Wushang Group: Total Pre-tax Compensation for Directors, Supervisors, and Senior Management in 2024 Has Decreased Year-on-Year

Securities Star News: Wushang Group (000501) responded to investor concerns on the Investor Relations platform on March 19.

Investor: The company’s net profit attributable to the parent has declined by over one billion yuan in recent years, with core operational indicators continuously worsening. Meanwhile, management’s annual total compensation has remained high for a long time, even increasing significantly despite major performance declines. Does the company’s compensation assessment system have a rigid link to operating performance, preservation and appreciation of state-owned assets, and shareholder returns? Is there a “performance collapse, steady salary increase” mechanism that openly damages the interests of state shareholders and small investors?

Wushang Group Secretary: The company assesses management compensation based on the “Management Compensation Management Measures” approved by the shareholders’ meeting. Currently, the assessment indicators include quantitative basic metrics such as operating revenue and total profit, as well as qualitative and quantitative combined features like strategic planning and major projects. The company is studying the feasibility of incorporating new indicators into the assessment, considering market conditions and industry practices. In 2024, the pre-tax total compensation of directors, supervisors, and senior management has decreased year-on-year, reflecting the effective operation of a constraint mechanism linking compensation with performance. There is no situation of “performance collapse, steady salary increase.”

Investor: Wushang Dream Times has been open for three years. Customer flow is below expectations, shop vacancy rates are high, and brand adjustments are frequent. Large depreciation and financial expenses continue to erode the company’s profits. Regarding the ongoing losses of this project, what feasible and verifiable plans has management put forward to turn losses into profits? Why has profitability not been achieved so far, and losses continue to grow? Have you already given up on the profit prospects of this project?

Wushang Group Secretary: Wushang Dream Times, as a large-scale commercial complex built with the company’s efforts, is inherently subject to a longer market cultivation cycle due to its scale. Facing current depreciation, amortization, and financial pressure, the company has always recognized the challenges and actively promoted quality improvement through introducing flagship stores, cross-border marketing, “Guzi Economy,” trendy IP, and other young consumer experiences to enhance the attractiveness of consumption scenarios. Currently, the project’s customer flow and sales scale have steadily increased, and its status as a commercial landmark continues to be consolidated. Management is working through refined management to narrow losses and is striving to achieve break-even as soon as possible.

Investor: The company has heavily borrowed to build Wushang Dream Times and Nanchang Wushang MALL. The high asset-liability ratio and large interest-bearing debt have become core factors devouring profits through financial expenses. Did you carefully evaluate the company’s debt repayment ability and financial safety when expanding through borrowing? Now that the company is in a situation where profits cannot cover interest, do you bear unavoidable full responsibility?

Wushang Group Secretary: The investment decisions for Wushang Dream Times and Nanchang Wushang MALL strictly followed market research, feasibility studies, and review procedures, with careful assessment of project payback periods and fund arrangements. The recent rise in debt ratio and increase in financial expenses are mainly due to significant investments during the construction phase and the projects still being in the normal market cultivation stage. The related depreciation, amortization, and interest expenses are normal accounting treatments for major investments and do not represent current operational losses. Currently, Wushang Dream Times has achieved consecutive quarters of year-on-year growth in revenue and net profit, and Nanchang Wushang MALL’s customer flow and sales continue to improve, with losses steadily narrowing. The company’s management has always been diligent and responsible, with no negligence in decision-making. Going forward, the company will continue to focus on quality and efficiency improvement in its core business to deliver solid performance and reward all shareholders.

The above content is compiled from public information by Securities Star, generated by AI algorithm (Net Information Backup 310104345710301240019), and does not constitute investment advice.