Zhongtai Chemical's performance is fraudulent! Heavy fines totaling 18.8 million yuan will be changed to ST Zhongtai from today

China Net Finance, May 21 After two months, the investigation of Zhongtai Chemical (002092.SZ) information disclosure violations and violations has ended. Zhongtai Chemical, its controlling shareholder, and 8 relevant responsible persons were heavily fined a total of 18.8 million yuan, in addition, Zhongtai Chemical will also wear the "hat" of ST.

According to the announcement issued by Zhongtai Chemical, due to the total inflated revenue of 4.248 billion yuan and the inflated cost of 4.248 billion yuan in 2022, the total inflated revenue in 2021 was not disclosed. In 2022, the controlling shareholder and its related parties will be fined a total of 7.718 billion yuan for the related party transactions occupied by non-operating funds, and the information disclosure of the relevant bond prospectus is inaccurate, Zhongtai Chemical and its 7 senior executives will be fined a total of 11.8 million yuan, and its controlling shareholder Zhongtai Group and the then CFO of Zhongtai Group will also be fined a total of 7 million yuan, and Zhongtai Chemical will also be subject to "other risk warnings" from May 21, and the stock abbreviation will be changed to "ST Zhongtai".

Inflated income exceeded 4.2 billion yuan, and non-operating funds occupied 7.7 billion yuan, Zhongtai Chemical was heavily fined

According to the "Administrative Penalty Decision", Zhongtai Chemical has false records in the 2022 annual report; Failure to timely disclose related party transactions occupied by non-operating funds by controlling shareholders and their related parties; Three illegal facts of inaccurate information disclosure in the relevant bond prospectus.

First, in order to complete the operating income target issued by the controlling shareholder Zhongtai Group, Zhongtai Chemical and its controlled subsidiaries such as Xinjiang Blue Sky Petrochemical Logistics Co., Ltd., Xinjiang Tiantong Modern Logistics Co., Ltd., Qingdao Qitai Technology Co., Ltd. and Zhongtai Dayou Wuyu (Shanghai) International Logistics Co., Ltd. accounted for the business that does not have control or is actually an agent according to the total amount method, and the total inflated revenue and inflated cost in 2022 will be 4.248 billion yuan, accounting for the total 7.60% and 7.75% of the total operating income and total operating costs disclosed in the 2022 Annual Report.

Second, Zhongtai Chemical did not disclose the related party transactions occupied by the controlling shareholder and its related parties for non-operating funds in the 2021 and 2022 periodic reports and interim announcements. In 2021 and 2022, Zhongtai Chemical and its subsidiaries had related party transactions with Zhongtai Group and its affiliates in the name of advance payment, return payment, collection and payment of freight, etc., directly or through a third-party company, with a total amount of 7.718 billion yuan. Among them, the amount incurred in 2021 was 2.154 billion yuan, accounting for 8.54% of the audited net assets in 2021; The amount incurred in 2022 was 5.564 billion yuan, accounting for 21.61% of the audited net assets in 2022. Up to now, the principal amount of the above-mentioned annual funds has been returned.

Third, Zhongtai Chemical publicly issued "23 Xinhua 01" and "23 Xinhua K1" corporate bonds in March 2023 and August 2023 respectively, raising a total of 1.1 billion yuan. The prospectus of "23 Xinhua 01" cites the financial report data of Zhongtai Chemical in 2021 and from January to September 2022, and discloses the 2022 annual report of Zhongtai Chemical during the duration period. The prospectus of "23 Xinhua K1" cites the financial report data of Zhongtai Chemical in 2021 and 2022.

Regarding the illegal facts of Zhongtai Chemical, the Xinjiang Securities Regulatory Bureau believes that Yang Jianghong, the then chairman of the board, and Peng Jiangling, the then chief financial officer, are the supervisors directly responsible for all the above-mentioned illegal information disclosures; Liu Hong, then director and general manager of Zhongtai Chemical, was the other directly responsible person who was responsible for all the above-mentioned information disclosure violations; Jiang Jun, the current director and general manager, is the other person directly responsible for the illegal information disclosure of Zhongtai Chemical; Supervisor Zhang Qinghua is the other person directly responsible for the above-mentioned non-operating capital occupation issue; Deputy General Manager Lu Wenhan is the other person directly responsible for the above-mentioned part of the inflated income; Ding Yongzhong, deputy general manager, is the other person directly responsible for the occupation of part of the funds of Zhongtai Chemical.

In addition, Zhongtai Group, as the controlling shareholder of Zhongtai Chemical, organized and instructed the capital occupation of Zhongtai Chemical, resulting in the illegal information disclosure of major omissions in the listed company. Gong Chunhua, then the chief financial officer of Zhongtai Group, was in charge of the finance, investment and financing of Zhongtai Group during his tenure, and was the other person directly responsible for organizing and instructing Zhongtai Chemical to carry out illegal information disclosure activities of Zhongtai Group.

According to the facts, nature, circumstances and degree of social harm of the parties' illegal acts, the Xinjiang Securities Regulatory Bureau decided to impose a fine of 5 million yuan on Zhongtai Chemical in accordance with relevant regulations; imposed a fine of 5 million yuan on Zhongtai Group; imposed a fine of 2.5 million yuan on Yang Jianghong; imposed a fine of 2 million yuan on Gong Chunhua; imposed a fine of 1.5 million yuan on Peng Jiangling; imposed a fine of 600,000 yuan on Liu Hong; imposed a fine of 600,000 yuan on Jiang Jun; imposed a fine of 600,000 yuan on Zhang Qinghua; imposed a fine of 500,000 yuan on Lu Wenhan; Ding Yongzhong was fined 500,000 yuan.

Also due to the penalty, Zhongtai Chemical Ticket will be suspended for 1 day from the market open on May 20, 2024, and will resume trading from the market open on May 21, 2024; After the resumption of trading, the "other risk warning" will be implemented, the stock abbreviation will be changed from "Zhongtai Chemical" to "ST Zhongtai", and after the implementation of other risk warnings, the daily rise and fall of the company's stock trading will be limited to 5%.

Performance declines, serious losses, and stock prices have fallen sharply year after year

Not only is the illegal fact of more than 4.2 billion yuan of inflated income and more than 7.7 billion yuan of non-operating funds occupied in 2021 and 2022 staggering, but the performance of Zhongtai Chemical's net profit loss attributable to the parent company of 2.865 billion yuan in 2023 is also shocking.

It previously explained that due to the impact of the industry cycle, the sales prices of the company's main products PVC, caustic soda, viscose fiber, and viscose yarn declined to varying degrees compared with the same period last year, and the profitability of the products decreased significantly. At the same time, at the end of 2023, the company conducted an impairment test on assets with signs of impairment, and an asset impairment loss occurred. In addition, the performance of the joint venture declined and the loss increased, and the company recognized an increase in investment losses.

Regarding the loss situation and measures, Zhongtai Chemical replied in the interactive platform on February 4 that the company will continue to focus on the main business of chlor-alkali chemical industry, continuously improve and optimize the industrial chain, comprehensively strengthen standardized management, reduce costs and increase efficiency, so as to continuously improve the company's overall profitability and market risk resistance ability, and achieve high-quality development.

However, from the perspective of the first quarter of 2024, the effect may not be satisfactory, although the net profit attributable to the parent increased by 43.61% year-on-year, but it is still in a state of loss. Its first quarter report for 2024 shows that the operating income in the reporting period was 7.780 billion yuan, a year-on-year decrease of 27.33%; net profit attributable to shareholders of listed companies was -177 million yuan, an increase of 43.61% year-on-year.

In fact, in the past three years, Zhongtai Chemical's revenue and net profit have been in a declining stage. According to the data, from 2021 to 2023, Zhongtai Chemical's revenue will be 60.754 billion yuan, 51.662 billion yuan, and 37.118 billion yuan respectively; The net profit attributable to the parent company was 2.754 billion yuan, 776 million yuan and -2.865 billion yuan respectively.

In the secondary market, Zhongtai Chemical's share price has shown a "falling endlessly" situation, since the highest of 18.74 in September 2021, it has fallen all the way, with occasional rises in the middle, but the overall trend has not changed, and as of 4.93 at the time of suspension, it has fallen by more than 70%. The number of its shareholders has also shrunk to 110,000 from 150,000 in 2021.

According to public information, Zhongtai Chemical's main business is the production and sales of polyvinyl chloride resin and ion membrane caustic soda; The production and sales of viscose fiber and yarn are the world's largest acetylene PVC production enterprises and the largest chlor-alkali production enterprises in China.

(Editor in charge: Zhu He)