Zhejiang Guangsha (600052, stock bar) issued an announcement on June 21 to clarify the June 20 media report "Zhejiang Guangsha Sells Overseas Chinese Hotel at a Low Price?".

It is understood that previous media reports stated that the transaction amount of external guarantee mortgage for the Overseas Chinese Hotel had reached 510 million yuan, and the mortgage guarantee was basically made in September 2013. According to the operating practices of financial institutions at that time, this meant that the relevant financial institutions valued the Overseas Chinese Hotel at at least 1 billion yuan. The report questioned whether the current sale price of only 300 million yuan constituted a low-price sale.

The incident began on June 18, when Zhejiang Guangsha announced that it would divest its equity in the Overseas Chinese Hotel at a price of 300 million yuan and acquire 100% equity in Futian Film and Television.

It is reported that the "Overseas Chinese Hotel" is one of the best hotels in the minds of old Hangzhou (property market) residents. It is adjacent to the Hyatt and faces West Lake. Fourteen years ago, it was purchased by Lou Zhongfu, chairman of the board of directors of Zhejiang Guangsha, for 208 million yuan. In 2001, the controlling shareholder of Zhejiang Guangsha injected 90% equity of the Overseas Chinese Hotel into the listed company at a valuation of 135 million yuan.

This time, the 100% equity of Futian Film and Television is valued at only 300 million yuan. Zhejiang Guangsha pointed out in the announcement that the overall architectural layout of the Overseas Chinese Hotel is relatively old, room prices have remained at a low level, and it has been operating at a loss in recent years. As of May 31, 2014, its book net assets were 14.9445 million yuan.

Zhejiang Guangsha stated that, from the perspective of optimizing the quality of listed company assets and improving operating efficiency, the company made a strategic decision to inject the film and television culture industry with good growth potential and divest loss-making and inefficient assets.

At the same time, Zhejiang Guangsha also stated in the clarification announcement that the valuation method in the media report is questionable, "Based on the above reasons, it is not appropriate to use the market approach for this valuation."

The announcement also stated that even without considering these differences, according to public information, "the Hubin plot has a land transfer area of 7,354 square meters, a building area of 57,361 square meters, and a floor area ratio of approximately 7.80. Calculated at the transaction price of 827.47 million yuan, the equivalent floor price is 14,425 yuan per square meter; the Overseas Chinese Hotel has a total land area of 7,493 square meters, a building area of 19,260.36 square meters, and a floor area ratio of 2.57. Calculated at the current valuation of 303.3629 million yuan, the equivalent floor price is 15,750.63 yuan per square meter."

Other public information shows that Futian Film and Television has exclusively invested in and produced a series of TV dramas such as "Phoenix Wearing Peony", "Concern", and "The Wife's Secret". Lu Yingying, executive director and manager of Dongyang Futian Film and Television Co., Ltd., is also the daughter-in-law of Lou Zhongfu, chairman of the board of directors of Guangsha Holdings, and the wife of Lou Ming, vice chairman of the board of directors of Guangsha Holdings.