The company that was ST this year is approaching 2023

The readings are unique

2024-06-02 20:03Published in Beijing

After the listed company is ST, the first problem it faces is that it may be excluded from institutional positions and stock pools, and it may be difficult for listed companies to obtain liquidity, which is even more unfavorable for central state-owned enterprises with market value management assessment

Text: Zhang Yun, Wang Ying

Editor|Yang Xiuhong

After the annual report season, a large number of A-share listed companies "wore stars and hats".

According to statistics, in the past month or so, nearly 100 listed companies have been ST. Since the beginning of this year, the companies that have been implemented ST or *ST have approached the level of the whole of 2023.

Compared with previous years, while the number of ST companies has increased, the number of companies that have been "subject to administrative penalties by the CSRC for material information disclosure violations" is also increasing this year. According to Wind data, since May this year, there have been five listed companies that have been ST or judged to continue ST for this reason, and only two listed companies will be "wearing stars and hats" for this reason in 2023.

Many of these listed companies are state-owned enterprises. On May 21, Zhongtai Chemical, whose actual controller is Xinjiang State-owned Assets Supervision and Administration Commission, was ST; On the same day, Guorui Technology, whose actual controller is the State-owned Assets Supervision and Administration Commission of Zhejiang Province, was also ST for the same reason. For a time, listed companies that have been investigated but have not yet issued a final result, or whose final punishment result is the same as the above-mentioned company, have attracted attention in the secondary market, and many investors have chosen to stay away from such companies. In order to meet the needs of investors, most market service providers also specialize in selecting listed companies with traces of "case filing and investigation" for investors.

"The first problem faced by such companies is that they may be excluded from institutional holdings and stock pools, other investors will be more cautious, and listed companies may have difficulty obtaining liquidity, which is even more unfavorable for central state-owned enterprises with market value management assessments." A secondary market source said.

In January this year, the State-owned Assets Supervision and Administration Commission of the State Council held a meeting on the assessment and distribution of central enterprises and local SASAC, and clearly proposed to comprehensively promote the market value management assessment of listed companies, so the market value management of central state-owned enterprises has become one of the major highlights of the capital market in 2024, and the situation of listed companies of central state-owned enterprises will be more complicated.

In addition, in 2023, the two listed companies that were "wearing stars and hats" due to administrative penalties by the China Securities Regulatory Commission for illegal disclosure of material information - *ST Hongtu and *ST Xinhai have been delisted. The listed companies that "wear stars and hats" almost have one foot on the delisting list.

On April 12, the State Council issued the "New Nine Articles" and "Increasing the Supervision of Delisting" became one of the nine opinions. According to the opinion, it is necessary to "deepen the reform of the delisting system and accelerate the formation of a normalized delisting pattern that should be withdrawn and cleared in a timely manner." The opinions also put forward that it is necessary to "strengthen the implementation of standardized delisting", and among the risks of such delisting are "due to major deficiencies in information disclosure or standardized operation, the exchange is required to make corrections within a time limit, but the company fails to do so within the specified time limit".

135 companies wore stars and hats

Wind data shows that since the beginning of this year, as of May 27, 2024, 135 A-share listed companies have been implemented ST or *ST for different reasons, and this number is 117 in the same period in 2023, a year-on-year increase of about 15%. This figure is close to the level of the whole of 2023, with 145 listed companies being implemented ST or *ST in 2023.

Some of these listed companies have been implemented ST or *ST for the first time, while others continue to be implemented ST or *ST. From the perspective of the reasons for being ST, there are both companies involved in one reason, and companies involved in multiple reasons at the same time.

According to the disclosure of listed companies, the main reasons for the implementation of ST or *ST are as follows: first, non-standard audit opinions issued by accounting firms, including "unable to express opinions" or "negative opinions"; Second, the production and business activities of listed companies have been seriously affected and are not expected to recover within three months; (3) the listed company is occupied by the controlling shareholder and its affiliates for non-operational purposes or provides external guarantees in violation of the prescribed decision-making procedures, and the circumstances are serious; Fourth, the financial data is not up to standard, for example, the audit report of the most recent year has the statement that "there is uncertainty in the ability to continue operations", the audited net profit of the most recent fiscal year is negative and the operating income is less than 100 million yuan, the audited net profit of the most recent fiscal year is negative and the operating income is less than 100 million yuan, and the audited net assets at the end of the period are negative; Fifth, the main bank account was frozen; Sixth, it received the court's ruling to accept the company's reorganization application. In addition, there are other reasons for violations of laws and regulations, including "being administratively punished by the China Securities Regulatory Commission for illegal disclosure of material information, or being transferred to the public security organ in accordance with the law for suspected illegal disclosure or non-disclosure of important information".

After the 2024 annual report season, A-shares have added companies that have been implemented ST due to many substandard financial data, and there is a category of "wearing stars and hats" that was relatively rare in the past, and the scope of this year is expanding, that is, "administrative penalties imposed by the China Securities Regulatory Commission for illegal disclosure of material information" and ST or *ST listed companies, there are already five such companies.

Among them, ST Zhongtai, ST Ruike, and ST Shilong have all been ST for the first time, while *ST Furun and *ST Zhongli have been ST due to substandard financial data.

Among the above five companies, ST Zhongtai and ST Ruike are all state-owned enterprises. In 2023, there will be only two listed companies that will be ST for the same reason, and neither of them is a central state-owned enterprise.

A number of state-owned enterprises have been ST

Including ST Zhongtai and ST Ruike, there are a number of state-owned enterprises that have implemented ST this year, which has attracted market attention.

On May 17, Zhongtai Chemical, a subsidiary of Xinjiang State-owned Assets Supervision and Administration Commission, announced that it had received the "Administrative Penalty Decision" issued by the Xinjiang Securities Regulatory Bureau, and the company's shares had been subject to "other risk warnings" since May 21, and the stock abbreviation was changed from "Zhongtai Chemical" to "ST Zhongtai".

The reasons for Zhongtai Chemical's punishment involve financial fraud, occupation of shareholders' funds, and false records and major omissions in the periodic report. Specifically, the company's total inflated revenue in 2022 will be 4.248 billion yuan, inflated costs will be 4.248 billion yuan, and the non-operating funds occupied by the controlling shareholder and its affiliates in 2021 and 2022 will be 7.718 billion yuan.

The Xinjiang Securities Regulatory Bureau decided to order the company to make corrections, give a warning, and impose a fine of 5 million yuan; The parties concerned were given warnings and fines of varying amounts.

The company, formerly known as Xinjiang Chlor-alkali Plant, is one of the largest chlor-alkali chemical enterprises in China. At present, Zhongtai Chemical has two main businesses: chlor-alkali chemical industry and viscose textile industry, the controlling shareholder is Zhongtai Group, and the actual controller is Xinjiang State-owned Assets Supervision and Administration Commission.

It is worth mentioning that Zhongtai Chemical has maintained a high level of dividends in recent years. Since its listing at the end of 2006, it has paid dividends every year, with a total cumulative dividend of 2.222 billion yuan and a dividend yield (in the past 12 months) exceeding 2%.

ST Zhongtai fell for five consecutive days after being implemented, and the market value evaporated by nearly 2.5 billion yuan in the short term. As of May 28, the total market value of ST Zhongtai was 11.5 billion yuan, down 78% from the high point in 2021, and the number of shareholders exceeded 110,000.

Guorui Technology, a subsidiary of the State-owned Assets Supervision and Administration Commission of Zhejiang Province, also recently received an administrative penalty decision, was ordered to correct, given a warning, and imposed a fine of 2 million yuan, and the company was also ST.

Guorui Technology is mainly engaged in ship power distribution systems and ship engine room automation systems. It was found that the company inflated its operating income by 226 million yuan, inflated operating costs by 186 million yuan, and inflated total profits by 40.2577 million yuan in the 2020 annual report by participating in the false self-circulation business of private network communication, accounting for 39.61% of the disclosed operating income and 49.68% of the total disclosed profits in the 2020 annual report.

ST Ruike fell on the first trading day after the implementation of ST, a decline of 20%, and the market value evaporated by nearly 500 million yuan.

In addition, two state-owned enterprises, Straits Innovation and Special Information, received the "Prior Notice of Administrative Punishment" due to false records in their annual reports, and were subject to "other risk warnings".

Among these state-owned enterprises, the heaviest punishment is the special information, which has committed financial fraud for five consecutive years. In 2015, Tefa Information acquired 100% of the shares of Tefa Dongzhi. In order to fulfill the performance commitments, the company has inflated its revenue, inflated or reduced its operating costs and profits by adjusting operating costs and fictitious businesses across periods, resulting in false records in the annual reports from 2015 to 2019.

In addition to being warned, the company and the relevant responsible persons are also proposed to be fined 22.5 million yuan. Among them, the listed company intends to be fined 8 million yuan. Jiang Qinjian, then chairman of the board of directors of the company, Chen Chuanrong, then general manager of the company, and Yi Zongxiang, then deputy general manager of the company, were to be fined 4 million yuan, 3.5 million yuan, and 2 million yuan respectively, and they were to be banned from the securities market for 10 years, 8 years, and 6 years, respectively.

It is worth noting that after the announcement of relevant information to the close of trading on May 28, the share price of ST Texin has seen 10 falling limits.

In addition, there are also many companies that have been warned of risks due to financial data and audit opinions.

Shanghai Yilian previously announced that it was subject to a delisting risk alert because it was issued an audit report that could not express an opinion, and at the same time, it was subject to other risk alerts due to the internal control audit report with a negative opinion. As soon as this announcement came out, *ST Yilian's stock price fell for six consecutive trading days. In the long run, as of May 28, *ST Yilian's stock price has fallen by 77% this year.

After the disclosure of the annual report, iKang Technology was issued with a financial audit report with a qualified opinion on the material uncertainty related to continuing operations, as well as an internal control audit report with a negative opinion due to the negative net profit after deducting non-recurring gains and losses for the last three consecutive fiscal years, and at the same time, it was issued with a qualified opinion on the material uncertainty related to continuing operations, and the internal control audit report with a negative opinion was implemented, causing the funds to flee. Since May 6, the company has fallen for 17 consecutive trading days, and is facing the risk of being terminated because the stock price continues to be lower than the par value.

It is understood that the most direct impact of listed companies after the implementation of ST or *ST is the withdrawal of institutional funds.

The above-mentioned secondary market participants said that institutions often do not buy stocks that have been implemented ST or *ST, and those that have been bought may have to gradually reduce their positions.

According to public information, ST Zhongtai and ST Ruike have institutional positions. As of the end of the first quarter of this year, northbound funds accounted for about 1.1% of the outstanding share capital, fund holdings accounted for about 0.9%, the fund companies holding shares were Southern Fund and Wells Fargo Fund, and Chinese Life Insurance Co., Ltd. held about 0.73%. ST Ruike has QFII stepping on the thunder, Goldman Sachs Group and Barclays Bank hold about 1.1% of the shares.

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