CFIC Introduction
From April 29th to 30th, a number of companies such as *ST Garden City, *ST Tongda, *ST Mall, and *ST Carbon Yuan received prior notices of their intention to terminate their stock listings, and locked in "financial withdrawal" companies. As of April 30, 24 A-share companies have been locked in and delisted, of which 9 companies have completed delisting.
At the end of the annual report disclosure season, a number of listed companies have sounded the alarm of delisting due to financial failure or audit reports that cannot express opinions.
From April 29th to 30th, a number of companies such as *ST Garden City, *ST Tongda, *ST Mall, and *ST Carbon Yuan received prior notices of their intention to terminate their stock listings, and locked in "financial withdrawal" companies. As of April 30, 24 A-share companies have been locked in and delisted, of which 9 companies have completed delisting.
The regulatory authorities continue to strengthen the supervision of delisting, and increase the efforts to clear the "zombie shells" and "black sheep", which is continuing to show results, and a benign market ecology of A-share turbidity and clearing is expected to be formed.
The exit structure is becoming more and more diversified
Since the beginning of this year, the new delisting regulations have continued to take effect, with 9 A-share companies delisted and 24 companies locked in for delisting, forming a diversified delisting pattern of trading, finance, and major violations.
Delisted companies in 2024
Image source: Wind
With the end of the 2023 annual report, a number of listed companies that have touched the financial delisting indicators have appeared. Among them, due to the company's 2023 annual financial and accounting report being issued with an audit report that could not express an opinion, *ST Yuancheng and *ST Tongda respectively received a prior notice of their intention to terminate the company's stock listing on April 30.
Because the company's audited net profit in 2023 is negative, and the operating income after deducting business income unrelated to the main business and income without commercial substance is less than 100 million yuan, *ST Carbon Yuan received a prior notice of its intention to terminate the company's stock listing on April 30.
*ST Mall will achieve a net profit of -341 million yuan in 2023, and the operating income after deducting the business income unrelated to the main business and the income without commercial substance will be 82 million yuan, and at the same time, the company's 2023 financial and accounting report was issued an audit report that could not express an opinion, and received a prior notice of the company's stock listing to be terminated.
Industry insiders said that with the deadline for disclosure of the 2023 annual report, more and more companies that have implemented delisting risk warnings have joined the delisting list due to the failure to improve their financial indicators. There are also some annual reports that have terminated the contract with accounting firms, and "difficult birth companies" may touch the financial delisting criteria.
"1 yuan delisting" demonstrates the power of market-oriented "clearing" and has become the main channel for the normalized exit of A-share listed companies. As of April 30, more than 10 companies have locked in "1 yuan delisting" this year. Among them, *ST Huayi, *ST Bolong, *ST Oceanwide, *ST Aidi, ST Hongda, ST Xingyuan, and ST Guiren 7 companies have been terminated from listing and delisted;
Xu Feng, a lawyer at Shanghai Jiucheng Law Firm, said: "The number of companies delisted for 1 yuan has increased significantly, and the efficiency of survival of the fittest in A-shares has been significantly improved. This also means that investors are becoming more rational and pay more attention to value investing. ”
The number of cases that hit the mandatory delisting target for major violations continues to increase. After *ST Xinhai became the first case of mandatory delisting due to major violations in 2024, *ST Poten was also terminated from listing and delisted on April 25 due to forced delisting due to material violations.
In addition, *ST Huayi and *ST Xinfang were also previously subject to major illegal delisting risk warnings due to verified financial fraud, and the company was delisted in advance by the trading class because the risk was fully released.
Guojin Securities Research Report believes that in 2024, the trend of normalized delisting of the A-share market will continue, the market competition environment of survival of the fittest may be further strengthened, and market resources will continue to concentrate on high-quality enterprises.
The market ecology continues to be optimized
The signal of strengthening delisting supervision is becoming clearer, and many underperforming stocks are being "voted with their feet" by investors, and the market ecology continues to be optimized.
A number of underperforming stocks that have been put on delisting risk alert have seen their stock prices fall for several days after the release of their 2023 annual reports. As of April 30, Wind's ST sector index has fallen 32.43% year-to-date.
"In the context of the normalization of A-share delisting, investors pay more attention to the company's operation and financial condition, and reduce their tolerance for violations of laws and regulations and financial risks. Guo Yiming, director of investment consulting of Jufeng Investment Advisory, said.
Some companies have tried to protect their shells and avoid delisting, which has also been questioned and concerned by relevant departments.
"At present, the 'shell zombie' enterprises that do not have the ability to continue to operate are speeding up their clearance, and the market chaos such as 'raising shells' and 'speculating shells' in the past has been effectively curbed. Lucky speculators will gradually lose the opportunity to take advantage of, and investors also need to abandon the speculation, stay away from irrational speculation, and effectively protect their legitimate rights and interests. Lv Chenglong, an associate professor at the Law School of Shenzhen University, prompted.
In addition, from the perspective of the primary market, compared with the IPO review, the backdoor listing review is more stringent, and the incentive for the company to be listed to pass the backdoor listing is insufficient, and the value of shell resources is reduced.
"The normalized exit of the A-share market and the continuous optimization of the market ecology have benefited from the continuous deepening of reform. Zhao Xijun, co-dean of the Capital Market Research Institute of Chinese University, said that since the delisting reform in December 2020, the number of forced delistings of listed companies has increased significantly. The "Opinions on the Strict Implementation of the Delisting System" issued by the China Securities Regulatory Commission on April 12 will further strictly regulate, reduce the value of "shell" resources, and strengthen investor protection, which will further increase the intensity of delisting while promoting the formation of an orderly and timely clearing pattern, so that the overall quality of the market has been improved.
Source of this article: China Securities Journal
Author: Zan Xiuli
WeChat editor: Guan Qiao
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