"Retreat as much as possible" speed-up: 25 A-shares were locked in and delisted during the year, but brokerages lamented that the delisting business was "chicken ribs"

Blue Whale Finance

2024-05-10 22:51Posted on the official account of Beijing Blue Whale Finance

"Retreat as much as possible" speed-up: 25 A-shares were locked in and delisted during the year, but brokerages lamented that the delisting business was "chicken ribs"

Image source: Visual China

With the end of the annual report season of listed companies, a number of listed companies with poor performance and poor governance have sounded the "alarm bell" for delisting.

The Blue Whale News reporter paid attention to the fact that recently, *ST Zuojiang, *ST Tai'an, *ST Medium-term, *ST Sansheng, and *ST Yuebo have successively issued announcements and received a prior notice of termination of listing issued by the Shenzhen Stock Exchange, and the company's shares may be terminated due to financial reasons. According to the relevant regulations, after the delisting, the listed company needs to hire the sponsoring securities firm to handle the formalities of confirmation, registration and custody, as well as listing on the delisting board and share transfer.

However, a brokerage investment banker told reporters frankly that the delisting business is like a "hot potato" type of "chicken ribs" business - less money, more things, high risks, thankless, "if the enterprise itself is in the delisting stage, then the operating performance is already very poor, and it is not willing to spend money at all, or it is not possible to pay much money to the sponsoring brokerage responsible for the follow-up disposal." The degree of cooperation in the work related to delisting and disposal is also relatively low. ”

During the year, 25 companies have been locked in and delisted

According to the reporter's incomplete statistics, 25 listed companies have been locked in delisting this year (including delisted), of which 9 have been delisted, more than half of last year. The power of market-oriented "clearing" is accelerating.

From the perspective of the type of delisting, the "1 yuan delisting" that triggers the forced delisting of transactions has become the mainstream method. Since the beginning of this year, more than a dozen companies such as *ST Civil Control, *ST Meisheng, *ST Meishang, ST Zhongnan, *ST Shimao, *ST Baoli, ST Xingyuan, ST Guiren, ST Hongda, *ST Aidi, *ST Oceanwide, etc., have locked in the trading delisting situation because they have touched or will touch the situation of "the closing price is less than 1 yuan for 20 consecutive trading days", accounting for more than half.

The number of listed companies that touched the reasons for financial delisting was also majority. Since the beginning of this year, among the listed companies locked in and delisted, 10 companies have not improved their performance in their 2023 annual reports, or have been issued with "non-standard" audit opinions, which have touched the financial delisting situation, accounting for 40%.

In addition, the Blue Whale News reporter found that in the past month, A-shares have ushered in a wave of relatively concentrated securities abbreviation changes, and more than 80 companies have changed their securities abbreviations. Among them, most of the companies that "wear stars and hats" after being put on risk warnings are implemented. It is worth mentioning that on May 6 alone, nearly 50 companies changed their securities abbreviations, all of which were "wearing stars and hats" after being put on risk warnings.

In recent years, in order to promote the high-quality development of the equity market, the regulatory authorities have continuously strengthened the supervision of delisting, and increased the efforts to clear the "zombie shells" and "black sheep", and a benign market ecology is expected to be formed.

On April 12 this year, the third "National Nine Articles" in the capital market were introduced. Among them, it is clearly stated that the formation of a normalized delisting pattern that should be withdrawn and cleared in a timely manner should be accelerated. The China Securities Regulatory Commission (CSRC) thoroughly implemented the above requirements and issued the Opinions on the Strict Implementation of the Delisting System, further releasing a "zero tolerance" signal. The Shanghai and Shenzhen Stock Exchanges have simultaneously revised the relevant delisting rules and improved the four types of mandatory delisting indicators: financial, major violations, regulatory and trading.

Delisting business is "thankless"

With the continuous improvement of the delisting mechanism, the diversified delisting channels of A-shares have become increasingly smooth. For brokers, the increase in delistings is also expected to expand new business opportunities.

According to the relevant regulations, after the delisting, the listed company needs to hire the sponsoring securities firm to handle the formalities of confirmation, registration and custody, as well as listing on the delisting board and share transfer. However, at present, brokerages are not active in participating in the delisting business, and the majority of participants are small and medium-sized brokers.

Taking the 9 companies that have been delisted this year as an example, the host brokerages are mainly small and medium-sized brokerages, including Hualong Securities, Hengtai Changcai Securities, Jinyuan Uni-President Securities, Shanxi Securities (002500. SZ), Great Wall Securities (002939. SZ) and so on.

Some market analysts told the Blue Whale News reporter that large brokerages are often able to achieve full-license operation, while the compliance risk of delisting business is greater and the business profit is not high. However, because of the limited license, small brokerages will be more active in fighting for business as long as they are allowed to do business within their capabilities.

However, in the eyes of investment bankers, at this stage, the delisting business is often "thankless".

"If the company itself is in the delisting stage, then the operating performance is already very poor, and it is not willing to spend money at all, or it can't pay much money to the sponsoring brokerage company responsible for the follow-up disposal." A brokerage investment banker told reporters frankly.

And that's not even the "most head-scratching" part. The market analyst told reporters that the biggest risk of the delisting business is that the delisted companies themselves are full of problems, and they may be more unscrupulous after delisting, and do not actively cooperate with the brokerage to carry out delisting disposal-related work, such as not disclosing information that should be disclosed in accordance with relevant requirements. At the same time, securities firms are subject to strong supervision, and if insufficient due diligence leads to poor handling, it will have a negative impact on the capital market and investors, and even face their own penalties.

"Originally, this business is not very profitable, and it will face the situation of being punished, which is not cost-effective", the person bluntly said that for most brokers, the delisting business is like a high-risk "hot potato" type of "chicken ribs" business - it is not, and it is not not.

In the future, if the regulators and the market can increase the constraints on delisted enterprises, and give incentives to securities companies to undertake relevant business, and reduce the operating costs of securities companies, they may be able to cover it, and it is believed that delisted enterprises will not only "retreat" in the near future, but also "retreat steadily".

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