Red Weekly reporter He Yan
As a company with a market value of only about 1.7 billion yuan, *ST Jitang's boldness can be described as big enough, for 4 consecutive years of financial fraud, inflated revenue of more than 20 billion yuan, can be called a professional "old thousand". There is no suspense, *ST Jitang stock price fell for 5 consecutive trading days, facing the risk of delisting.
The market value is less than 2 billion, and the inflated revenue exceeds 20 billion
On the evening of October 24, 2021, *ST Jitang issued an announcement on the receipt of the CSRC's "Advance Notice of Administrative Penalties and Market Prohibition". Judging from the content of the notice, *ST Jitang has had performance fraud almost every year since its backdoor listing in 2016.
Specifically, from 2016 to 2018, *ST Jitang accumulated 20.735 billion yuan in false income, 17.851 billion yuan in inflated costs, and 2.43 billion yuan in inflated profits through fictitious sales and procurement business, inflated sales and management expenses, and forged bank receipts through the fictitious sales and procurement business of tongjitang pharmaceutical, Nanjing Tongjitang and Xinyi Tongjitang.
In 2019, *ST Jitang inflated "operating income - other business income" by 386 million yuan, inflated the total profit by 386 million yuan, and inflated the net profit by 299 million yuan, accounting for 226.52% of the net profit disclosed in the 2019 annual report. This means that in these 4 years, *ST Jitang has increased its operating income by more than 20 billion yuan and increased its total profit by more than 2.8 billion yuan.
According to this prior notice, the company has inflated net profit for four consecutive years from 2017 to 2019, while the financial accounting report will be retrospectively adjusted to have a negative net profit for four consecutive years from 2017 to 2020.
In addition to financial fraud, *ST Jitang is also suspected of three violations of information disclosure violations, including the related party transactions that failed to disclose in a timely manner and failed to disclose the non-operational occupation of funds by controlling shareholders and their related parties in the annual reports from 2016 to 2019; failed to truthfully disclose the deposit and actual use of the company's raised funds; and failed to disclose in a timely manner and in the 2018 Annual Report and 2019 Annual Report the relevant matters related to providing guarantees and major litigation for the controlling shareholders and their related parties as required.
On the evening of October 25, 2021, *ST Jitang announced that it may be terminated due to the situation of forced delisting due to major violations of the law. On the same day, *ST Jitang fell to a stop, and in the following 4 trading days for consecutive trading days.
Based on the above illegal facts, according to the relevant judicial interpretation, if the investor holds *ST Jitang at the close of trading on April 27, 2020, and sells or still holds it after April 28, 2020 and has incurred a certain floating loss (whether or not it is unwinding), you can initiate a claim, you only need to send your name, contact number and transaction records (recommended as Excel files) to the mailbox of the [email protected] to participate in the "private rights protection" by the Securities Market Red Weekly. The column organizes a pre-collection of claims to safeguard its legitimate rights and interests. Investors do not need to pay any attorney fees before receiving compensation.
The big guys of the past are now withering away
*ST Jitang full name Xinjiang Tongjitang Health Industry Co., Ltd., and the Chinese time-honored Guizhou Tongjitang has nothing to do, the two have been in a lawsuit because of the trademark, but in the end it was not resolved. According to public information, *ST Jitang was originally mainly engaged in beer raw materials, beer production, fruit and vegetable drinks, and involved in real estate, import and export trade and other business areas, and then through major asset restructuring, the original industry was disposed of, and at the same time injected into the Tongjitang pharmaceutical industry, from beer production and sales to pharmaceutical circulation enterprises.
In 2016, after the completion of the one-year asset restructuring, the company successfully landed on the A-share market with a backdoor "hop" of more than 6 billion yuan, and the stock was referred to as Tongjitang. After landing on the capital market, *ST Jitang's performance has achieved a surge, and by 2018, the company's operating income and net profit exceeded 10 billion yuan and 500 million yuan respectively, and the company's actual controller Zhang Meihua also became the richest man in Jingzhou, Hubei Province. Of course, now the market is also clear, the company's brilliant performance and huge wealth are backed by false financial data.
And the explosion of *ST Jitang is also traceable. Because as early as before the listing, *ST Jitang began to diversify its layout, a wide variety of business has long dragged down Tongjitang, more than 3 of its controlled subsidiaries are deregistered, and there are many other subsidiaries with serious losses.
In order to alleviate the financial constraints brought about by diversification, *ST Jitang relies on the resources of the listed platform to frequently borrow funds from banks. In 2020, Tongjitang's short-term borrowing amount exceeded 700 million yuan. The company's cash flow has long been unable to support interest expenses, the debt ratio is rising, and the capital turnover is gradually difficult.
After retrospective adjustment, *ST Jitang's net profit from 2017 to 2019 was negative, and in 2020, it lost 2.3 billion yuan. According to the 2021 semi-annual report, *ST Jitang's revenue was 373 million yuan and a net loss of 64.77 million yuan. The third quarter report of 2021 shows that the company achieved the main revenue of 559 million yuan, down 78.79% year-on-year; the net profit attributable to the mother was 107.7116 million yuan, down 787.99% year-on-year; the deduction of non-net profit loss was 107.76 million yuan, of which in the third quarter of 2021, the company's single-quarter main revenue was 186 million yuan, down 20.13% year-on-year; the single-quarter net profit loss attributable to the mother was 42.9411 million yuan, down 1.84% year-on-year.
From a backdoor loan with a price of more than 6 billion yuan to a valuation of only about 1.7 billion yuan, today's *ST Jitang has long been different from the past, and delisting may only be a matter of time. As of September 30, 2021, *ST Jitang had 50,200 shareholders. These investors who have been badly damaged should seize the time to protect their rights, and the follow-up progress of related matters will continue to be tracked by the reporter of Red Weekly.
