Xin Jiang Ready Health Industry Co.Ltd(600090) (Tongjitang) and related parties wandering on the edge of delisting have successively ushered in regulatory penalties.
On April 11, the company issued two announcements, namely, recently received the “decision on market prohibition” and the “decision on administrative punishment” from the China Securities Regulatory Commission.
At the same time, the Shanghai Stock Exchange announced on the evening of the 11th that Xin Jiang Ready Health Industry Co.Ltd(600090) failed to fulfill the obligation of information disclosure as required, did not apply for stock suspension, and still refused to fulfill the above obligations after supervision. Based on this, the trading of Xin Jiang Ready Health Industry Co.Ltd(600090) shares will be suspended from April 12, 2022.
three years of inflated revenue of 20.7 billion yuan
In the decision on administrative punishment, the regulatory authorities decided to order Tongjitang company to make corrections, give a warning and impose a fine of 3 million yuan; Give a warning to Zhang Meihua and Li Qing and impose a combined fine of 5 million yuan, including 3 million yuan as the directly responsible person in charge and 2 million yuan as the actual controller; Wei Junqiao was warned and fined 1 million yuan.
The decision on banning entry into the market clearly states a number of illegal facts of Xin Jiang Ready Health Industry Co.Ltd(600090) existence. Firstly, there are false records in the company’s 2016 annual report, 2017 annual report and 2018 annual report, falsely increasing the operating revenue, operating costs, sales and management expenses, resulting in the total falsely increased profits of RMB 680 million, RMB 920 million and RMB 830 million from 2016 to 2018 respectively.
From 2016 to 2018, Tongjitang falsely increased revenue by 20.735 billion yuan, cost by 17.851 billion yuan and total profit by 2.43 billion yuan through fictitious sales and procurement business, falsely increasing sales and management expenses and forging bank receipts of three subsidiaries including Tongjitang Pharmaceutical Co., Ltd.
At the same time, there are also false records in Tongjitang’s 2019 annual report, falsely increasing other business income by 386 million yuan and falsely increasing total profit by 386 million yuan.
In addition, Tongjitang did not disclose in time and did not disclose the related party transactions of non operating funds occupied by the controlling shareholders and their related parties in the annual report from 2016 to 2019.
Fourth, Tongjitang has not truthfully disclosed the deposit and actual use of the company’s raised funds.
Finally, Tongjitang did not disclose in time and did not disclose the matters related to providing guarantees and major litigation for the controlling shareholders and their related parties in the 2018 annual report and 2019 annual report.
From the subject of punishment, it also points to the above-mentioned many people. Among them, Zhang Meihua was the legal representative and chairman of Tongji hall at that time; Li Qing was the vice chairman and general manager of Tongji hall at that time; Wei Junqiao was the director, deputy general manager and chief financial officer of Tongji hall at that time.
Zhang Meihua, Li Qing and Wei Junqiao requested that they not be given access to the securities market. However, the CSRC believes that Zhang Meihua and Li Qing are the actual controllers of Tongji hall. Zhang Meihua was the chairman of Tongji hall at that time, Li Qing was the vice chairman and general manager at that time, and Wei Junqiao was the director, deputy general manager and chief financial officer at that time. They should be directly responsible for the illegal acts of listed companies during their tenure. Therefore, it is not improper to identify him as the person in charge directly responsible for the illegal act involved.
stock exchange suspends trading of shares
In addition to the punishment of the CSRC, Xin Jiang Ready Health Industry Co.Ltd(600090) has always been the focus of the exchange.
Just two days ago, the company just received the supervision letter of the exchange on urging Xin Jiang Ready Health Industry Co.Ltd(600090) not to disclose the audited annual report and relevant delisting risks on schedule.
In addition, on April 8, the Shanghai Stock Exchange also announced that it had taken written warnings and other regulatory measures for 47 abnormal securities transactions such as raising and suppressing, false declaration and so on.
Strictly implement self-discipline supervision on delisting Xinyi, Xin Jiang Ready Health Industry Co.Ltd(600090) , Zhongxing Tianheng Energy Technology (Beijing)Co.Ltd(600856) and other delisting risk warning stocks, as well as abnormal trading behaviors that aggravate market fluctuations and affect market trading order, such as centralized application for sale in a short time.
On the same day that the company disclosed the decision on administrative punishment and the decision on banning market entry, the exchange also decided to suspend the trading of Xin Jiang Ready Health Industry Co.Ltd(600090) shares.
Specifically, on the 11th, the Shanghai Stock Exchange said that according to the facts identified in the decision on administrative punishment and the 2020 annual report disclosed by the company, after retroactive adjustment, the net profit of 6 Xinyangfeng Agricultural Technology Co.Ltd(000902) 0172019 for three consecutive fiscal years was negative, and the net profit of 2020 was also negative, and the accounting firm issued an audit report with no opinion.
The above facts show that the financial indicators from 6 Xinyangfeng Agricultural Technology Co.Ltd(000902) 017 to 2020 may touch the situation of major illegal compulsory delisting stipulated in the original measures for the implementation of major illegal compulsory delisting of listed companies of Shanghai Stock Exchange. Shanghai Stock Exchange will start the procedure of major illegal compulsory delisting of its shares in accordance with the stock listing rules of Shanghai Stock Exchange.
The Shanghai Stock Exchange made it clear that “after receiving the decision on administrative punishment, the company shall apply to the bourse for stock suspension in accordance with the provisions of the stock listing rules, disclose the relevant contents in time, and give special risk tips on the possible implementation of major illegal compulsory delisting of its shares. However, the company fails to fulfill the obligation of information disclosure and apply for stock suspension in accordance with the above provisions, and still refuses to fulfill the above obligations after being supervised and urged by the bourse.”
In view of the above circumstances, if the company fails to fulfill the obligation of information disclosure as required, the exchange may suspend the trading of its shares and make an announcement to the market. Accordingly, the Shanghai Stock Exchange will suspend the trading of Xin Jiang Ready Health Industry Co.Ltd(600090) shares from April 12, 2022.
These penalties are just the tip of the iceberg of Xin Jiang Ready Health Industry Co.Ltd(600090) risk. Successive regulatory measures not only reflect the plight of corporate governance and operation, but also reflect the sharp increase in the risk of Xin Jiang Ready Health Industry Co.Ltd(600090) termination of listing.
For Xin Jiang Ready Health Industry Co.Ltd(600090) , it has been facing triple delisting risks recently.
First, financial delisting risk. At present, Xin Jiang Ready Health Industry Co.Ltd(600090) has not hired an annual audit accountant. If the audited 2021 annual report cannot be disclosed on schedule on April 30, the trading will be suspended and the listing will be terminated. Even if an accountant is employed, since the CSRC found out the company’s financial fraud in the early stage, the company’s 2020 annual report cannot express opinions, the matters involved have not been eliminated, and the accountant cannot issue a standard audit opinion.
Second, transaction delisting risk. Recently, the Xin Jiang Ready Health Industry Co.Ltd(600090) share price has been struggling at or below 1 yuan. Considering the poor fundamentals of the company and the risk of major illegal delisting, it is not ruled out that the company’s share price has been below 1 yuan for 20 consecutive days, touching the compulsory delisting of trading.
Third, major illegal delisting risks. The company announced on October 25, 2021 that it may touch major illegal delisting after receiving the prior notice of administrative punishment from the CSRC.
It can be seen that Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) (all in October 2021) who received the advance notice in the same period as Xin Jiang Ready Health Industry Co.Ltd(600090) has received the decision on March 2 this year and entered the delisting procedure.
Judging from the current signs, Xin Jiang Ready Health Industry Co.Ltd(600090) is also seeking self-help.
On April 2, after the share price was lower than 1 yuan for eight trading days, Xin Jiang Ready Health Industry Co.Ltd(600090) executives threw out a shareholding increase plan. The actual controller, general manager Li Qing and other directors and supervisors of the company planned to increase their shareholding of 3.1 million to 6.2 million shares within 12 months, accounting for 0.22% to 0.43% of the total share capital of the company. However, the shareholding increase plan thrown out during the window period of the annual report is not enough to change market expectations. The dilemma of intertwined delisting risks faced by the company is still lingering.
