11 daily limit in 19 trading days! Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) was named “the strongest demon stock” at the beginning of the year of the tiger.
From January 28 to the closing on February 24, 2022, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) has raised the limit for 11 trading days and achieved six board connections. The share price has increased from 5.7 yuan to 9.7 yuan per share, with a cumulative increase of 70.18% during the period.
On February 7, the Shanghai Stock Exchange issued an inquiry letter on the change of Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) share price, requiring the company to explain in combination with the malicious speculation and the stock trading of supervisors, senior managers and related parties.
On February 24, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) announced that due to the abnormal fluctuation of the company’s stock trading, the trading was suspended for verification.
Yang Zhaoquan, distinguished member of the legislative Advisory Committee of the Standing Committee of the Beijing Municipal People’s Congress, said in an interview with Securities Daily: “Under the multiple negative news and lawsuits, the company’s share price has been trading continuously in a short period of time, indicating the possibility of artificial speculation. In the process of ups and downs, many investors will suffer heavy losses. At the same time, it involves the occupation of funds by major shareholders, and the damaged investors are expected to claim for compensation. If it is verified that there are illegal acts such as artificial manipulation of the market, the regulatory authorities will continue to intervene in the investigation 。”
deeply trapped in the liquidity crisis of controlling shareholders and themselves
For Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) deeply trapped in the debt dilemma of the major shareholder Chengxing group, the suspension verification is even worse.
On February 8, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) announced that the reorganization procedure of Chengxing group had been officially opened because the controlling shareholder Chengxing group could not pay off the due debts, the amount of liabilities was huge, the assets were insufficient to pay off all debts, and there was an obvious lack of solvency.
In fact, the liquidity crisis of Chengxing group has been open since two years ago. As Chengxing group has taken too big steps in expanding industrial investment, the capital demand is mainly solved by issuing bonds by enterprises. There is great pressure on funds when meeting centralized cashing. In addition, it is difficult for private enterprises to issue bonds again in recent two years, resulting in the shortage of working capital.
In order to alleviate the financial pressure, Chengxing Group pledged all its Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) 25.78% shares. At the same time, by the end of 2021, Chengxing group still occupied a total of 2.239 billion yuan of Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) principal and interest, which has not been returned.
Not only that, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) itself also faces multiple lawsuits. According to the latest announcement, up to now, the cumulative amount involved by the company is 2.4 billion yuan, including 2.2 billion yuan in major litigation (Arbitration). A total of 34 bank accounts of the company and its subsidiaries were frozen, with a frozen amount of 9.84 million yuan. On November 9, 2021, the creditor Jiangyin building decoration products factory applied to the court for bankruptcy reorganization on the ground that the company could not pay off its due debts. This is like the “sword of Damocles” hanging over Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) . According to the relevant provisions of the Shanghai Stock Exchange, if it is declared bankrupt, the listing of the company’s shares will be terminated.
In addition, due to suspected violations of information disclosure, the regulatory authorities filed a case for investigation against Chengxing group and Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) . In January this year, they recognized that there were major defects in the company’s internal control, and gave core executives different degrees of sanctions such as circular criticism and public condemnation.
save yourself or wait for the “savior”?
The pledged Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) shares held by Chengxing group were auctioned twice by the judiciary in January and February this year. Even though the underlying shares have been discounted by 20%, they are still sold because there is no bid. Obviously, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) has not yet waited for the “savior”.
As for whether the company can save itself, Yang Zhaoquan said: “after applying for bankruptcy and reorganization, the company needs to put forward the reorganization plan and obtain the approval of the creditors’ meeting. Through the creditors to give up their creditor’s rights or extend the debt period, the company’s debt repayment pressure will be reduced. At the same time, the company’s business situation after reorganization will determine whether it can turn the crisis into safety.”
Although Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) is expected to have a net profit of 1.356 billion yuan to 2.017 billion yuan last year, according to the third quarterly report of 2021, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) net assets attributable to shareholders of listed companies are -383 million yuan. At the same time, the company’s asset liability ratio has reached 100%, and the pressure of short-term debt repayment is still huge.
“From its financial situation, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) as of the third quarter, the current liabilities alone were as high as 4.878 billion yuan, and there were a lot of borrowings. There were almost no funds in the account, which was seriously insolvent.” Kuang Yuqing, founder of lens company, a third-party research institution, said.
He believes that “in the face of a large number of indicted cases that have not been adjudicated and it is difficult for net assets to change from negative to positive in the short term, it is very unlikely to make up for the loss of net assets only by relying on the main income, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) it is difficult to get out of the dilemma independently.”
Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) received inquiry letters from Shanghai Stock Exchange on judicial auction, performance forecast and financial data in December last year, January and February this year respectively.
On February 25, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) announced that the company and its major shareholder Chengxing group are actively cooperating with the China Securities Regulatory Commission in its investigation. The company expects to reply to the inquiry of Shanghai Stock Exchange before March 5.
