The chairman of the board of directors was investigated for suspected bribery, the listed company itself was investigated and investigated for suspected unit bribery violations and violations of the law, and after a series of negative bears broke out on September 2, the stock price fell sharply by 8.47% to 11.13 yuan, a new low since 2015.
Since August 30, Huayu Software has fallen sharply for 4 consecutive days, with a cumulative decline of more than 43%. The current plunge began with an announcement of major events issued by the company. On the evening of August 29, Huayu Software announced that on March 22, 2021, the company received a notice from the Beijing Municipal Commission of Supervision to investigate the illegal issue of suspected bribery by Shao Xue, the chairman and general manager of the company, and imposed a lien on him since March 21.
It is worth noting that in March, Hoau Software learned that the chairman of the board of directors was investigated and retained, but the company was 5 months late to the semi-annual report to disclose this major matter.
The afterglow of the first thunder has not subsided, and the second thunder has reached the battlefield. On the evening of September 1, Huayu Software issued an announcement that the Beijing Municipal Commission of Supervision decided to file a case for review/investigation into the disciplinary/illegal issues of bribery by the company's suspected units. As of the date of the announcement, the Company is not aware of the matters involved and the reasons for this, and it is currently impossible to determine the possible impact.
From the chairman of the board of directors suspected of bribery to the company suspected of bribery
As for the reasons for the 5 months late disclosure of the chairman's investigation, Huayu Software said that the incident is still in the investigation stage of the relevant departments. Since as of the current meeting of the board of directors, there has been no situation in which Shao Xue is unable to perform his duties, combined with the relevant legal provisions, according to Article 22 of the Measures for the Administration of Information Disclosure of Listed Companies, it is argued that this matter does not constitute a major event that the company needs to disclose.
On August 27, Huayu Software held a board meeting to consider the relevant proposals for this year's semi-annual report, and found that Shao Xue could not perform his duties. Until this time, Wei Guangyu, secretary of the board of directors of the company, believed that the matter may constitute a major event that the company needs to disclose.
In the announcement, China Resources Software said that Shao Xue's investigation only involved himself and had nothing to do with the company. Hoau's explanation does not convince regulators and investors.
The next day, the Shenzhen Stock Exchange issued a letter of concern, requesting Hoau Software to determine the basis and reasonableness of the above matters that are not related to the company, and verify the time context of the above matters and the specific time point of the company's knowledge of the matters, and explain the reasons for Shao Xue's failure to disclose the lien matters in a timely manner.
In this regard, Huayu Software replied that as early as the 2020 annual report and the first quarter report of 2021, Shao Xue was absent from the company's board of directors' review of the annual report and quarterly report. At that time, Shao Xue entrusted the company's director Zhao Xiaoming and the secretary of the board of directors Wei Guangyu to perform their duties on their behalf, and used Shao Xue's seal to stamp the report.
It is understood that in recent years, Shao Xue has served as the chairman and general manager of Huayu Software, presiding over the strategic decision-making and capital operation of the group, while the management of the group in terms of manpower, finance, brand, collaboration, securities, administration and other aspects is managed by other executives according to the system and authorization.
China Mobile subsidiaries and a number of funds stepped on the thunder
The stock price of Hoau Software has fallen sharply in recent days, and the most injured is the shareholding fund. As of June 30, xingquan trend investment and CITIC Securities excellent growth funds were newly promoted to the sixth and seventh largest shareholders of listed companies in the second quarter, holding 14.5481 million shares and 14.3497 million shares respectively. Xingquan Business Model, another product of Xingquan Fund, reduced its holdings by 5.7738 million shares during the second quarter, and the current number of shares held is 12.7 million shares, ranking the tenth largest shareholder.
In the second quarter of this year, the National Social Security Fund 418 Portfolio increased its holdings in Huayu Software by 4.0378 million shares, with a total number of 14.3396 million shares, ranking the eighth largest shareholder.
After-hours Dragon and Tiger list data show that as soon as the above-mentioned bearish announcement came out, the institution "grouped" to sell Huayu software. On August 31, Huayu Software fell more than 11%, and among the top five seats of sellers, the special seat of Shenzhen Stock Connect was sold for one, with a net sale of 174 million yuan. The last four sellers were all institutional seats, with a total net sale of $546 million. On the 30th, Huayu Software recorded a "20cm" drop stop, selling one, selling three and selling five seats are all for the exclusive use of institutions.
In addition, in November 2020, China Mobile Capital acquired 41 million shares of Hoau Software held by Shao Xue and others, and became the third largest shareholder of Hoau Software in the fourth quarter of that year. At that time, the transfer price was 22.11 yuan per share, and the total transaction consideration was 906 million yuan.
China Mobile Capital is a wholly-owned subsidiary of China Mobile and an important platform for China Mobile to conduct equity investment and capital operation. As of the second quarter of this year, China Mobile Capital has not reduced its holdings in Huayu Software, and if it has not reduced its holdings since the third quarter, according to the latest closing price, China Mobile Capital has held more than 50% of the floating loss in the past 10 months.
From a fundamental point of view, the rapid growth of performance in the first half of the year may be the main reason why many funds favor Hoau Software. According to the financial report, the main business of Huayu Software involves legal technology, education informatization, smart government and other fields. In the first half of the year, Hoau Software achieved operating income of 2.154 billion yuan, an increase of 157.04% year-on-year; net profit attributable to the mother was 215 million yuan, an increase of 1190.39% year-on-year; net profit attributable to the mother after deduction of non-profit was 203 million yuan, an increase of 2703.88% year-on-year.
During the reporting period, the net outflow of cash flow from operating activities of Hoau Software was 1.177 billion yuan, down 102.31% year-on-year. The company said that this is mainly due to the substantial increase in the scale of contracts in hand, resulting in a significant increase in the implementation expenditure of projects such as procurement.