Tuyere financial reporter Zhao Chong
After the Shanghai and Shenzhen Stock Exchanges issued the revised Stock Listing Rules, A-shares ushered in the first delisted stock with market capitalization - *ST Shentian.
Since the issuance of the relevant regulations on market value delisting, there have been no cases of market value delisting on A-shares. The emergence of the first market value delisted stocks also aroused the market's attention to low-capitalization stocks, Flush iFinD data shows that as of the close of July 26, in addition to *ST Shentian, a total market value of the main board of A-shares is less than 500 million yuan of stocks a total of 8.
Nowadays, there is not much time left for these individual stocks.
From "the first share of commercial concrete" to "the first share of A-share market value delisting"
*ST Shentian announced on Wednesday evening that the closing market value of the company's shares has been less than 300 million yuan for 20 consecutive trading days since June 27, 2024, and will be terminated by the Shenzhen Stock Exchange in accordance with relevant regulations, and trading will be suspended from the opening of the market on the 25th (Thursday). So far, *ST Shentian has become the first stock to be delisted from the A-share market capitalization.
Image source: Company announcement
Behind the low market value is actually the result of the long-term poor management of Shenzhen World.
According to public information, Shenzhen Tiandi landed on the Shenzhen Stock Exchange as early as 1993 and is one of the first batch of building materials stocks listed in the A-share market. The company's main business is the production and sales of concrete, the development and sales of real estate.
In recent years, the company's revenue has shrunk significantly, from 1.783 billion yuan in 2020 to 178 million yuan in 2023, and profits have been losing money for many years. Among them, the loss amount in 2023 will reach 271 million yuan, the largest loss since listing.
According to the latest 2024 semi-annual performance forecast released by Shenzhen Tiandi, *ST Shenzhen Tian expects a loss of 80 million yuan to 100 million yuan in the first half of 2024, a decrease of 59.69% to 99.62% over the same period last year.
Image source: The company's 2024 semi-annual results forecast
The reason for the loss is explained in the announcement as follows:
First, the company's concrete industry was affected by the market, and the company's sales revenue decreased year-on-year; Second, the company, its holding subsidiaries and grandchildren have many litigation and arbitration matters due to economic disputes, and too many litigation matters have led to some bank accounts being frozen by the judiciary, that is, some assets have been frozen and seized, which has had a certain impact on the company's production and operation; Third, during the reporting period, the four concrete stations shut down in 2022 have not yet resumed production and sales, and the increase in the aging of accounts receivable has led to a large increase in the provision of credit impairment losses; The company made a provision for litigation and arbitration matters, resulting in a decrease in operating profit.
In addition to facing the risk of delisting, *ST Shentian also has the situation that the actual controller occupies the funds of the listed company.
In May this year, *ST Shentian disclosed the "Announcement on the Company and the Actual Controller Receiving the Corrective Measures Ordered by the Shenzhen Securities Regulatory Bureau and the Risk Warning" showing that the company's actual controller Lin Hongrun and his affiliates occupied the listed company's funds for non-operational purposes. As of the disclosure date of the 2023 annual report, Lin Hongrun and his affiliates have occupied the company's fund balance of 137 million yuan, accounting for 685% of the company's latest audited net assets.
Regarding the current situation, the relevant staff of *ST Shentian responded that investors said that there is no new response plan for the time being, and said that the company's employees are still working normally and will not affect the company's operation.
The delisting of market value is conducive to the high-quality development of the capital market
In the history of A-shares, there are currently four types of delisting indicators for listed companies: transactional compulsory delisting, financial compulsory delisting, regulatory compulsory delisting and major illegal compulsory delisting, and different delisting rules correspond to different measurement standards.
The delisting of Shentiandi is a kind of transactional delisting, called "market value delisting", which looks at the total market value of the stock at the close of each day; "Par value delisting" is also a type of transactional delisting, which looks at the daily closing price of the stock.
Over the years, small- and mid-cap stocks have been the hardest hit by short-term speculation. In order to guide investors to make rational choices, guide value investment, and achieve survival of the fittest, the "Shanghai Stock Exchange Stock Listing Regulations" revised in December 2020 added a new indicator of "market value delisting", and the total market value of listed companies for 20 consecutive trading days is less than 300 million yuan, which will trigger delisting, and will be officially implemented from July 1, 2021.
With the intensification of delisting supervision, on April 30, 2024, the Shanghai and Shenzhen Stock Exchanges officially released the revised Stock Listing Rules, which show that the market value delisting standard for A-shares (including A+B shares) on the main board will be increased from 300 million yuan to 500 million yuan from October 30 this year, and the delisting standard for B shares, ChiNext and STAR Market will remain unchanged at 300 million yuan; During the transition period from 30 April to 30 October, the market capitalisation of the Main Board will remain at $300 million.
In other words, from October 30, 2024, A-share companies on the main board will be terminated if the total market value of the shares closed for 20 consecutive trading days is less than 500 million yuan, which means that the risk of market value delisting of companies will increase.
Yu Yang, deputy director of the Institute of Financial Development and State-owned Assets and State-owned Enterprises of China (Shenzhen) Comprehensive Development Research Institute and a registered international investment analyst, pointed out that market value delisting is an indispensable part of the delisting system, and let market capitalization, an indicator determined by the market, be used as a condition for delisting, guide market funds to reduce the tendency of market funds to flow to very low-capitalization companies, and spur low-capitalization companies to increase market value by improving performance, improving governance, and strengthening communication with the capital market, which is conducive to accelerating the formation of a high-quality development ecology of the mainland capital market.
There are also 8 "sound the alarm" under the new standard
It is worth noting that although *ST Shentian will be the first A-share company to be delisted due to market capitalization, it is not the first listed company to be delisted due to a market value that does not meet the standard.
Previously, CCR B triggered the market value delisting regulations due to the closing market value of the Shenzhen Stock Exchange stock for 20 consecutive trading days being less than 300 million yuan, becoming the first B share in history to touch the market value delisting regulations.
In addition to *ST Shentian and Jianche B, there are also some listed companies that are also at risk of delisting from market capitalization.
Flush iFinD data shows that as of the close of trading on July 26, among the A-share listed companies, in addition to *ST Shentian, the market value of less than 300 million yuan is Zuo Jianghui and *ST Meishang; The main board is less than 500 million yuan, and there are 8 listed companies such as *ST Meiji, *ST Meixun, *ST Chaohua, and *ST Tiancheng.
*ST Meixun issued the "Risk Warning Announcement on the Possible Termination of the Listing of the Company's Shares Due to a Market Value of Less than 300 Million Yuan" on July 10, stating that the closing price of the company's shares on July 9, 2024 is 1.05 yuan per share, with a market value of less than 300 million yuan, and the company's shares may be terminated due to a market value of less than 300 million yuan. Although the company's market value has returned to more than 300 million yuan recently, the latest market value is only 320 million yuan.
Ning Communication B also issued an announcement on July 23, suggesting that the stock may be terminated from listing: the closing price of the company's shares on July 22, 2024 is RMB 0.97 per share, which is lower than RMB 1 for the first time. As of July 26, the closing market value of Ning Communication B was only 335 million yuan.
Some analysts pointed out that the first case of the delisting of the A-share market marks the further improvement of the survival of the fittest mechanism in the A-share market. In the future, we may see more companies that hit the delisting red line being cleared out of the market.