil appeal has not been completed.

In 2017, the gross margin of Cool Group was - 9.43%, down from 2016, which is related to the accelerated sale of unsalable inventory by Cool Group in 2017. But Cool also acknowledged in its earnings announcement that sales in China and Southeast Asia were still declining in 2017 and that the company was cutting down products that could cause losses.

Overseas markets are the focus of Cool School, with overseas revenues of HK $1.901 billion and mainland China's HK $1.476 billion, accounting for more than 50 percent of revenues in 2017, according to earnings figures for 2017. In order to save costs, the 2017 CoolPay has been detonated in China will recruit all graduates to terminate the contract. But in the past, the cool pie, which used to want to take advantage of overseas markets, is now trying to figure out if it can get a slice of the domestic market. In its 2017 results announcement, Cool Group said:

For the emerging AI wave, the Cools are also trying to catch up. In 2017, the Cools set up the AI Science and Technology Center.

Big action saves itself

Saving money and raising money have become two legs for the cool to keep walking.

At the end of 2016, the number of Cool Piece employees was 4504, and the wage cost of the employees was HK$697 million. At the end of 2017, the number of employees fell to 1421, two-thirds of them were laid off in one year, and the wage cost of employees in 2017 was HK$548 million.

Cool Group disclosed in its performance announcement that in 2017, it gained 40 million yuan by selling land, because it issued convertible bonds and received a proposed deposit of HK$58 million.

After consultation with the bank, a Chinese bank confirmed in July 2018 its willingness to renew Cool's short-term bank loans totalling HK$48 million. Cool faction also borrows money from shareholders. In May 2018, Cool faction signed a loan agreement with shareholder Jingji Group Co., Ltd. Jingji Group lent Cool faction up to 500 million yuan for operation. The loan term is 12 months and the annual interest rate is 6.5%.

The sale of assets continues. On July 25, 2018, Coop sold its investment property in Shenzhen for HK$118 million; on July 30, 2018, Coop sold 80% of its wholly owned subsidiary for HK$120 million. Both transactions are in cash and both are expected to be completed by the end of 2018.

This article is from Wechat Public Number: Economic Observer (ID: eeo-com-cn), by Li Huaqing.

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