On the evening of October 24, 2021, *ST Jitang announced that it received the CSRC's "Advance Notice of Administrative Penalties", and after ascertaining the CSRC, the facts of *ST Jitang suspected of violating the law are as follows:
1. There are false records in Tongjitang's 2016 Annual Report, 2017 Annual Report and 2018 Annual Report, which inflate operating income, operating costs, sales and management expenses, resulting in total inflated profits of 680 million yuan, 920 million yuan and 830 million yuan from 2016 to 2018, respectively
2. There are false records in Tongjitang's "2019 Annual Report", which inflated other business income by 386 million yuan and inflated the total profit by 386 million yuan.
3. Tongjitang failed to disclose in a timely manner and failed to disclose the related party transactions of non-operational occupied funds of controlling shareholders and their related parties in the annual reports from 2016 to 2019.
4. Tongjitang did not truthfully disclose the deposit and actual use of the company's raised funds.
5. Tongjitang failed to disclose in a timely manner and failed to disclose the relevant matters of providing guarantees and major litigation for controlling shareholders and their related parties in the 2018 Annual Report and the 2019 Annual Report as required.
As the results of the investigation come to the surface, the conditions for investors to claim compensation from Tongjitang have also been further clarified. The securities team of Shanghai Narada Law Firm believes that investors who bought Tongjitang (*ST Jitang, 600090) shares before April 22, 2017 and April 28, 2020, and sold or continued to hold shares after April 28, 20202, can register or initiate a claim on their own.
In terms of performance, *ST Jitang is not good, its semi-annual performance report released on August 31 said that the operating income in the first half of 2021 was about 373 million yuan, a year-on-year decrease of 84.48%; the net loss attributable to the shareholders of the listed company was about 64.77 million yuan; and the basic earnings per share loss was 0.04 yuan.
Historical information shows that Tongjitang mainly operates pharmaceuticals, health care products and medical devices, and its main customer objects include medical institutions, wholesale enterprises, and retail pharmacies. On March 16, 2007, Tongjitang landed on the New York Stock Exchange, raising US$120 million, becoming the first proprietary Chinese medicine company in China to be listed in the United States. In April 2011, Tongjitang was acquired by Fosun Industrial (Hong Kong) Co., Ltd., a subsidiary of Fosun Pharma Holdings, and Hanmax Investment Limited, becoming a wholly-owned private company of the two companies, and the shares were immediately discontinued on the New York Stock Exchange. In 2016, Tongjitang landed on the A-share market through a major asset restructuring through backdoor hops.
According to Tianyan, the main business of Xinjiang Tongjitang Health Industry Co., Ltd. is the wholesale and retail distribution of drugs, medical devices and health-related products. The company's main products are drugs, medical devices, food, health care products, other non-pharmaceuticals, housing. The company's core drug circulation members have entered the top 50 of the top 100 pharmaceutical commercial enterprises in China for many years, and their sales performance and marketing network are at the forefront of the industry.
