Sunshine city reply to the inquiry: market environment cliff type decline inventory decline preparation

2022-04-25 0 By

Yango Group Co.,Ltd. (HEREINAFTER referred to as Yango Group Co.,Ltd) announced on February 18 that shenzhen Stock Exchange had replied to the company’s letter of concern.Previously, Yango City received a letter of Concern on Yango Group Co.,Ltd from Shenzhen Stock Exchange on January 29, 2022.According to the Shenzhen Stock Exchange, in combination with your company’s business situation, real estate area and sales situation, explain the specific situation of the major inventory items for large impairment, the basis for impairment and the calculation process, as well as the main reasons, compliance and rationality of the large amount of inventory depreciation reserve in this report period compared with previous years.Ask annual audit accountant to check and comment.Sunshine city believes that in 2021, the real estate industry policy adjustment upgrade, the rapid decline in market demand, industry sales fell seriously, the market sales price did not meet expectations, the company to further promote sales collection, take price reduction measures;In addition, the frequent occurrence of credit risk events in the industry, domestic and foreign rating agencies have successively downgraded the company’s rating, the company’s refinancing is blocked, the liquidity of cash collection is greatly limited, liquidity pressure is obvious, customer confidence has been severely depressed, customer flow has dropped significantly, which has a great impact on the company’s sales, and the future sales situation is not optimistic;Moreover, in the future, the industry will still adhere to the basic ideological program of “housing not speculation”, and strive to establish a long-term mechanism to promote the healthy development of real estate and explore new development models. The company believes that the real estate market will remain stable in 2022, and is cautious about the sales volume and price expectations.Based on the above reasons, in 2021, the overall market environment and the company’s own fundamentals show a cliff decline, and the company adjusts the price dynamically according to the market situation.In accordance with the above situation, the company shall, based on the principle of prudence, make provision for the decline of the corresponding inventory.About 800 million inventory impairment provision in 2020, the year in 2019 about 500 million inventory impairment provision, more than 100 million yuan price of project and the number is less, the main department in 2019 and 2020 to the market generally expected environment well, and green house of wisdom, quality tree also increased sales of premium, the relevant measures such as benchmarking to sales average relatively optimistic,Take the project in Table 1 as an example, the price of the project in 2020 is relatively high, there is no large price drop of the project, and the company’s own fundamentals are relatively stable, so there is no large provision for inventory price drop.Compared with previous years, this report period concentrated large amount of reserve for inventory price decline, mainly because the overall market environment and the company’s own fundamentals in 2021 show a cliff decline, leading to the price reduction of most of the company’s projects in 2021 to varying degrees, so most of the projects have signs of impairment (see Table 1 for details).Therefore, the amount of inventory depreciation provision during the reporting period increased substantially compared with the same period last year.To sum up, due to the overall market environment and the company’s own fundamentals in 2021, the company dynamically adjusts the selling price of most items. According to the accounting standards, the lower the cost and net realizable value method, and based on the principle of prudence, the corresponding inventory depreciation reserve is prepared.Source: Viewpoint