The equity of the richest man in Chongqing has been frozen. Can the "wonderful brother" who owns 30 supercars save his father's car dream?

Author｜Wang Hongchen

Source｜Yema Finance

“A smart cat will always keep a crouching posture, waiting for a gust of wind to blow open the door again. Jumped out. I am such a cat that is ready to move. The reason why I have not become a living fossil is that I have been challenging the environment, fate, and myself." Yin Mingshan, the actual controller of Lifan Holdings (601777.SH) once said. So emotional.

However, he who once defeated fate encountered the most severe challenge this time.

According to a recent Lifan Share announcement, due to overdue financing projects, 97.28 of the company’s shares held by the company’s controlling shareholder Chongqing Lifan Holdings Co., Ltd. (hereinafter referred to as “Lifan Holdings”) were frozen by the court, accounting for 10% of the company’s total share capital. 45.96. And behind Lifan Holdings is Yin Mingshan, one of the legends in the business world.

Before the age of 41, Yin Mingshan was the "cat waiting to move", always keeping a crouching posture and enduring the arrangements of fate.

In 1938, Yin Mingshan was born in Fuling, Chongqing, the "hometown of pickled mustard". When he was young, his family had little wealth. However, this background laid hidden dangers for his future life.

Being considered a landlord family, Yin Mingshan and his mother were driven to the countryside during the turbulent years and lived a difficult life. It was also at this time that Yin Mingshan's talent for business began to emerge. He found that needlework is one of the most commonly used items in rural areas, and it is small and easy to carry and easy to sell. So young Yin Mingshan started this business. During the two years of selling goods, Yin Mingshan supported himself and his mother, and still made a slight profit. His first business venture was quite successful.

Later, Yin Mingshan went to Chongqing to study alone and was admitted to Chongqing No. 1 Middle School, the best in Chongqing, with excellent results. In high school, Yin Mingshan had excellent grades, but just when he was complacent and ready to "jump out", fate dealt him a heavy blow.

In his senior year of high school, Yin Mingshan was reported for his speech and was forced to drop out of school. Three years later, he was imprisoned again and sent to a plastic factory on the edge of the Yangtze River in Chongqing for labor reform. This level is 18 years. During these years, Yin Mingshan fed pigs, pulled weeds, and cleaned the cowshed every day. However, he did not give up studying and studying hard.

In 1979, Yin Mingshan regained his freedom. At this time, he was 41 years old, and fate finally opened the door for him.

After regaining his freedom, Yin Mingshan was transferred to Chongqing Design Institute as an English teacher, and later entered Chongqing Publishing House. In 1985, Yin Mingshan resolutely resigned as vice president and went to work to become a bookseller, and soon made a name for himself. The series of "Middle School Students' Dime Books" edited by him was a great success, with 30 million copies sold. With this book, Yin Mingshan made the first pot of gold in his life.

In 1992, Yin Mingshan was already the largest private bookseller in Chongqing, but he found that the ceiling of the book publishing industry was low and it was difficult to carry his bigger dream. So, after taking an entire warehouse of unsold books to a scrap collection station and selling them, he decided to start over.

It was in this year that he and Zuo Zongshen jointly founded the "Chongqing Hongda Vehicle Parts Research Institute" with the help of their wives. Although Yin and Zuo later split up and developed their own businesses, the road to motorcycle manufacturing was already laid out in front of 54-year-old Yin Mingshan.

Starting from engine production, Yin Mingshan plunged into the motorcycle industry. In 2000, 62-year-old Yin Mingshan ranked on the 2000 Forbes 50 Chinese Richest List with a net worth of 550 million yuan. In the same year, he entered Chinese football by buying the Huandao Club for 55.8 million yuan. After that, Chongqing Lifan won the first-ever championship for a Western Conference team.

In 2003, Yin Mingshan was elected vice chairman of the Chongqing Municipal People's Political Consultative Conference, becoming the first private entrepreneur to enter the ranks of senior provincial and ministerial officials after the reform and opening up. And his Chongqing Lifan also became the largest motorcycle manufacturer in China that year.

However, Yin Mingshan also realized the crisis at this time. The motorcycle industry is limited by economic laws. With the increasing GDP per capita, the motorcycle market is facing a gradual decrease.

So Yin Mingshan had a new dream, to build a car. Before him, Li Shufu, who also started in the motorcycle industry, had already taken the lead with Geely Automobile.

In the domestic car industry, Yin Mingshan’s son and “Wonderful Brother” Yin Xidi is famous for his love of luxury cars. Public information shows that it has exposed more than 30 supercars, including Bugatti Veyron, Ferrari, Koenigsegg, Pagani, BMW, Mercedes-Benz and many other luxury car brands. In addition, he is also the first Chinese buyer of many sports cars, such as Bugatti Veyron, BMW M6, BMW M3 and so on.

In 2009, Yin Xidi purchased China’s first mini Bugatti. At that time, the car's freight and vehicle price and other various expenses were as high as more than 38 million.

Compared to his son’s enthusiasm for luxury cars, Yin Mingshan’s enthusiasm for building cars is no less intense. He said, "In order to build a car, I can just hang it under someone else's banner and be their son."

However, Yin Mingshan's "dream of building a car" did not go smoothly.

In 2003, Lifan Auto City began construction. But not long after that, in 2004, the National Development and Reform Commission issued the "Automotive Industry Development Policy." According to this policy, Lifan must obtain approval from the National Development and Reform Commission, and according to the policy requirements, Lifan must not only achieve a cumulative investment of more than 2 billion within three years, but also need to have its own independent research institution and R&D investment of more than 500 million.

This policy frustrated Lifan’s attempt to obtain a “birth certificate” for cars. When he learned the news, Yin Mingshan was very frustrated. According to the "Chongqing Morning News" report, Yin Mingshan once sought help from Li Shufu, Changan Automobile, FAW, and Second Automobile Works, and was even willing to exchange "20 shares of Lifan Motors for their car licenses," but all failed. end. It was not until December 2005 that Lifan Motors turned around and finally received approval from the National Development and Reform Commission to be included in the car production catalog.

Two months later, in January 2006, the first "Lifan 520" built by Yin Mingshan was announced for sale. However, although this car had good configurations at the time, it was not recognized by the market, and sales volume that year was less than 10,000 units. At that time, the well-known car reviewer "Fat Brother Yang Li" once evaluated this car. "The steering wheel is not installed correctly" became the focus of many car enthusiasts' complaints.

"We use it (Lifan 520) to tell you why outsiders can't build cars." The reviewer said, "From my birth to now, among all the vehicles I have driven, Lifan, "It is the first and only car whose steering wheel is not facing me." A car enthusiast told Yema Finance that "the only advantage of Lifan is that it is cheap."

Compared with its peers. , the monthly sales of BYD F3, which was launched at the same time, exceeded 10,000 units that year. Chery Automobile also created brilliance at that time, with total annual sales exceeding 300,000 vehicles.

After losing the first battle, Lifan began to learn from and imitate. The Lifan 320, launched in 2009, became a classic imitation of the BMW MINI and became very popular. At its peak, monthly sales exceeded 7,000 units. After the Lifan 320, Lifan launched the Lifan 620, which "borrowed" from the BMW 3 Series, the Xuanlang which borrowed from Ford's new S-Max, and the Lifan x80 which borrowed from the Highlander, etc., and it was out of control.

In November 2010, Yin Mingshan led Lifan to successfully land in the A-share market. Yin Mingshan became the richest man in Chongqing, with a net worth of tens of billions. At this time, the road for Lifan Automobile became narrower and narrower.

However, although Lifan has many models, covering small cars, compact cars, small SUVs and other fields, and has a complete product layout, there are few popular models. As competition in the automobile market becomes increasingly fierce, its sales are increasingly bleak. Of course, this is closely related to the quality issues that have been discussed at Lifan Automobile.

According to the 2016 "Research Report on Vehicle Quality Performance of China's Passenger Car Market" released by Autohome and Ipsos Auto, Lifan Motors ranked fourth from the bottom on the list with a failure coefficient of 658.2, significantly higher than Compared with the industry average of 486.9.

Faced with the unsatisfactory performance of traditional automobile products, Yin Mingshan set his sights on new energy vehicles. But in this area, Lifan stumbled again.

In October 2016, Lifan New Energy was disqualified from new energy vehicle subsidies by the Ministry of Finance due to inconsistent battery markings on thousands of new energy vehicles. The production qualification of this model of new energy vehicle was also cancelled, involving Central financial subsidy funds are 114 million yuan. Although the Ministry of Industry and Information Technology reinstated Lifan Auto's qualifications to apply for subsidies for new energy models in 2017, Lifan Auto's sales have plummeted.

Public information shows that from 2015 to 2018, Lifan’s new energy vehicle sales were 14,874 vehicles, 5,550 vehicles, 7,738 vehicles and 10,166 vehicles respectively. In contrast, the domestic new energy vehicle market is booming, with production and sales exceeding one million vehicles. According to public data, in the first five months of 2019, Lifan’s sales of new energy vehicles were only 1,011 units, a year-on-year drop of 57.77.

Obviously, Lifan New Energy Automobile’s prospects are not optimistic if it wants to break out of the tight encirclement.

At this time, the sales of motorcycles, which is Lifan’s traditional “base”, are also not doing well. In recent years, various places have issued "motorcycle bans" one after another, and the sales of motorcycles by domestic manufacturers have declined year by year. In the first five months of 2019, Lifan motorcycle sales were 244,900 units, a year-on-year decrease of 18.33%. Yin Mingshan's future in realizing his "car dream" is unpredictable, and his old business is also facing the danger of "falling", and a storm is coming.

In December 2018, Lifan Co., Ltd. announced that it would sell 100 shares of its wholly-owned subsidiary Chongqing Lifan Automobile Co., Ltd. to Beijing Chehejia Information Technology Co., Ltd. (hereinafter referred to as "Chehejia") for 650 million yuan. "). With this acquisition, Chehejia and Li Xiang obtained the coveted vehicle production qualifications. After selling its assets, Lifan's tight capital chain took a breather, but the bigger crisis has not been resolved.

In the first quarter of 2019, Lifan's total revenue was 2.247 billion, a sharp drop of 31.07% year-on-year, and its net profit was a loss of 97.2047 million.

For Lifan, losses seem to have become the norm in recent years. Data shows that from 2016 to 2018, the company’s net profit after deducting non-profit items was negative for three consecutive years. In 2018, after deducting non-profit items, the company suffered a huge loss of 2.15 billion yuan. In the five years from 2012 to 2017, the net cash flow generated by Lifan's operating activities has been negative for six consecutive years, with a cumulative outflow of 4.152 billion yuan. In 2018, the data turned positive, but in the first quarter of 2019, the data turned negative again to 164 million yuan.

At the 2017 annual shareholder meeting, Yin Mingshan, as the major shareholder, said that 3.3 billion yuan of bonds will mature in the next few years. At that time, Yin Mingshan said that he would sell idle assets to repay debts, "For example, the land on Shangxin Street in Nan'an District has been idle for almost 10 years, and the factory has been empty. We are trying to find a way to deal with it and are discussing with the Nan'an District government. There are also Lifan Motorcycles Vanke is also interested in our idle land. They are interested in several pieces of idle land and are currently doing due diligence.”

In order to deal with the liquidity crisis, Lifan Co., Ltd. 650 million yuan to sell one of the two license plates to Chehejiawai, and land sales are also inevitable. In December 2018, Lifan sold the original production base of the 150,000-unit passenger car project to the Chongqing Liangjiang New Area Land Reserve Renovation Center for approximately 3.315 billion yuan.

But even so, Lifan Co., Ltd. still failed to avoid the terrible situation of overdue financing and frozen equity.

As of 2018, the book balance of Lifan's current liabilities was as high as 18.78 billion yuan, of which short-term borrowings were 9.161 billion yuan, and current assets during the same period were 13.429 billion yuan. In addition to current liabilities being much higher than current assets, Lifan's financial expenses are rising year by year, reaching as high as 1.242 billion in 2018, almost doubling and 4.9 times its net profit.

But what is quite unusual is that as of the end of March 2019, Lifan's monetary funds were still as high as 4.968 billion.

As companies such as Kangmei Pharmaceuticals and Kangdexin have experienced successive explosions, "high deposits and loans" have become a "nightmare" in the capital market. Lifan shares also showed signs of "high deposits and loans", which does not seem to be a good sign.

On May 17, the Shanghai Stock Exchange issued a letter of inquiry to Lifan Shares, requiring it to disclose its future repayment plan and explain whether there are liquidity risks and debt repayment risks. But before Lifan Co., Ltd. could respond to the inquiry letter, the equity freeze suddenly came.

Not long ago, representatives of more than 30 Lifan Automobile authorized dealers gathered in Chongqing and displayed the slogan "Lifan Pays Back the Money" in front of Lifan's headquarters. The former legend in the business world may have been disgraced in the face of denunciation from dealers.