"The world's largest driving school" is also not good, and Oriental Fashion has suffered a huge loss of 360 million and has been downgraded

Small bonds are on the market

2024-07-01 12:27Creators in the field of finance and economics

In 2023, due to the combined impact of discounted sales of inventory vehicles, impairment losses and the intensification of the erosion of expenses during the period, Oriental Fashion's performance will suffer a huge loss.

01

demote

On June 27, United Credit transferred Oriental Fashion (603377. SH) downgraded its long-term credit rating from AA- to A+, and downgraded the credit rating of "Dongshi Convertible Bonds" to A+, with a negative outlook.

Credit Rating Announcements

According to the report, there are serious deficiencies in the implementation of Oriental Fashion's corporate governance structure and internal control system, and the management level needs to be improved.

Since 2023, the actual controller and former chairman of Oriental Fashion have been subject to criminal coercive measures, the controlling shareholder and the actual controller's shares have been passively reduced, and the controlling shareholder has a number of enforcement information; The company's litigation matters increased and the China Securities Regulatory Commission received a notice of filing.

In addition, Beijing Dahua International Accounting Firm issued an audit conclusion with a qualified opinion and an internal control audit report with a negative opinion on the 2023 financial report of Oriental Fashion.

At present, Oriental Fashion's credit record has added a number of overdue, concerned and bad records due to matters such as extension.

According to the statistics of "Small Debt Market", at present, there is only one "Dongshi Convertible Bond" in Oriental Fashion, with an issuance scale of 428 million yuan, and a total of 330 million yuan has been converted into the company's A-share ordinary shares, and the scale of the transfer of shares has not yet been 98 million yuan, and the conversion price is 12.15 yuan per share.

Details of "East Time Convertible Bonds".

On September 5, 2023, the closing price of Oriental Fashion's stock price was lower than 80% of the current conversion price for at least 15 of any 30 consecutive trading days, triggering the downward revision of the conversion price of the "Eastern Times Convertible Bonds".

02

Financial deterioration

According to the official website, Oriental Fashion was established in 2005, the head office is located in Daxing District, Beijing, is a national driver training industry leader, and is also the only driving school in Beijing that can provide fully quasi-driving driver training.

In February 2016, Oriental Fashion was officially listed on the A-share market, becoming the "first driving school stock" in China.

Oriental Fashion Beijing Park covers an area of 3,000 acres, certified by the World Records Association as "the world's largest driver training institution", with more than 3,000 training vehicles and more than 2,000 high-level instructors.

Oriental Fashion official website

From the perspective of equity structure, the controlling shareholder of Oriental Fashion is Oriental Fashion Investment Co., Ltd.; Xu Xiong, the actual controller, directly holds 6.9% of the company's shares and indirectly controls 19.44% of the shares through Oriental Fashion Investment, holding a total of 26.34% of the shares.

As of June 14, 2024, all the shares of Oriental Fashion held by Xu Xiong have been judicially marked, judicially frozen or waiting to be frozen; The 83.65 million shares of the company held by Oriental Fashion Investment through ordinary accounts have all been judicially marked, judicially frozen or waiting to be frozen, accounting for 59.69% of its shares.

Shareholding structure chart

Oriental Fashion's revenue mainly comes from the driving training business, and in 2019, it entered the field of general aviation training, realizing the leap from "motor vehicle driving training" to "aviation driving training".

In terms of performance, in 2023, due to the combined impact of discounted sales of inventory vehicles, impairment losses and the intensification of the erosion of expenses during the period, the total profit loss of Oriental Fashion will expand to 329 million yuan year-on-year.

In 2023, Oriental Fashion will achieve a total operating income of 1.042 billion yuan, a year-on-year increase of 4.22%; The net profit loss attributable to the parent company was 362 million yuan.

In the first quarter of 2024, Oriental Fashion achieved an operating income of 187 million yuan, a year-on-year decrease of 7.96%, and a net profit attributable to the parent company of -35 million yuan, an increase of 45.83% year-on-year.

Net profit attributable to the parent company

As of the end of the first quarter of 2024, Oriental Fashion has total assets of 4.695 billion yuan, total liabilities of 2.713 billion yuan, net assets of 1.981 billion yuan, and an asset-liability ratio of 57.79%.

In recent years, Oriental Fashion's interest-bearing debt has grown rapidly, and the company has short-term capital turnover pressure.

The analysis of the debt structure of "Small Debt Market" found that Oriental Fashion mainly focuses on current liabilities, accounting for 64% of the total debt, and the debt structure needs to be optimized.

As of the same reporting period, Oriental Fashion had current liabilities of 1.733 billion yuan, mainly short-term borrowings, and its short-term debts due within one year were 798 million yuan.

Compared with the pressure of short-term debt, Oriental Fashion has tight liquidity, and its monetary funds on the account are only 821.383 billion yuan, which is not enough to cover short-term debt, and it is declining year by year, and the company has a large short-term debt repayment pressure.

In addition, in terms of standby funds, as of the end of June 2023, the total credit line of Oriental Fashion Bank was 1.092 billion yuan, and the unused credit line was 216 million yuan, which shows that the company's financial flexibility is not good.

Line of credit

In terms of liabilities, Oriental Fashion also has non-current liabilities of 980 million yuan, mainly long-term borrowings, and its long-term interest-bearing liabilities totaled 327 million yuan.

On the whole, the total scale of Oriental Fashion's rigid debt is 1.125 billion yuan, mainly short-term interest-bearing debt, and the interest-bearing debt ratio is 41%.

From the perspective of financing channels, as a listed company, Oriental Fashion has direct financing channels, but its indirect financing channels need to be broadened.

In terms of cash flow, in the first quarter of 2023 and 2024, after repaying a large amount of debt, Oriental Fashion's financing cash flow showed a net outflow, and the company faced certain refinancing pressure.

From the perspective of asset quality, Oriental Fashion has large-scale fixed assets and land assets, and other receivables have a high degree of capital occupation and 80% of the receivables have been identified by the audit institution as the basis for forming a qualified opinion because they have not provided sufficient information and information, and the company's asset quality and liquidity are very weak.

In terms of restricted assets, as of the end of 2023, the book value of assets with restricted ownership and use rights of Oriental Fashion totaled 1.23 billion yuan, accounting for 25.55% of the total assets at the end of the same period.

Overall, Oriental Fashion's performance is poor, and the ability to protect debt and interest from huge losses in 2023 will decrease; The company's interest-bearing liabilities are high and the company's liquidity is poor; There is a net outflow of financing cash flow, and there is certain refinancing pressure.

03

The world's largest driving school

At the beginning of its establishment, Oriental Fashion has always implemented an asset-heavy model, that is, it has invested a lot of money in venues, vehicles and other equipment.

Thanks to the asset-heavy model and the rapid expansion of the country, Oriental fashion has unlimited scenery for a while. However, the regional concentration of Oriental Fashion business is high, and some foreign business operations continue to lose money.

By the end of 2023, the company had a market share of approximately 32% in the field of driving training in Beijing, of which the market share of small cars was approximately 48%.

In 2020, the driving school industry was hit hard by the epidemic. In recent years, with the saturation of private cars, the decline in market demand, and the intensification of competition, the driver training industry is facing difficulties.

Xu Xiong, the former chairman of Oriental Fashion

The previous asset-heavy model has become a "heavy burden" on the body of Oriental fashion.

In the face of this situation, Oriental Fashion has also actively sought transformation, laid out the direction of "Internet + driver training", and transformed the company from an asset-heavy model to an asset-light model.

In addition to the driving school business, Oriental Fashion is also actively seeking a second growth curve. However, judging from its performance, it is still difficult for Oriental fashion to break through.

In September 2023, the actual controller Xu Xiong was arrested by the First Branch of the Shanghai Municipal People's Procuratorate on suspicion of manipulating the securities market.

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