The A-share company and its 2 actual controllers were fined

On the evening of March 22, Qinghai infrastructure leader Zhengping Co., Ltd. (603843) announced that it received the "Prior Notice of Administrative Punishment" from the Qinghai Supervision Bureau of the China Securities Regulatory Commission on the same day.

According to the announcement, Zhengping shares and 6 responsible persons were fined a total of 6.9 million yuan. Among them, Zhengping shares were fined 1.5 million yuan, 2 actual controllers were fined a total of 3.1 million yuan, and 4 other directly responsible personnel were fined a total of 2.3 million yuan.

In January this year, due to suspected violations of information disclosure laws and regulations, the China Securities Regulatory Commission decided to file a case against Zhengping shares and Jin Shenghui, one of the actual controllers of the company.

A pre-fine exposes the specific facts of Zhengping shares' suspected violations:

In March 2020, Zhengping Co., Ltd. and its subsidiary, Guizhou Water Conservancy Industry Co., Ltd., formed a consortium to contract the river treatment and infrastructure construction of the old city section of Jinsha County and the construction project of a street in Shatu Town, Jinsha County (hereinafter referred to as the Jinsha Project), with Zhengping Co., Ltd. as the leader of the consortium.

In 2021, Zhengping Co., Ltd. fabricated the "List Estimated Scale", "List Estimated Quantity Summary Table" and "Medium-term Price Estimated Scale" to fabricate the engineering quantity of seven suppliers, including Chongqing Xinfa Construction Labor Co., Ltd. (hereinafter referred to as "Chongqing Xinfa"), Xunhua County Tongsen Highway Construction Engineering Co., Ltd. (hereinafter referred to as "Xunhua Tongsen"), Sichuan Tengqi Construction Engineering Co., Ltd., and Qinghai Jintai Construction Engineering Co., Ltd., and inflated the contract performance cost. This situation led to false records in the 2021 annual report of Zhengping Co., Ltd., inflating the operating cost by 53.6558 million yuan, accounting for 1.11% of the total operating cost of the current period, inflating the operating income of 71.5411 million yuan, accounting for 1.40% of the total operating income of the current period, and inflating the profit of 17.8853 million yuan, accounting for 11.80% of the total profit of the current period.

In the first half of 2022, Zhengping Co., Ltd. fabricated the "List Estimated Scale", "List Estimated Quantity Summary Table" and "Medium-term Price Estimated Scale" to fabricate the engineering quantity of Chongqing Xinfa and Xunhua Tongsen suppliers and inflated the contract performance cost. This situation led to false records in the 2022 semi-annual report of Zhengping Co., Ltd., inflating the operating cost by 10.1491 million yuan, accounting for 1.05% of the total operating cost of the current period, inflating the operating income of 13.5322 million yuan, accounting for 1.41% of the total operating income of the current period, and inflating the profit by 3.383 million yuan, accounting for 11.11% of the total profit of the current period.

The above-mentioned illegal facts are proved by evidence such as financial vouchers, relevant business materials, company announcements, records of inquiries by relevant personnel, and explanations of the situation.

The Qinghai Regulatory Bureau believes that the above-mentioned behavior of Zhengping shares is suspected of violating the relevant provisions of the Securities Law and constitutes an illegal act.

Jin Shenghui, as the then director and vice chairman of Zhengping Co., Ltd., was responsible for the company's investment and financing management, large fund payment management and major investment project management, arranging and directing the inflated project quantity of suppliers of the Jinsha Project and inflating the contract performance costs, signing written confirmation opinions on the 2021 annual report and the 2022 semi-annual report and ensuring that the content of the report was true, accurate and complete, and failed to be diligent and conscientious, and was the directly responsible person in charge for the false records in the above-mentioned report. As one of the actual controllers, Jin Shenghui arranged and instructed the inflated construction quantity of the suppliers of the Jinsha Project and the inflated performance cost of the contract in 2021, resulting in false records in the information disclosure of Zhengping shares, which constituted the act of "organizing and instigating the controlling shareholder and actual controller of the issuer to engage in the above-mentioned illegal acts, or concealing relevant matters resulting in the occurrence of the above-mentioned circumstances" as stated in the second paragraph of Article 197 of the Securities Law.

Jin Shengguang, as one of the then chairman, president and actual controllers of Zhengping Co., Ltd., was fully responsible for the company's operation and management, signed a written confirmation opinion on the 2021 annual report and the 2022 semi-annual report and guaranteed that the content of the report was true, accurate and complete.

According to the data, Jin Shengguang and Jin Shenghui are brothers, and they are still the actual controllers of Zhengping shares, and the other actual controller, Li Jianli and Jin Shengguang, are husband and wife. At the same time, as of the end of the third quarter of last year, Jin Shengguang and Jin Shenghui were still the top two shareholders of Zhengping shares, with a shareholding ratio of 17.33% and 6.61% respectively. At that time, the number of shareholders of the company was about 35,000.

In addition, according to the prior notice of administrative punishment, other directly responsible persons include: Ren Fawei, then general manager of the general contracting department of the river treatment PPP project in the old city section of Jinsha County, Wang Liying, then chief financial officer and vice president of Zhengping Co., Ltd., Xian Baji, then supervisor of Zhengping Co., Ltd. and then deputy director of the engineering management department of Zhengping Construction Group Co., Ltd., and Li Changlan, then vice president of Zhengping Co., Ltd. and deputy general manager of Zhengping Construction Group Co., Ltd.

In view of the above-mentioned illegal acts, the listed company and a number of former executives were punished. However, the Supervision Bureau also pointed out: "The parties in this case were able to actively cooperate with the investigation, take the initiative to mitigate the harmful consequences of the illegal acts, and voluntarily confess the illegal acts that our bureau did not grasp." ”

According to the penalty results of the latest pre-penalty order:

1. Zhengping shares were ordered to make corrections, given a warning, and fined 1.5 million yuan;

2. Jin Shenghui was given a warning and fined 2.3 million yuan, of which a fine of 800,000 yuan was imposed on him as the directly responsible person in charge and a fine of 1.5 million yuan was imposed on him for violations of laws and regulations as the actual controller;

3. Give Jin Shengguang a warning and impose a fine of 800,000 yuan;

4. Give Ren Fawei a warning and impose a fine of 700,000 yuan;

5. Give Wang Liying a warning and impose a fine of 600,000 yuan;

6. Give warnings to Xianbaji and Li Changlan, and impose fines of 500,000 yuan each.

Regarding the impact of the incident, Zhengping shares said that the situation involved in the "Advance Notice of Administrative Punishment" received by the company this time did not touch the situation of major illegal forced delisting stipulated in the "Shanghai Stock Exchange Stock Listing Rules". As of the announcement date, the company's business activities are carried out normally.

The main business of Zhengping shares includes infrastructure construction, cultural tourism + industrial comprehensive development, non-ferrous metal mining three major sectors, in September 2016, Zhengping shares landed on the main board of the Shanghai Stock Exchange. In recent years, the company's performance has declined significantly, and the stock price has also hovered at a low level. Before the Spring Festival this year, Zhengping shares once fell to a record low of 1.59 yuan per share. The stock rebounded after the holiday, and the share price has recovered nearly 51% to 2.8 yuan per share so far.

According to the previous performance forecast of Zhengping Co., Ltd., the net profit attributable to the parent company in 2023 is expected to be -320 million yuan to -460 million yuan.

For this performance, the company explained that due to the macroeconomic environment, industry environment, local government reduction of infrastructure investment and other factors, the company's orders in hand have decreased and the new bid-winning projects have not yet formed a large output value, coupled with the fact that some projects under construction are affected by factors such as land acquisition and demolition, and the owner's unit funds are not in place, and the construction progress is not as expected, resulting in a large decrease in construction business income and gross profit in 2023 compared with the same period last year, while management expenses, financial expenses and other expenses are comparable to previous years. At the same time, due to the shortage of funds, some owners of the company's construction projects are lagging behind in the measurement and approval of the project and the payment of project payments, and the company will make corresponding impairment provisions for contract assets and accounts receivable in accordance with accounting policies.

Editor-in-charge: Peng Bo

Proofreading: Wang Wei