Xinhua News Agency, Beijing, April 18 (Xinhua) -- China Securities Journal published an article on April 18 titled "Precise Clearing and Increasing Weights to Build an Orderly Market Pattern of Advance and Retreat". According to the article, the new "National Nine Articles" and the CSRC's delisting opinions were issued on April 12, and the exchange revised the stock listing rules accordingly. The China Securities Journal reporter combed and found that the revision of the delisting rules focuses on improving the overall quality of existing listed companies, and through strict delisting standards, it will increase the efforts to clear the "zombie shells" and "black sheep", and accurately clear the companies with bad records and poor performance risks.
Experts interviewed by China Securities Journal reporters believe that on the basis of the 2020 reform, the new delisting regulations will further tighten the scope of application of major illegal delisting, crack down on various illegal "shell" and "shell speculation" behaviors with stricter securities regulatory law enforcement, and propose to improve the investor compensation and relief mechanism in the process of delisting, etc., will accurately increase the clearance of "zombie shells" and "black sheep", reduce the value of "shell" resources, strengthen investor protection, and strive to build a market pattern of orderly and timely clearance.
(File picture.) Xinhua News Agency)
Accurately identify companies with poor performance and bad performance
The focus of this revision of the delisting rules is to crack down on financial fraud and capital occupation, and in light of the actual situation, the delisting index of the operating income of loss-making companies on the main board and the market value of the main board company have been moderately increased.
According to estimates, the number of companies that will be delisted by the Shanghai and Shenzhen stock exchanges next year is expected to be about 30 companies that will be delisted by the combined financial indicators, and about 100 companies that may touch this indicator and implement delisting risk warnings next year, and these companies will have more than a year and a half to improve their operations and improve their quality, and they will not be delisted until the end of 2025. In terms of market capitalization indicators, only 4 main board companies in Shanghai and Shenzhen currently have a market value of less than 500 million yuan, and there are no companies on the Science and Technology Innovation Board and ChiNext that are close to 300 million yuan in market value delisting.
Guo Ruiming, director of the Listing Department of the China Securities Regulatory Commission, said that the principle of delisting supervision is that "all should be withdrawn", and there is no preset quantity. In the next step, the China Securities Regulatory Commission will conscientiously implement the new rules and strive to achieve "retreat" and "retreat steadily".
In the eyes of industry insiders, the new delisting rules set specific indicators for each delisting situation, the scope of "clearance" is clear and unambiguous, and at the same time, a buffer period is gradually set, and it is a misreading to mistakenly believe that all "small-cap stocks" will be affected.
The introduction of dividends does not meet the standard, and the ST arrangement is implemented
The new "National Nine Articles", a series of supporting measures of the securities regulatory system and the draft for comments have made key arrangements for the dividend distribution provisions of listed companies. Among them, restrictive measures are proposed for listed companies that do not meet the dividend standard, and different regulations are set up in different sectors, and companies that have not paid dividends for many years or have a low dividend ratio are included in the situation of "implementing other risk warnings (ST)".
Industry insiders believe that the implementation of other risk warnings (ST) if the dividends do not meet the standards is mainly aimed at improving the stability and predictability of dividends of listed companies, focusing on companies that have the ability to pay dividends but do not pay dividends for a long time or have a low dividend ratio. It should be pointed out that ST is not a delisting risk alert (*ST), but is mainly intended to remind investors to pay attention to the company's risks. If a company is ST for this reason alone, it will not lead to delisting, and it can apply for revocation of ST after certain conditions are met.
A reporter from the China Securities Journal noticed that some market participants recently came to the conclusion that "more than 1,000 companies in A-shares will be ST due to the low amount of dividends" according to the dividend amount standard in the newly revised rules.
According to the new regulations and professional calculations, the aforesaid analysis methods and conclusions are incorrect. ST is implemented for profitable companies, i.e. companies with positive net profit for the most recent fiscal year and positive undistributed profit at the end of the parent company's reporting year. In terms of judging the implementation conditions, ST will only be implemented if the cumulative dividend ratio of the last three years (the total cumulative cash dividend of the last three fiscal years is less than 30% of the average annual net profit of the last three fiscal years) and the dividend amount (the cumulative dividend amount of the last three fiscal years for the main board is less than 50 million yuan, and the cumulative dividend amount of the Science and Technology Innovation Board and the Growth Enterprise Market is 30 million yuan) do not meet the requirements.
The conditions set by the rules fully take into account the characteristics of the large R&D investment of enterprises on the Science and Technology Innovation Board and the Growth Enterprise Market, and some enterprises are still in the early stage of industry development. For enterprises with high R&D intensity (cumulative R&D investment in the last three fiscal years accounting for more than 15% of cumulative operating income) or large R&D investment (more than 300 million yuan in three years), even if the dividends do not meet the above conditions, ST will not be implemented.
Based on the available financial data, it is expected that more than 80 companies will touch the ST standard. In addition, considering that the disclosure of annual reports has not yet ended, and the rules will not be applied for the first time until 2025, it is expected to promote the company to enhance investor returns through dividend buybacks and other means, and the actual impact will be smaller.
In recent years, the China Securities Regulatory Commission has continued to improve the dividend supervision system, and on the basis of corporate autonomy, it has strengthened constraints from information disclosure supervision, restricting the reduction of controlling shareholders who do not meet the dividend standards, and proposing new restraint measures for listed companies that do not meet the dividend standards, and will continue to guide listed companies to enhance the level of investor returns.
The market ecology continues to be optimized
The reporter combed and found that under the background of the new delisting regulations vigorously reducing the value of "shell" resources, many underperforming stocks are being "voted with their feet" by investors, and the market ecology continues to be optimized.
Wang Yi, chief strategic analyst of Huatai Securities, said that on the one hand, the new rules on delisting support the absorption and merger of listed companies and guide companies to take the initiative to delist, and on the other hand, increase the supervision of restructuring and listing, improve the coverage of on-site inspections, and crack down on the behavior of "fake restructuring and real shell speculation", etc., will take multiple measures to reduce the value of "shell".
Lv Chenglong, an associate professor at the Law School of Shenzhen University, reminded that under the new rules on delisting, "shell" companies that do not have the ability to continue to operate will be cleared at an accelerated pace, and market chaos such as "shell raising" and "shell speculation" in the past will be effectively curbed. Investors also need to abandon speculation, stay away from irrational speculation in "shell" companies, and safeguard their own investment interests.
"What the market wants to avoid are those potential delisting targets, and the other side of the game is naturally good companies with good performance, low valuations and abundant cash flow. Hong Rong, a senior market observer, said that in the future, companies with poor fundamentals will only find it more and more difficult to get the attention of market funds, while the head companies with industry-leading advantages or thresholds will continue to be covered and embraced by funds. (ENDS)