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Reporter | Wang Xin
Editor | Peng Jieyun
When he saw the news that *ST Contemporary was terminated by the Shenzhen Stock Exchange, “ Xiao San “ Li Yumeng, who had been holding on to the stock for more than two years, sighed for his escape.
In November 2019 , the concept of blockchain is in the air. Contemporary Oriental ( 000673.SZ ) , a media stock that has just acquired the equity of a related concept company , was targeted by Li Yumeng and invested heavily in a position at a cost price of 6 yuan per share.
Unexpectedly, a few months later, Contemporary Oriental reported a loss in 2019. The company was issued a delisting risk warning ( *ST ) due to losses for two consecutive years . Li Yumeng was immediately stunned, but instead of cutting the meat, he chose to fight hard and continued to increase positions at bargain prices. The cost of holding positions was reduced to 2.2 yuan per share all the way.
In 2020 , *ST Contemporary has not seen a turnaround, and the deducted non-net profit for the year was -136 million yuan. Losses for three consecutive years were originally destined to be delisted, but the “new delisting regulations” implemented in 2021 saved the company’s life again. The new regulations adopted the principle of ” retrospective “ . The revenue was more than 100 million and it narrowly escaped. However, the net worth at the end of the period was negative, allowing *ST Contemporary to continue to “ wear stars and hats “ .
For *ST Contemporary, 2021 is a real matter of life and death. Until the end of September of that year , the company’s net assets were still -149 million yuan, and the delisting seemed to be a sure thing. Until the last month of the year, *ST Contemporary, who did everything possible to protect the shell, successively offered 1 yuan to transfer the non-performing asset package of its theaters, received 35% equity of Nantaiwu Fishing Port shareholders, and received 4,000 yuan donated by the actual controller. 10,000 yuan and other capital operations. During this period, the company has achieved multiple daily limits, and the stock price has returned to above 2 yuan.
Feeling like a “ roller coaster “ , Li Yumeng finally couldn’t hold back and chose to clear the warehouse quickly, and finally “escaped from death” with a meager profit of 3,000 yuan . Shortly thereafter, although the net assets of *ST Contemporary became positive at the end of 2021 , a series of “ sacred operations “ made the accountants issue an “ incapable of expressing opinion “ audit opinion on the annual report of that year, and it was still difficult to escape the fate of delisting.
Income generation, debt restructuring, debt forgiveness … A series of efforts made by *ST stocks to protect the shell have achieved little effect after the new delisting regulations came into effect.
According to Jiemian News statistics, after the disclosure of the 2021 annual report, 40 companies will face delisting, of which 34 companies will trigger financial delisting indicators. This is the first wave of delisting after the new delisting regulations take effect, and the number of delisted companies will hit a new high. Will delisting become the new normal for A shares?
Under the registration system, both the export and the import of new shares are accelerated. When the A -shares speed up the metabolism, the scarcity and value of shell resources decrease sharply. Jiemian News found that there have been 8 “A eats A” cases since 2022. Has the spring of the M&A market also quietly arrived?
40 companies will be forced to retire, and more than 80% will trigger financial delisting indicators
On March 23 , the first A – share delisted company in 2022 was born.
Due to financial fraud for two consecutive years in 2018 and 2019 , avoiding delisting, and finally involving major violations of forced delisting, the Shanghai Stock Exchange made a decision to terminate the listing of *ST Xinyi . Following *ST Xinyi, five listed companies including *ST Iger, Changdong, Dongdian, Zhongxin, and Laxia have been delisted successively .
Currently, *ST Lawton, * ST Zhongfang , *ST Zhongtian, *ST Minke, * ST Youjiu , *ST Changyu, *ST Kodi, *ST Xinguang, *ST Prima, *ST Universal, * 16 companies including ST King Kong, *ST Tengbang, *ST Danbond, *ST Shenglai, *ST Huaxun, and *ST Yijian will enter the delisting adjustment period successively, and their stocks will be terminated from listing after the expiration.
In addition to the above 22 companies, another 18 listed companies are awaiting the “ trial “ of the exchange. As long as the exchange issues a notice to terminate the listing, the listed company basically faces the “ death penalty “ . According to the current delisting procedure, listed companies still have the right to apply for a hearing, but from practical experience, the probability of a comeback is very small.
Among the above-mentioned 40 companies that have been delisted or are about to be delisted, 34 have triggered financial delisting indicators.
According to the new delisting regulations, the financial delisting indicators include three sub-indicators: negative net assets at the end of 2021; negative non -net profit in 2021 and revenue less than 100 million yuan; qualified opinions issued by accountants, Unable to express opinions, negative opinions and other non-standard audit opinions. Financial indicators can be used interchangeably. No matter what indicator is issued with a delisting risk warning in the first year, if any indicator is touched in the following year, it will be delisted.
Among the remaining 6 companies , * ST Iger’s stock price was lower than the par value of 1 yuan for 20 consecutive trading days , triggering the trading delisting indicator . A few days ago, the 2021 annual report was disclosed , and the exchange was forcibly delisted due to the “ difficulty “ of the annual report. In addition, the delisting of Xinyi and the “ first share in the blockchain ” *ST Yijian were both forced to delist due to major violations of the law.
Cheng Xiaoming, a senior person in the securities industry, told Jiemian News that most companies have been delisted this year because they touched financial indicators, but this is not the best standard. It is the most reasonable to use the stock price and trading volume as the delisting criteria.
“The best judge must be the market entity. The most authoritative judge of a listed company is the investor, because they invest with real money. A -shares are still immature, and stock price and trading volume may not be an accurate criterion. Now it is understandable to use financial indicators as a standard. “ Cheng Xiaoming commented.
In 2018 , the China Securities Regulatory Commission revised the delisting system. Since then, the delisting speed has accelerated significantly. The number of delistings from 2019 to 2021 is 10 , 16 , and 20 respectively . At the end of 2020 , on the basis of the new Securities Law, the Shanghai and Shenzhen Stock Exchanges revised the delisting system and formed new delisting regulations. After the 2021 annual reporting season, the first wave of delisting will take place. years have doubled.
Xun Yugen, chief strategy analyst of Haitong Securities, pointed out that in the past, the A – share delisting system was not perfect, the delisting indicators were set unreasonably, and the delisting process was long and inefficient. As a result, companies that should have been delisted could not be effectively cleared, and these companies were gradually marginalized. A large number of small-cap companies have been generated, occupying valuable market resources.
Wang Sheng, chief analyst of Shenwan Hongyuan Strategy, said that a normalized delisting mechanism is taking shape, the concept of “ retires should be fully recognized”, and a new market ecosystem with entry and exit, and survival of the fittest is gradually being built . The new delisting regulations will have a deterrent effect on listed companies, which will help motivate listed companies to adjust their business strategies in a timely manner and achieve stable operations. Overall, the implementation of the new delisting regulations has achieved good results, further purifying the capital market environment.
“Now the delisting rate of A -shares is quite different from that of U.S. stocks. We can continue to increase the delisting rate. At the same time, we must greatly increase the speed of IPOs , so that more companies should enter and exit. “ Cheng Xiaoming believes that in the past, A -shares were listed on the market. The number of delistings is almost zero, so both aspects must be connected, and delisting is used to force listing.
According to research by Caitong Securities, as of March 23 , 2022 , there were 4,761 A – share listed companies and 6,906 listed companies in the United States . Based on the number of delisted companies in 2021 , the delisting rate in the United States is 5.86% , and the delisting rate in China is only 0.42% .
Will the new delisting regulations hit a precise “ combination punch “ , will the new financial skills for the shell be seen through?
Listing qualification has always been regarded as a scarce resource, and *ST companies that are on the verge of delisting have always staged various “ shell protection “ dramas.
Before the delisting system is perfected, listed companies can pass the test by selling assets, selling equity, and subsidizing local governments. The new delisting regulations have played a precise “ combination punch “ , clarifying the deduction items of operating income, including business income unrelated to the main business and income without commercial substance, and the net profit is calculated using the lower value before and after the deduction, etc. .
The new delisting regulations introduce a combination of operating income and net profit, which aims to emphasize the sustainable ability of listed companies, which also reshapes the means of protection of listed companies to some extent, that is, from increasing net profit to increasing revenue, some Listed companies make surprise revenue generation on the verge of delisting, or engage in businesses unrelated to their main business. *ST Lujing and *ST Changyu are typical cases.
*ST Lvjing’s main business is real estate management and development. However , 70% of its operating income of 173 million yuan in 2021 comes from mechanical and electrical installation engineering business income, and this part of the income comes from its wholly-owned subsidiary Shenzhen Hong beneficial. Shenzhen Hongyi was acquired by *ST LVGEM from Peng Suhong with 380,000 yuan in cash in March 2021. The company just completed the acquisition. The company immediately signed a total of about 180 million yuan in electromechanical installation contracts with several customers in the second half of the year.
Shenzhen Hongyi’s revenue contribution was denied by accountants. The accountant said that the project cost corresponding to the income of Shenzhen Hongyi mechanical and electrical installation engineering business was 117 million yuan, of which the material and equipment procurement cost was 835.755 billion yuan, and the subcontracted construction project construction was 32.6227 million yuan. These two costs accounted for 99.27 % of the mechanical and electrical installation project cost. % , and the average gross profit margin of the mechanical and electrical installation engineering business is 3.85% , which cannot cover the period expenses.
The auditor said that it was unable to judge whether the business income had commercial substance, which was the basis for forming an “ inability to express an opinion “ . In the end, *ST Lujing was issued an audit report of “ incapable of expressing an opinion “ due to its 2021 financial statements . The company’s audited net profit in 2021 was negative and its operating income was less than 100 million yuan. was terminated from listing.
*ST Changyu’s main business is the farming and processing of freshwater fish and related aquatic products. In the first three quarters of 2021 , the company achieved revenue of 15.07 million yuan, and net profit attributable to the parent was -20.87 million yuan.
In the fourth quarter, the company staged a “ jedi counterattack “ . According to the performance forecast released by *ST Changyu on January 29 this year, the company is expected to achieve an operating income of 110 million yuan in 2021 . The operating income after income with commercial substance is about 106 million yuan. In just one quarter, the company’s annual revenue soared from 15 million yuan to more than 100 million yuan.
It is worth mentioning that on the same day that *ST Changyu released the performance forecast, the company’s annual audit accountant applied for resignation. Subsequently, *ST Changyu re-engaged the audit agency on April 1 . The agency revised its performance forecast on April 27. Because the soybean business has nothing to do with its main business, the revenue of about 91.5 million yuan was deducted, and the deducted operating income was about 14.5 million yuan. According to the annual report of *ST Changyu, the company ‘s operating income in 2021 after deducting business income unrelated to the main business and income without commercial substance will be 14.5256 million yuan, and the net profit attributable to the parent will be -28.8774 million yuan, triggering the delisting indicator. .
In addition to blitz revenue generation, some listed companies are also pinning their hopes on avoiding delisting through debt restructuring or debt forgiveness.
Interface News found through Wind search that from January 2021 to the present, there have been *ST Colin (002499.SZ) , *ST Stars (300256.SZ) , ST Jiuyou (600462.SH) , *ST Dewei ( 300325.SZ) , *ST Jinzhou ( 000587.SZ ), ST Anxin (600816.SH) , *ST Mengshi ( 002684.SZ ) , including 20 A -share listed companies signed a debt waiver announcement. From the perspective of the amount of exemption, the scale is as low as 10 million yuan, and the highest is even more than 3 billion yuan.
A certified public accountant told Jiemian News that according to accounting standards, debt exemption enters non-operating income, and net profit can become positive, avoiding three-year net profit losses, but it may also have two effects. After that, the net profit was still negative. Auditors may consider going concern issues that may result in an opinion that affects the report. Second, those who are willing to exempt will not be non-related parties, nor will it be normal market behavior. Then there is an element of human manipulation in such immunity.
The largest debt forgiveness amount is *ST Mengshi, which received a debt forgiveness notice involving 12 creditors with a total of 3.404 billion yuan on December 31 , 2021 , and then the Shenzhen Stock Exchange issued 6 letters of concern, asking it to pay more attention to the amount of debt. And whether there is a “ drawer agreement “ with the creditor and other issues to reply.
According to *ST Dynavolt ‘s 2021 annual audit report, the company formed an investment income of 214 million yuan through debt restructuring in 2021 , of which the investment income formed by creditors’ debt forgiveness to Dynavolt Technology in December was 208 million yuan.
Because the accounting firm failed to obtain sufficient and appropriate audit evidence for the creditors’ debt waiver of Dynavolt, and could not judge the authenticity and commercial rationality of the debt waiver by other creditors, the accounting firm issued an “ unable to express ” Opinion ” audit report, *ST Mengshi was forcibly delisted by Shenzhen Stock Exchange.
*ST Jintai wanted to protect the shell through debt transfer, but this financial technique was discovered and the listing was terminated after the water was removed.
On January 28 , 2022 , *ST Jintai released the 2021 annual performance forecast. The company expects that the net profit in 2021 will be turned into a profit year-on-year, and the non-net profit in 2021 is expected to be about 6 million yuan. If the data is finally confirmed in the annual report, it means that the company has successfully protected the shell.
On April 19 , * ST Jintai issued a correction announcement on the performance forecast. The company expects a net profit of -1.2 million yuan and a non-net profit of 1.5 million yuan. The main reason is that in September 2021 , Shandong Jintai transferred the 20 million yuan creditor’s rights held by Chen Zhiyu to Zhongweihong International Investment Consultants (Beijing) Co., Ltd., and received a 20 million yuan creditor’s rights transfer payment in December 2021 . After the audit procedure carried out by Hexin Certified Public Accountants, it was found that the funds for Zhongweihong’s acquisition of the creditor’s rights came from the controlling shareholder of Shandong Jintai.
The company’s creditor’s rights generally need to accrue credit impairment reserves. *ST Jintai made a provision for impairment of 4 million yuan for Chen Zhiyu’s 20 million yuan credits held in the previous year . After the company transferred the creditor’s rights and received the transfer payment , the 4 million yuan credit impairment loss will be reversed, and the credit impairment loss will not be accrued for the transferred creditor’s rights. This operation will increase the company’s net profit. However, after this operation was discovered by the accountant, the accountant added another 4 million yuan to the impairment provision on the basis of 4 million yuan, resulting in the company’s 2021 net profit attributable to the parent being adjusted from the original estimated 6.5 million yuan to -1.2 million yuan about.
Because the company ‘s audited net profit in 2021 was negative and its operating income was less than 100 million yuan, the financial accounting report was issued an audit report with a qualified opinion. *ST Jintai was terminated by the Shanghai Stock Exchange on April 29 .
During the year, there have been 8 cases of “A eating A” . Will the normalization of delisting reshape the M&A market?
Since 2016 , the China Securities Regulatory Commission has tightened its restructuring and listing, and the number of A – share backdoors has dropped sharply. In October 2019 , the China Securities Regulatory Commission issued the revised “Administrative Measures for the Restructuring of Major Assets of Listed Companies”, which significantly loosened the reorganization and listing of the main board and released the restricted area of backdoor listings on the GEM, but backdoor listings are still very rare. From 2017 to 2021 , the number of backdoors disclosed by A -share listed companies for the first time was 7 , 12 , 11 , 10 , and 9 , of which the number of successfully completed backdoors was 4 , 7 , 6 , 3 , and 0 , respectively .
The relevant person in charge of the investment banking business of Sinolink Securities told Jiemian News that compared with IPO , there is still a certain cost in restructuring and listing, and there are still certain uncertainties in the process. Therefore, in the context of the normalization of registration-based IPOs , most companies will tend to choose the path of IPO .
When the value of the A -share shell weakens, delisting becomes the norm. Before small-cap companies or companies on the verge of delisting become zombie shells, the original shareholders of listed companies may exit through mergers and acquisitions.
In 2022 , mergers and acquisitions between A -share listed companies will become increasingly active. According to Jiemian News statistics, there have been at least 8 “A eat A” cases during the year. The bidders include Zijin Mining ( 601899.SH ), Gree Electric ( 000651.SZ ), Tongce Medical ( 600763.SH) , Midea Group ( 000333.SZ) and other leading large-cap companies in the industry, the transferees are basically small and medium-cap companies. Based on the closing price on May 25 , the target party is ST Longnet has the highest market value of 11.225 billion yuan, the rest of the market value is less than 10 billion yuan, there are 4 companies with a market value of less than 5 billion yuan, and the lowest is Jinlun shares, with a market value of only 2.3 billion yuan.
Some scholars told Jiemian News that the promotion of the registration system and the normalization of delisting have reduced the value of shell resources on the market. Some small-cap companies are not concerned by funds, and there is a lot of financing pressure . Mergers and acquisitions between A – share companies are active, which is a source of capital. The performance of market pricing and allocation capabilities.
An M&A consultant told Jiemian News that the above-mentioned mergers and acquisitions have obvious characteristics of industrial integration, and they all belong to vertical integration or horizontal coordination in the industrial chain, which reflects an extensional growth strategy of the acquirer, and its M&A logic is not simple and short-term. Arbitrage is the long-term benefit achieved by business synergy and industrial integration.
“ From the perspective of the target, with the overall downward trend of A shares this year , the market valuation of many small and medium-sized companies is at a relatively low level, which reduces a large part of the transaction cost for the acquirer. The asset value of the target company itself is relatively good and it is in a key position in the industry chain. The internal control of the target company benefits from the strictness of the supervision of listed companies and is also better than that of most unlisted companies, so it is easy to become the target of acquisition. “ The above-mentioned person pointed out.
An investment banker told Jiemian News that the reason for the active A -share mergers and acquisitions in the past two years is the price. During the economic downturn, the value of enterprises is prominent. The normalization of delisting will reduce the shell value and bubbles of enterprises, which is conducive to mergers and acquisitions . Recovery, demand increases, state-owned assets and high-quality listed companies with funds will also step up acquisitions and integrate poorly managed companies. ”
“ The M&A market of A-shares has been declining for several years, and it is more sluggish than the IPO market and the refinancing market. The fundamental reason is that the arbitrage logic in the primary and secondary markets of mergers and acquisitions three or five years ago has already failed, and the market has not found new opportunities. From this point of view, the sluggish trend of the A -share M&A market this year may not fundamentally change. ” The aforementioned person in charge of the investment banking business of Sinolink Securities said that the liquidity of the A -share market has already produced a huge differentiation, and the delisting is also gradually Normalization, which will generate huge demand for transformation and M&A of listed companies. Combined with the phenomenon that A -shares are gradually increasing, the M&A of A -share listed companies in the future will not only include industry-integrated M&As such as “ good boys and good deeds “ , but also will inevitably be born. “ Bad boy prodigal son back “ type of transformation and mergers and acquisitions.
“The A -share M&A market has experienced ups and downs for nearly 10 years, and may have entered a period of ‘ silent consolidation ‘ . We believe that future mergers and acquisitions will return to their essence: industrial integration or transformation to save themselves. “ He said.
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