Evening of February 3rd，Xinhualian’s reply to inquiry letter from Shenzhen Stock Exchange。In response to the issue of impairment provision that Shenzhen Stock Exchange is concerned about，Xinhualian said，Mainly influenced by its subsidiary New Silk Road Cultural 188bet online live casino。

Provision for 188bet online live casino erodes part of the profits

Evening of January 28th，Xinhualian releases 2020 performance forecast，Estimated net profit loss attributable to the parent company is 1.1 billion yuan to 1.3 billion yuan。One of the reasons that drags down Xinhualian’s performance is，Xinhualian plans to make an 188bet online live casino provision of RMB 100 million to RMB 300 million。

Xinhualian’s 188bet online live casino provision immediately attracted the attention of the Shenzhen Stock Exchange。January 31，Xinhualian received a letter of concern from the Shenzhen Stock Exchange，Ask them to explain the types of assets corresponding to the provision for asset 188bet online live casino in 2020，Basis and rationality of provision for asset 188bet online live casino。

Evening of February 3rd，Xinhualian responded，Indicates that the asset 188bet online live casino provisions made by the company and its subsidiaries in 2020 mainly correspond to goodwill and intangible assets。

According to reply letter，Xinhualian’s provision for impairment in 2020 is mainly affected by its subsidiary New Silk Road Cultural 188bet online live casino。

2015，New Silk Road Culture and 188bet online live casino acquires South Korea’s Megalo Co., Ltd. 51.5% equity，Obtained Jeju Island gambling license。Early 2020，Global outbreak of COVID-19，South Korea imposes strict restrictions on entry and exit personnel，Having a greater adverse impact on Megalo’s daily operations，Megalo’s revenue in 2020 fell sharply year-on-year。This has also brought about a substantial "dive" in New Silk Road Cultural 188bet online live casino's operating income in 2020。

Xinhualian said，Considering the impact of force majeure factors such as the COVID-19 epidemic and the sales situation of the company’s existing real estate projects and future business plans，Predict the cash flow of New Silk Road Cultural 188bet online live casino’s asset group portfolio including goodwill in the next five years，The recoverable amount in the next five years is expected to be less than the book value of the asset group portfolio including goodwill by about 400 million yuan。The company accrued approximately 1% of the goodwill impairment provision.500 million yuan。

And before that，Xinhualian has made multiple provision for asset 188bet online live casino。Wind data display，Xinhualian in 2017、2018、Provisions for asset 188bet online live casino respectively in 2019 2728.750,000 yuan、1410.630,000 yuan、9208.590,000 yuan。

It is worth mentioning，2019 annual report in progress，Xinhualian also failed to make provision for impairment of goodwill of New Silk Road Cultural 188bet online live casino，Questioned by accountant。

At that time，Represented by Tianjian Accounting Firm，Goodwill generated when Xinhualian acquired New Silk Road Cultural 188bet online live casino in 20151.9.8 billion yuan。For this goodwill，Xinhualian management will conduct impairment testing every year。And New Silk Road Cultural 188bet online live casino suffered a loss in 2019 1.1.4 billion yuan，Goodwill shows signs of impairment，Xinhualian has not made any provision for impairment of goodwill。

Tianjian Accounting Firm believes，Xinhualian management failed to effectively implement the internal control system related to goodwill 188bet online live casino，There are major deficiencies in the internal control system related to goodwill 188bet online live casino。

Overdue loans continue to increase

The provision for 188bet online live casino is "eating" Xinhualian's profits bit by bit。However，There are still many "landmines" laid by Xinhualian。

Based on the 2020 interim report，Xinhualian’s asset-liability ratio after excluding advance receipts is 79.95%；Net debt ratio 228.82%；Cash short-term debt ratio is 0.57，Step on the “Three Red Lines”。

In addition，Xinhualian pointed out in its reply letter on February 3rd，Due to financial constraints，Wuhu Xinhualian Cultural 188bet online live casino Investment、The total overdue loans of Wuhu Xinhualian Cultural 188bet online live casino and other subsidiaries are 13.4.4 billion yuan。

Xinhualian said，Will actively raise funds for repayment，Promote sales elimination，Increase sales of existing products，Accelerate sales repayment，Effectively improve operating cash flow；And further increase the hotel、Strength in disposal of bulk properties in non-scenic areas such as shopping malls，Improve asset and liability structure，Achieve cash increment，Strive to properly resolve the above overdue debts and litigation matters。

However，Meanwhile，Xinhualian still needs to face the problem of frozen funds。As of February 3，About 80 Xinhua Lian bank accounts have been frozen，Total frozen funds 2.7.3 billion 188bet online live casino，Accounting for 5 of the company’s latest audited monetary funds.54%。

Also，New Hualien Multiple Houses、Land and other assets are being seized、Freeze status，Corresponding asset book value 23.3.9 billion 188bet online live casino，Accounting for 29% of the latest audited net assets ratio.53%。

Early 2021，With the disclosure of 2020 performance forecast，Xinhualian’s risks were exposed one by one。In the 188bet online live casino year，Is the embarrassing situation of Xinhualian expected to improve?？

*This 188bet online live casino comesSource: Caijing.com, author: Xiong Ying, original title: "Xinhualian responded to the inquiry letter and made provision for 188bet online live casino and expected to erode profits 1.500 million yuan》.