On the evening of May 12, Huijin Co., Ltd., Strait Innovation, and Special Information successively issued announcements saying that due to false records in the annual report, the company was taken regulatory measures or administrative penalties by the local securities regulatory bureau, and the stock was subject to "other risk warnings", and the stock abbreviation was preceded by the word "ST".
At the opening of trading on May 14, the share prices of ST Texin, ST Xiachuang and ST Huijin went straight to the fall limit, falling by 4.94%, 20% and 20% respectively. On May 15, the stock prices of the three companies continued to fall sharply, among which ST Texin and ST Huijin both recorded a fall limit.
On the same day, three companies were "ST", which shows the strength of the regulator to govern the market. However, it is undoubtedly a hammer for the 180,000 shareholders of these three companies. For investors in the A-share market, how to avoid buying thunder companies needs to be carefully studied.
3 companies "wear hats" on the same day
On May 12, Huijin shares, Strait Innovation and Special Information successively issued announcements saying that due to violations such as false records in annual reports, the company and relevant persons in charge were subject to corresponding administrative penalties, and will be suspended on May 13, and on May 14, "other risk warnings" were implemented, and the stock abbreviation was changed to ST Xiachuang, ST Huijin, and ST Texin.
Among the three companies fined, the heaviest penalty was the special information. Here's why, in 2015, Tefa Information acquired 100% of the shares of Tefa Dongzhi. In order to fulfill the performance commitment, the company has inflated revenue, inflated or reduced operating costs and profits through a variety of ways. It was found that there were false records in the annual reports from 2015 to 2019.
For 5 consecutive years of financial fraud, the company and related responsible persons were not only warned, but also fined 22.5 million yuan. Among them, the listed company was fined 8 million yuan. As the main responsible person, Jiang Qinjian, the then chairman of the special information, intends to be fined 4 million yuan and intends to take a 10-year ban on entering the securities market. Chen Chuanrong, then general manager of Tefa Dongzhi, proposed to be fined 3.5 million yuan and banned from the securities market for 8 years. Yi Zongxiang, then deputy general manager of Tefa Dongzhi, planned to be fined 2 million yuan and banned from the securities market for 6 years.
Huijin was fined 2 million yuan, mainly because of two violations of information disclosure. First, the company made an error in the calculation of fair value change profit and loss, and failed to provide for credit impairment losses in accordance with the disclosed accounting policies, resulting in an inflated total profit of 15.2452 million yuan in the company's 2021 annual report. Second, Guo Junkai, the general manager at the time, was placed in custody in August 2022, but the company did not inform the Hebei Securities Regulatory Bureau of the relevant news and publicly disclose it until June 2023.
Strait Innovation "paid for" the violations during the period when the former actual controller was in power. It is reported that as early as 2018, Strait Innovation won a controlling stake in Good Medical Friends from H&Q Yuyou. From 2018 to 2019, in order to expand the scale of revenue, Good Doctor inflated its operating income by fictitious or fictitious consultation and consulting services, and arranged for third-party entities to cooperate with idling funds. This behavior led to an inflated revenue of 75.3369 million yuan and 47.1227 million yuan from 2018 to 2019. However, after Pingtan State-owned Assets took control of Strait Innovation in 2020, it immediately corrected and retrospectively corrected and retrospectively this behavior, but the CSRC still filed a case for investigation into the above matters.
180,000 shareholders stayed up all night
Three companies were "ST" in one day, which is undoubtedly a nightmare for shareholders who hold shares. According to the latest data, the number of shareholders of Special Information is 104,700, the number of shareholders of Strait Innovation is 30,600, and the number of shareholders of Huijin is 48,600. The total number of shareholders of the three companies exceeds 180,000.
However, this also means that after the revision of the Stock Listing Rules of the Shanghai and Shenzhen Stock Exchanges, the regulatory penalties for financial fraud of listed companies have been strengthened. This may lead to a major turning point in the investment philosophy of the A-share market. Companies suspected of inflating profits or revenues are directly ST, which is equivalent to a label for listed companies and distinguishing between good companies and bad companies. For investors, finding really good companies has become a must for investment.
So, for investors, how should they avoid buying this kind of "thunder stocks"? Toutiaojun believes that through the financial statements, some data is worth paying attention to.
First, companies with too high a ratio of inventory to main business costs should be extra vigilant. After all, there is too much inventory, which gives the company too much room to operate.
Second, companies with net cash flows and profit divergences in their cash flow statements should also pay attention. Generally speaking, the profits obtained by whitewashing will not be supported by capital flows.
Third, investors can pay attention to the financing payout ratio. In most cases, if a company's dividend funds are much larger than the financing amount, it means that the company is not too short of money and has a relatively high level of security.
Fourth, companies with VAM agreements also need to be vigilant. Because it is a bet, it means that once you fail to fulfill your performance commitments, you will pay a certain price. Therefore, this kind of company actually has a greater possibility of counterfeiting.
All in all, with the tightening of regulations, the ecology of the A-share market is undergoing profound changes, and investors need to keep their eyes open in the investment process.