Author: Taylor, Editor: Xiaoichi Mei
"The most expensive ST in history" *ST Zuojiang is finally going to be delisted.
On June 28, *ST Zuojiang issued an announcement announcing that it had received the "Decision on the Termination of the Listing of Beijing Zuojiang Technology Co., Ltd." from the Shenzhen Stock Exchange (Shenzhen Stock Exchange). According to the decision, *ST Zuojiang's shares will enter a 15-trading day delisting consolidation period on July 8, 2024, with the expected last trading date scheduled for July 26, 2024.
From May 4, 2023, *ST Zuojiang has been put on delisting risk alert due to negative audited net profit in 2022 and operating income of less than 100 million yuan. The 2023 annual financial report shows that the company's net profit loss reached -223 million yuan, and the operating income was 52.1727 million yuan, and the financial report was issued by the audit institution with an audit report that could not express an opinion. This triggered the termination of listing conditions set out in the GEM Listing Rules of the Shenzhen Stock Exchange.
At its peak, *ST Zuojiang's share price was close to 300 yuan/share, and it was less than 7 yuan/share when it was delisted.
According to incomplete statistics from Securities Star, throughout June, 16 listed companies, including *ST Chaohua, *ST Hongtao, *ST Zuojiang, ST Contact, Zhongyin Cashmere, ST Aikang, ST Yili, ST Dima, *ST Baan, ST Futong, Jianche B, *ST Yilian, *ST Meiji, ST Sunshine, Kaima B and *ST Gaosheng, announced that they had received relevant documents to terminate the company's stock listing.
Obviously, A-shares are no longer a safe place for junk companies.
Under the full registration system, there is no place for companies that do not have profitability in A-shares, and more new people will join in the future, and more companies will exit. In the past, it was "strict in and wide out", and in the future, it will be "wide in and wide out".
The timely introduction of the new nine articles is a comprehensive and fundamental clean-up of the capital market.
According to a report in Fortune magazine, the average lifespan of small and medium-sized enterprises in the United States is less than 7 years, and the average lifespan of large companies is less than 40 years. In China, the average lifespan of small and medium-sized enterprises is only 3 years, and for large groups, it is only 7-8 years.
This means that even a company that is in the limelight, as long as it lasts long enough, will eventually decline and die. Think about it further, if you let a company stay in the stock market for a long time, it will ultimately do more harm than good to the capital market over time.
Therefore, it is an inevitable requirement to maintain the vitality of the capital market, which is also an important prerequisite for the high-quality development of U.S. stocks in the long term.
Professor Craig Deutsch from the University of Toronto has written an article in the journal Financial Economics on the delisting of U.S. stocks. From 1975 to 2012, the total number of IPOs on the three major U.S. stock markets (NYSE, NASDAQ, AMEX) in the 38 years was 15,922, while the number of delisted companies in the same period was as high as 17,303 (including mergers and acquisitions and voluntary delistings).
In other words, the number of delistings has been greater than the number of IPOs for the past few decades. Another more intuitive data is that in the past 40 years, about 80% of listed companies in the United States have been delisted.
On the other hand, as of the end of 2021, the number of listed companies in Shanghai and Shenzhen has exceeded 4,600, while the total number of delisted companies is only 163.
Only by maintaining the survival of the fittest can the overall profitability of the whole market be guaranteed.
Zhongtai Securities once made a statistic, the interval was set from 2009 to 2019, counting the number of listed companies with ROE higher than 15% in this decade, of which there are only 18 A-shares, while 161 are U.S. stocks; The ROE target was relaxed to 10%, and the number of companies that met this requirement was 54 in A-shares, and 298 in U.S. stocks.
The good performance has led to better market performance and investors have also reaped strong returns.
After the 2008 financial crisis, the U.S. stock market came out of a bull market that lasted for more than a decade, and the Dow Jones index rose from a low of 6,470 points to nearly 37,000 points in 2021, an increase of nearly five times during the period.
On the other hand, the Shanghai Composite Index broke through 3,000 points more than a decade ago, and then went around and around, and it is still in this position today. And in this period, domestic GDP has already tripled. Although the malaise in China's stock market cannot be attributed entirely to the lack of quality and dynamism of listed companies, it is ultimately a factor that cannot be avoided.
What's worse is that due to the very limited number of delistings, a large number of garbage companies can always "survive in a desperate situation", and this special "dilemma reversal" is even favored, causing the market to be immersed in the atmosphere of "speculating in junk stocks" for a long time. Enterprises with good quality do not get the attention they deserve, and companies with poor quality are bustling with activity, which seriously distorts and deviates from the original intention of the capital market to serve the real economy.
At the same time, the nature of the capital market's "strict entry and wide exit" is very similar to the college entrance examination system, where you study hard in high school and completely relax yourself once you enter university. In the case of listed companies, it is manifested that the performance is desperately rushed before the IPO, and the profitability quickly "changes" after listing.
In the long run, without the pressure of delisting, many companies began to lie flat and mess around, and in the end, they even stiffened but did not die, which to a large extent damaged the release of the vitality of market economy competition.
Only "flowing" listed companies can be exchanged for an "iron-clad" capital market.
Through high-frequency entry and exit, the stock market is always retained by the most dynamic part of the entire economic world. This is not only conducive to economic development, but also gives investors returns, forming a win-win virtuous circle situation.
The high-pressure delisting is a lingering dark cloud for the part of the enterprises that are still breathing, and for the entire market, it is a sunny day.
The era of junk stock speculation is completely over, and it is necessary for investors to carefully examine their positions.
disclaimer
The content of this article related to listed companies is the author's personal analysis and judgment based on the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.); The information or opinions contained herein do not constitute any investment or other business advice, and Market CapWatch disclaims any liability for any actions resulting from the adoption of this article.
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