A-share ST shares were sold in panic, and many companies started to save themselves

The Economic Observer

2024-05-11 10:09Published on the official account of Gansu Economic Observer

With the centralized disclosure of the 2023 annual report and the first quarter of 2024, in the face of increasingly strict supervision, many listed companies have encountered risk warnings due to failure to meet regulatory requirements, and individual listed companies have been punished by regulators. At the same time, a large number of ST stocks (including ST shares and *ST shares, the same below) have recently encountered panic selling by investors.

On the evening of May 10, Guangdong Huatie Tongda High-speed Rail Equipment Co., Ltd. (000976. SZ, hereinafter referred to as "ST Huatie") announced that on May 10, 2024, the company received the "Administrative Penalty Decision" and "Market Ban Decision" issued by the Guangdong Supervision Bureau of the China Securities Regulatory Commission. The company has illegal facts such as false records in the 2020 annual report and 2021 annual report, and the Guangdong Securities Regulatory Bureau decided to give a warning to ST Huatie and impose a fine of 8 million yuan.

On May 7, Yinjiang Technology Co., Ltd. (300020. SZ, hereinafter referred to as "Yinjiang Technology" or "*ST Yinjiang"), Wang Teng, chairman of the board of directors, issued an open letter after the company was warned of risks, which was widely circulated. As of May 10, *ST Yinjiang's share price fell from 6.69 yuan/share on April 29 to the current 2.78 yuan/share.

On May 8, Chongqing Dima Industrial Co., Ltd. (600565. SZ, hereinafter referred to as "ST Dima"), suddenly staged the sky board, and the stock price went from 0.86 yuan to 0.95 yuan. Li Junjie, secretary of the board of directors of ST Dima, privately told the reporter of the Economic Observer that the shell is in the people, and the company is working hard to protect the shell.

The open source securities research report pointed out that in the past, the delisting rate of A-shares was low, which gave rise to the value of "shell resources". However, after the introduction of the new "National Nine Measures", the A-share ecosystem is expected to evolve significantly, and the factors that supported the excess market of small and micro cap stocks in the past may subside. The new "National Nine Measures" are expected to fundamentally improve the ecological environment of A-shares, and the pressure on small-capitalization stocks that lack the ability to continue operating and micro-cap stocks that rely on the value of "shell resources" may increase.

ST shares were sold in a panic

As of 3 p.m. on May 10, the number of A-share companies under risk warning has reached 176, of which 98 are *ST companies and 78 are ST companies. Most companies have suffered panic selling, and some are still falling continuously.

For example, ST Hanggao (002665.SZ), ST Kelida (603828.SH), ST Xinchao (600777.SH), ST Yongyue (603879.SH), ST Yuancheng (603388.SH) have fallen for 6 consecutive days, ST Bailing (002424.SZ), ST Baili (603959.SH), ST Changkang (002435.SZ), ST Spring (600381.SH), More than 10 listed companies such as ST Dongshi (603377.SH), ST Futong (000836.SZ), and ST Gaohong (000851.SZ) have fallen for four consecutive days.

*ST company's situation is not optimistic, many stocks suffered from panic selling, the worst such as *ST Baoli (300116.SZ), on April 30 was delisted after the risk warning, 6 consecutive trading days 20% down limit, the stock price fell from 0.65 yuan to 0.18 yuan / share, according to the par value delisting rules, *ST Baoli has been locked in advance delisting.

A large number of risk warning stocks are concentrated in the panic selling and continuous decline after May Day, which has never happened in the history of A-shares. Against this backdrop, a number of ST-listed companies acted quickly and launched self-rescue measures.

*ST Yinjiang: Shame and courage

On May 6, 2024, after Yinjiang Technology implemented the delisting risk warning, the stock abbreviation was changed to *ST Yinjiang, because Zhongxinghua Certified Public Accountants (Special General Partnership) issued the "2023 Annual Audit Report" to the listed company that could not express an opinion.

According to the rules of the Shenzhen Stock Exchange, the company's shares will be subject to delisting risk alert (*ST). At the same time, three independent directors of *ST Yinjiang also sent a letter of urging to the company, asking the company to clarify the matters of capital occupation, the project payment and the amount of service fees claimed by some of the suppliers involved in the company's case.

In 2023, *ST Yinjiang's operating income will be 1.169 billion yuan, a year-on-year decrease of 27.47%; The net profit loss amounted to -234 million yuan, a year-on-year decrease of 437.10% (the above financial data accounting firm issued an audit report that could not express an opinion).

In the face of the dilemma, Wang Teng, chairman of *ST Yinjiang, issued an open letter to all shareholders on May 7, in which he wrote:

Yinjiang Technology was *ST, and I would like to express my deep apologies to all shareholders!

Ten years ago, I graduated from university, joined Yinjiang Technology with dreams and passion, participated in and witnessed the growth and transformation of the company, and grew from an ordinary employee to the chairman of the company. As young as I am, our management team is around 40 years old on average, energetic and creative.

Internal control is the cornerstone of an enterprise's survival, because improper internal control will pay a heavy price. The company will re-examine the internal control system, conduct special internal control self-examination, further strengthen the construction of internal control, improve the ability to continuously standardize operation and the level of information disclosure, implement the rectification responsibility system, and ensure the timeliness and effectiveness of internal control.

The market did not buy it, and on May 7 and May 8 after Wang Teng issued an open letter, *ST Yinjiang continued to fall to the limit.

Investors can easily raise questions through the Shenzhen Stock Exchange interaction:

"I hold a lot of Yinjiang Technology, and the stock fell sharply after being ST, how is the company's current business?"

"If the company's management is confident in the company's future development, is there a plan to buy back the company's shares in the near future, or if the executives increase their holdings of the company's shares?"

"After the company is warned to delist, is there any major shareholder increase or other important countermeasures to resolve the current crisis?"

In this regard, *ST Yinjiang did not respond.

ST Dima: Major shareholders urgently save themselves

ST Dima is a special example, the company's stock price is repeatedly competing around 1 yuan.

More than 80% of the company's operating income comes from the real estate business, and the company's net profit loss in 2023 is 3.651 billion yuan, which is the company's third consecutive year of losses. The controlling shareholder, Chongqing Dongyin Holding Group Co., Ltd. (hereinafter referred to as "Dongyin Holdings"), has all its shareholdings in ST Dima frozen by the judiciary due to debt disputes.

On May 6, 2024, ST Dima's corporate bonds (21 Dima 01) exploded, and the principal and interest were not fully repaid on April 30, the maturity date, amounting to 326 million yuan.

On May 7, ST Dima fell to 0.90 yuan per share, and Dongyin Holdings announced after the close of the day:

The Company and Chongqing Jiangnan Urban Construction and Development (Group) Co., Ltd. (hereinafter referred to as "Chongqing Jiangnan Group") signed the Strategic Investment Framework Agreement to fundamentally promote the company's extrication from difficulties through judicial reorganization and the implementation of a package restructuring of assets, debts, rights and interests and businesses. At the same time, a person from Dongyin Holdings said that the restructuring involved two of its listed companies (ST Dima and Smart Agriculture), and a change in control could not be ruled out.

Chongqing Jiangnan Group is a local state-owned enterprise controlled by the government of Nan'an District, Chongqing, and this move means that ST Dima's controlling shareholder will pin its hopes on local state-owned assets to take over the restructuring.

On May 8, ST Dima's share price reversed from the down limit to the daily limit, and the closing price of the day was 0.95 yuan, and the market gave a short-term hope.

On the evening of May 8, the Shanghai Stock Exchange issued a letter of inquiry to ST Dima, requiring the company to disclose more details and basis for "the reorganization may involve a change of control"; As well as combined with the loss of net profit for three consecutive years, the overdue payment of large debts, and the stock price being lower than 1 yuan for three consecutive trading days, etc., investors are fully reminded of the possible delisting risk of the company's shares.

On the same day, ST Dima issued an announcement, saying that the company's controlling shareholder, Dongyin Holdings, had been applied for reorganization by creditors, and the result of the reorganization was not yet known.

On May 10, ST Dima fell again, and the stock price closed at 0.86 yuan per share.

On the SSE interactive platform, investors asked worriedly:

"Hello Secretary of the Board of Directors, the company has been ST to investors to bring huge losses, in addition to many years of no dividends, no cash, but also involved financial problems, the company has lost 10 billion for three consecutive years, and the listed market value is only 2.2 billion, what rescue measures does the company have?"

"Does the company's current stock price situation plan to save it, or is it going to be delisted at par?"

ST Dima replied that the company's current operating situation is stable, and the company is actively doing its own business while also trying its best to seek help from shareholders and the government, in order to maintain a stable and upward sustainable business goal and protect the interests of investors from damage.

Some shareholders and executives of listed companies who have been warned by the risk choose to increase their holdings to save their stock prices. For example, Gu Jia, vice chairman of ST Kelida, and He Limin, secretary of the board of directors, increased their holdings of the company's shares together; ST Yongyue was led by four directors led by Chairman Chen Xiang to increase their holdings in the company; ST Shida was initiated by the company's controlling shareholder to increase its holdings.

However, in the face of the huge sell-off, the executives of ST Kelida and ST Yongyue increased their holdings without effect, and the stock prices continued to fall to the limit.

Jiang Weijia, a senior analyst at the Chongqing Business Department of Jinyuan Securities, told the Economic Observer that the current round of ST stock sell-off highlights the market's rapid response to regulatory policy changes. Only by strictly regulating themselves can listed companies survive in the capital market. After the introduction of the new "National Nine Articles", the entire core of the investment logic of the capital market has changed.

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