According to Zhitong Finance App News, Shenghualand (08106) announced that it is expected that in the year ended December 31, 2023, the Group will obtain about RMB 38.5 million in net losses due to the company owner from continuing operations and discontinued operations, while the net loss due to company owners from continuing operations and discontinued operations in 2022 is approximately RMB 16.2 million, or an increase of about 138%.
The main source of funding for smart city construction in China depends on national fiscal expenditure. Although the “COVID-19” epidemic has ended, the epidemic has hindered economic development for three years, and the Chinese economy has inevitably been affected. Local governments' fiscal spending on smart city construction and operation has been passively reduced due to macroeconomic pressure. At the same time, market competition continues to intensify, and the Group's performance in terms of market development has not been ideal. Under these circumstances, the financial performance of the Group's business of providing smart city solutions was adversely affected. In 2023, losses in this business segment increased significantly, mainly due to a sharp drop in revenue; a sharp reduction in government grants received; and a significant increase in impairment losses on accounts receivable and notes receivable confirmed based on the expected credit loss model using the provision matrix method. As a result, the net loss due to company owners in 2023 from continuing operations and discontinued operations is expected to increase significantly compared to last year. Although the Group's financial performance in 2023 was not ideal, the Board believes this will not have a significant adverse impact on the Group's business operations, and the Group maintains a stable financial position.