Zte Corporation(000063) 23 announced at noon that the company received a court judgment on March 22, 2022 (US time), and the probation period will expire on March 22, 2022 (US time) without any penalty, and confirmed that the term of office of the inspector will end on March 22, 2022 (US time).
After the resumption of trading in the afternoon, Zte Corporation(000063) of A-Shares rose by the opening limit, and Hong Kong stocks once rose by more than 60%.
The reporter of the science and Innovation Board daily learned from relevant channels and confirmed that the end of the probation period means that the five-year compliance observation period of Zte Corporation(000063) since 2017 has been allowed to end by the U.S. District Court.
five year observation period will not be extended
In March 2016, the US Department of Commerce listed Zte Corporation(000063) and several of its subsidiaries in the “entity list” on the grounds of violating US export control regulations, and imposed export restrictions on them.
On March 22, 2017, Zte Corporation(000063) reached an agreement with the U.S. Department of Commerce, the U.S. Department of justice and the office of overseas asset management of the U.S. Department of the Treasury. Due to the violation of the U.S. export control system and the violation of relevant U.S. laws and regulations due to the provision of information and other acts during the investigation, Zte Corporation(000063) will pay a fine of 892 million US dollars, another fine of 300 million US dollars suspended, as well as a series of compliance plans and enterprise supervision measures.
Among them, it includes the three-year compliance observation period agreement reached between Zte Corporation(000063) and the U.S. Department of justice. During this period, the U.S. court will send U.S. inspectors , supervise the company’s compliance with U.S. export control laws and the performance of its obligations under the agreement, and issue an annual report.
It is understood that a lawyer named James M. Stanton was appointed as the inspector by the Texas District Court and began to supervise Zte Corporation(000063) .
In October 2018, the U.S. District Court of Texas amended the monitoring conditions in the 2017 agreement, extending the term of office of the U.S. inspector from three years to five years, expiring on March 22, 2022
The court judgment and announcement showed that the term of office of the U.S. supervisor would not be extended, and the five-year compliance observation period officially ended .
A communications industry analyst believes that this means clearing a certain follow-up risk, which will certainly bring benefits to the whole communications sector. “Before, the industry was generally worried about whether new negative things would happen. This announcement eliminated the concerns of the industry.”
China Merchants communications pointed out that the end of the five-year probation period is expected to reduce Zte Corporation(000063) annual management expenses by about tens of millions of dollars, and is also expected to help the emotional recovery of the sector. In addition, due to the high degree of globalization of communication equipment, the relationship between overseas operators and Chinese suppliers may reappear opportunities.
compliance risk still needs to be paid high attention
According to the reporter of the science and Innovation Board daily, after the agreement was reached in 2017, the U.S. Department of Commerce once activated the export restriction order on Zte Corporation(000063) in April 2018 because it was considered to violate the settlement agreement. In June of the same year, Zte Corporation(000063) and the US government reached a settlement for the second time.
In this second settlement, Zte Corporation(000063) needs to pay a fine of US $1 billion and a fine of US $400 million for suspension of execution, US Department of commerce also issued a new 10-year refusal order. During this 10-year period, if Zte Corporation(000063) is deemed to fail to comply with the agreement, export control will be restarted immediately . At the same time, the U.S. Department of Commerce dispatched a “special compliance coordinator” to the company, which is mainly responsible for coordinating, monitoring, evaluating and reporting Zte Corporation(000063) on the compliance with the settlement agreement and U.S. export control laws and regulations.
An insider said that although the probation period ended in 2017, the 10-year refusal order of the US Department of commerce is still the sword of Damocles hanging over Zte Corporation(000063) head, and there are still some risks.
According to the annual report, the operating revenue of Zte Corporation(000063) in 2021 was 114.52 billion yuan, an increase of 12.9% year-on-year; The net profit attributable to the parent company was 6.81 billion yuan, a year-on-year increase of 59.9%; Deducting non net profit of RMB 3.31 billion, with a year-on-year increase of 219.2%, the net cash flow from operating activities was RMB 15.72 billion, with a year-on-year increase of 53.7%
Zte Corporation(000063) heavy announcement: Hong Kong stocks resumed trading after the probation period expired without additional punishment, up more than 50%
5g sector change Zte Corporation(000063) what does it mean to receive the latest ruling of the court
China Merchants Securities Co.Ltd(600999) : Zte Corporation(000063) winning the lawsuit is beneficial to the recovery of valuation in the communication industry
