Click image for details Source: Wanlianwang (ID: wanlinkcn) Introduction: Eternal Asia issued a supplementary announcement regarding the trading halt for a major matter, clearly stating that the partner for the strategic matter is a Shenzhen municipal state-owned enterprise, and the main issue involves transfer of controlling stake. In response to this announcement, rumors circulate that Shenzhen Capital Group will acquire over 50% of Eternal Asia's shares, and Zhou Guohui will step down to become the second largest shareholder. What do you think? On August 25, Shenzhen Eternal Asia Supply Chain Co., Ltd. (hereinafter referred to as "the Company") issued a supplementary announcement regarding the trading halt for a major matter. The announcement showed that the Company and its controlling shareholder, Shenzhen Eternal Asia Investment Holding Co., Ltd., were planning to sign a strategic agreement. According to the relevant provisions of the Shenzhen Stock Exchange Stock Listing Rules, the Company's stock has been suspended from trading since the opening of the market on August 7, 2017. It is worth noting that the announcement clearly states that the partner for the strategic matter is a Shenzhen municipal state-owned enterprise, and the main issue involves transfer of controlling stake. As the first listed supply chain enterprise in China, it is no exaggeration to say that every move of Eternal Asia causes a major earthquake in the industry. The announcement of the trading halt has touched every nerve of industry insiders. Who is the Shenzhen state-owned enterprise cooperating with Eternal Asia? What is going on with the transfer of controlling stake? Rumor: Zhou Guohui to Step Down as Second Largest Shareholder Netizens are buzzing about this on stock forums. With the acceleration of "managing capital," central and local state-owned enterprise reform funds are being established faster. It is understood that a special sub-fund for mixed-ownership reform of central and local state-owned enterprises will be established soon. The Sino-US Fund, jointly established by Shenzhen Capital Group, Shenzhen Yeilding Group, Shenzhen Duty Free Group, and other municipal state-owned enterprises, focuses on venture capital for high-tech enterprises at home and abroad and cross-border M&A, with a total scale of RMB 4 billion. Rumors say that the fund has already reached cooperation intentions with several domestic listed companies such as Eternal Asia and Tongxingda, and is planning overseas project acquisitions. In the future, the Sino-US Fund will accelerate cross-border M&A business as appropriate. Further rumors indicate that Shenzhen Capital Group will invest less than RMB 3 billion to acquire more than 50% of Eternal Asia Group's shares. In other words, Eternal Asia's chairman Zhou Guohui will transfer more than 50% of Eternal Asia Group's shares, and Mr. Zhou will step down to the position of second largest shareholder. Regarding these online rumors, reporters called Eternal Asia's senior executives, who said that everything is subject to the company's announcements. Reporters also called securities company executives, who said they were not aware of the matter. Speculation: Benefits of Cooperating with State-Owned Enterprises In recent years, with the deepening of state-owned enterprise reform, there are numerous examples of state-owned enterprises taking stakes in non-state-owned enterprises, such as Shenzhen Metro's investment in Wanda, and Gree Electric's state-owned reform. It must be admitted that state-owned enterprise investment has, to varying degrees, helped enterprises improve operational efficiency, release performance, and enhance market valuation. Sun Hongbin also talked about the benefits of cooperating with central and state-owned enterprises. He said that the convenience of cooperating with state-owned enterprises like Wanda, Shougang Group, and Fangxing Real Estate is "trouble-free," "because when we cooperate with them, they hold controlling stakes, and they manage the loans." So, is Eternal Asia cooperating with state-owned enterprises now also eyeing their resources? As we all know, cash flow is a highly watched indicator for every enterprise and investor. According to general accounting standards, currency, accounts receivable and notes receivable, inventory, short-term borrowings, and accounts payable can reflect a company's vitality. The sum of these indicators means whether a company can survive even if it does nothing. The first quarter 2017 financial report shows that Eternal Asia's net cash flow from operating activities was negative RMB 2.478 billion. It is understood that Eternal Asia, which heavily relies on cash, issued an announcement on July 4, 2017, regarding the non-public issuance of corporate bonds, planning to issue non-public corporate bonds with a total face value not exceeding RMB 3 billion (including RMB 3 billion). Is the cash flow issue one reason for Eternal Asia's cooperation with state-owned enterprises? "For supply chain companies, state-owned capital investment can provide access to more low-cost capital resources, government resources, customer resources, etc.," said a senior consultant at Wanlianwang. "State-owned enterprise investment may provide Eternal Asia with more government support in customs, inspection, taxation, foreign exchange, and other areas. It may not be direct support, but with a state-owned enterprise as a backing, Eternal Asia can fly higher and go further in international, global, and domestic business. Additionally, it must be mentioned that state-owned capital investment also has obvious benefits for improving Eternal Asia's cash flow." Regarding the benefits of state-owned enterprises investing in supply chain companies, an industry veteran said that it is similar to the benefits of mixed-ownership reform, but the key is whether the state-owned enterprise is making a financial investment or a business investment. The two are different: business investment is for integrated development, while financial investment may be short-term behavior. The above are just rumors and speculation. Let's wait and see what wings state-owned enterprise investment can give Eternal Asia! Click image for details The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. At this conference, New Distribution has invited over 1,000 distributors, 500 brand owners, founders of over 200 B2B platforms, and over 100 investment and financing institutions to participate. The theme of this conference: New Forces, New Ecology. We will invite well-known domestic B2B industry experts, mentors, and B2B platform founders to discuss the following topics:
How can the FMCG industry leverage B2B to achieve new growth opportunities?
How should the new supply chain behind new retail be built?
How can intra-city logistics help B2B achieve leapfrog development? Highlights of this conference: The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent distributors' transformation and upgrading
Upgraded conference + exhibition, with Hall 6 Internet Technology Exhibition strengthening networking
Leaders from well-known enterprises in various fields, including Alibaba Retail Link, Prologis Finance, Eternal Asia Supply Chain, Best Store Plus, Yijiupi, Unilever, Hitech Technology, and Yunmei Shares, will deliver speeches and share pioneering views. October 17-18, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend and note "Conference Registration" Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum 2017 (2nd) China FMCG + Internet Conference Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum -END-