Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) kicked off the delisting of A-Shares in 2022.
With the gradual landing of the 2021 annual report, a number of venture enterprises entered the countdown to delisting.
According to the incomplete statistics of the 21st Century Business Herald reporter, as of April 8, 86 enterprises have announced that there is a risk of terminating the listing or the exchange has made a decision to terminate the listing.
In addition, more listed companies may touch the risk of compulsory delisting and will be eliminated by the capital market.
According to the statistical data of our reporter, up to now, 228 companies have touched the delisting warning line, of which 21 enterprises have touched more than two delisting standards
“A-share normal delisting mechanism is gradually taking shape.” Haitong Securities Company Limited(600837) chief analyst Xun Yugen said that the delisting system is an important supporting system for the implementation of the registration system, which helps to ensure that the market ecology under the registration system can realize the self purification of the survival of the fittest, realize the dynamic balance of the number of A-share listed companies, alleviate the capital pressure brought by the issuance of listed companies to the market, and also help to optimize the resource allocation function of the capital market.
multiple listed companies may trigger financial delisting standards
In 2022, as the second year of the implementation of the new delisting regulations, and also a year in which the reform effect is concentrated, the diversified delisting indicators set by the new delisting regulations are continuously developing.
The new delisting regulations set four compulsory delisting standards: compulsory delisting for trading, compulsory delisting for finance, compulsory delisting for standardization and compulsory delisting for major violations. In recent years, enterprises have been forced to delist due to touching the red line, “shell companies” and “zombie enterprises” have been cleared continuously, and the delisting ecology of the market has been continuously improved.
Since this year, the compulsory delisting system in the capital market is still being strictly implemented, and Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) was forcibly delisted in violation of major laws by the Shanghai stock exchange due to financial fraud; On March 24, Great Wall International Acg Co.Ltd(000835) touched the financial index and was forcibly delisted; On March 25, Egls Co.Ltd(002619) touched the mandatory delisting index of trading, becoming the first delisting stock with par value in 2022
According to incomplete statistics by the reporter, at present, about 80 companies in the two cities have issued risk warning announcements on termination of listing, of which most are in a state of loss. The net assets of some enterprises are expected to be negative in 2021, and the number of enterprises touching financial compulsory delisting indicators is significantly higher than that in previous years
According to the data, the number of delisting companies from 2019 to 2021 was 10, 16 and 20 respectively, with a year-on-year growth rate of 100%, 60% and 25% respectively. The number of delisting companies in these three years alone accounted for 31% of the total delisting number of a shares.
Among the delisting enterprises in the past three years, 5 have taken the initiative to delist, and only 9 have been delisted due to unqualified financial data (consecutive years of losses). Since 2022, with the disclosure of annual report data, more and more enterprises are expected to touch the financial data indicators and be forcibly delisted.
According to the reporter’s statistics, as of September 30, 2021, the net assets of 45 enterprises have been negative. Among the enterprises that have disclosed the annual report of 2021, 4 are still in a state of loss by the end of 2021.
In addition, there are 76 enterprises whose net profit after deducting non-profit in the first three quarters of 2021 is negative, and their operating revenue is less than 100 million yuan. If they do not make efforts in the fourth quarter of 2021, these enterprises are likely to face forced delisting.
“The new delisting rules have streamlined the delisting process, and the 2020 annual report is the first applicable year of the new delisting rules. If the annual report in 2021 touches the delisting standard again, it will be directly terminated. After the delisting system cancels the suspension of listing, the number of companies with financial compulsory delisting in 2022 may increase significantly compared with the past.” Wei Wei, an analyst at Ping An Securities, said.
However, it is worth mentioning that based on the motivation of “shell preservation”, some high-risk enterprises on the verge of delisting try to avoid delisting through revenue management
This approach has aroused the vigilance of regulators.
For example, on January 29, 2022, Lvjing Holding Co.Ltd(000502) disclosed the estimated loss of RMB 17 million to RMB 21 million in 2021, and the operating income after deduction was RMB 140 million to RMB 165 million.
Journalists in the 21st century may be suspected of “hitting the target” in their business reports, but they may notice that their business income may increase in the 21st century. According to public information, Lvjing Holding Co.Ltd(000502) previous years, the main business was real estate. On March 22, 2021, Shenzhen Hongyi acquired 100% equity of Shenzhen Hongyi from Peng Suhong in cash of 380000 Yuan. Strangely, Shenzhen Hongyi, which was established in September 2020, has signed electromechanical installation contracts with a number of customers with a total amount of about 180 million yuan since the second half of 2021.
In addition, the electromechanical installation business has only been carried out for less than half a year. On January 22, 2022, the company disclosed the cancellation of the electromechanical installation contract signed with Shenzhen company of the third company of China Construction Fifth Bureau in October 2021. The original construction period of the above contract was from September 1, 2021 to December 31, 2021, but it has not started yet.
and the new delisting regulations clearly stipulate that the business income that has nothing to do with the main business or does not have commercial substance shall be deducted when calculating the corresponding indicators
Shortly after the release of the performance forecast, the Shenzhen stock exchange immediately sent a notice asking Lvjing Holding Co.Ltd(000502) to explain whether the new engineering installation contract business has formed a “stable business model” and whether the company has income unrelated to its main business or does not have commercial substance and whether there is a situation of avoiding the risk of termination of listing by adjusting income.
more than half of enterprises involved in major illegal delisting
with the successive implementation of annual reports in 2021, more enterprises have touched the delisting risk
Data show that up to now, 228 listed companies have touched the mandatory delisting index. Many of them have touched a number of compulsory delisting indicators at the same time.
A typical example is Great Wall International Acg Co.Ltd(000835) , the listed company with the most delisting indicators is Great Wall International Acg Co.Ltd(000835) , and its annual report shows that Great Wall International Acg Co.Ltd(000835) achieved an operating revenue of 2.3712 million yuan and a net profit attributable to shareholders of the listed company of – 454 million yuan in 2021. Meanwhile, Great Wall International Acg Co.Ltd(000835) the audited net assets at the end of the period were negative, and the company’s 2021 financial accounting report was issued with an audit report that could not express an opinion by the accounting firm, touching on a number of financial compulsory delisting indicators.
In addition, in September 2021, Chuzhou Great Wall International Animation Tourism Creative Park Co., Ltd., a wholly-owned subsidiary of Great Wall International Acg Co.Ltd(000835) received the notice of idle land investigation issued by Chuzhou Natural Resources Planning Bureau, pointing out that it had obtained the use right of state-owned construction land through listing, but there was a situation that the construction and development had not been started for one year beyond the agreed (specified) commencement date, which was suspected to constitute idle land. This investigation makes Great Wall International Acg Co.Ltd(000835) also violate the standard of mandatory delisting.
Specifically, four of the 228 listed companies may touch the mandatory delisting index of Trading (the closing price of the stock is lower than 1 yuan every day for 20 consecutive trading days), including Egls Co.Ltd(002619) (the closing price has been lower than 1 yuan for 20 consecutive trading days), delisting Xinyi, Chunghsin Technology Group Co.Ltd(603996) and Northeast Electric Development Company Limited(000585) (the closing price is lower than 1 yuan for 6 consecutive trading days). Among them, the total market value of Chunghsin Technology Group Co.Ltd(603996) has been less than 300 million yuan for 6 consecutive trading days;
12 enterprises touched financial indicators, including 6 enterprises whose net profit after deduction of non-profit was negative in 2021, and their operating income was less than 100 million yuan, and the audited ending net assets of 4 enterprises in 2021 were negative; In 2021, two enterprises were issued audit reports that could not express opinions or negative opinions.
151 enterprises hit the standard delisting index, that is, the risk warning of major defects in information disclosure or standardized operation in the latest year 123 enterprises were investigated in the recent year, and had the risk of delisting due to major violations, accounting for more than half.
In the view of insiders, the increase of delisting enterprises involving major violations is closely related to the severe crackdown on violations by regulators.
When the CSRC recently reported the handling of cases in 2021, it said that the CSRC handled 609 cases in 2021, including 163 major cases, involving typical illegal acts such as financial fraud, capital occupation, market manipulation in the name of market value management, vicious insider trading and failure of intermediaries to be diligent and responsible. 177 suspected criminal cases (clues) were transferred to public security organs according to law, with a year-on-year increase of 53%. Jointly deploy special law enforcement actions with the Ministry of public security and the Supreme People’s Procuratorate, and further strengthen the judicial joint force of securities law enforcement.
“In recent years, Chinese regulators have severely punished illegal acts such as financial fraud, and the number of companies delisting due to major fraud will continue to increase.” Cao Gang, partner of Zehao capital, pointed out in an interview.
According to the data, from 2019 to 2021, there were 5, 9 and 10 companies whose A shares were delisted due to financial fraud, showing a gradual increasing trend.
In March 2022, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) entered the delisting procedure because it clearly touched the compulsory delisting index of major violations, becoming the first delisted stock in 2022 and the first stock to be forcibly delisted due to major violations in 2022, more reflects the determination of the regulatory authorities to resolutely implement the new delisting regulations and “zero tolerance” for financial fraud, which will form an effective deterrent to market violations
\u3000\u3000 “In the past, the A-share delisting system was not perfect, the delisting indicators were set unreasonable, and the delisting process was long and inefficient, resulting in the inability to effectively clear the companies that should have been delisted. These companies were gradually marginalized, resulting in a large number of small market value companies, which occupied valuable market resources. In recent years, the A-share delisting has gradually normalized and implemented zero tolerance for financial fraud and other acts. This ST Xinyi delisting demonstrates the zero tolerance of Chinese regulators for financial fraud It also reflects that the normalized delisting mechanism of A-Shares is gradually taking shape. ” Xun Yugen pointed out.
