Source: Environmental Protection Circle
Author: Fu Bowang clan
A beef cattle breeding and sales company has crossed over into the environmental protection industry and proposed to "strive to occupy more than 45% of the county-level waste incineration market share". In May this year, just after winning the first waste incineration project, the company's actual controller was criminally detained on suspicion of contract fraud.
On September 4, Guilin Hengrui Environmental Protection Technology Co., Ltd. (hereinafter referred to as "Guilin Hengrui") announced that the company received a notice from Li Zhiyang's family that the Xifeng County Public Security Bureau had criminally detained Li Zhiyang on suspicion of contract fraud on August 30, 2024, and is now detained in the Xifeng County Detention Center.
▼Image source: Guilin Hengrui
Li Zhiyang, mentioned in the announcement, is the controlling shareholder, actual controller, director, person in charge of information disclosure and general manager of Guilin Hengrui. His criminal detention will adversely affect the daily operation and management of Guilin Hengrui.
The most direct impact is the company's failure to disclose the 2024 semi-annual report within the statutory deadline. If Guilin Hengrui still fails to disclose the semi-annual report within two months from the date of expiration of the statutory period, the company's shares may be terminated.
1
Suspected of contract fraud
The actual controller of the environmental protection company was criminally detained
Li Zhiyang's accident was actually well warned.
On August 27, Guilin Hengrui's host brokerage, Southwest Securities, issued a risk warning announcement saying that they had repeatedly contacted Li Zhiyang by phone, text message and other channels, but could not get in touch, Li Zhiyang's phone is currently in a state of shutdown, and other means of communication have not been answered.
Subsequently, Southwest Securities communicated with the financial director of Guilin Hengrui, who said that he had not seen Li Zhiyang in the near future and could not take the initiative to get in touch with him.
Since Guilin Hengrui is a listed company on the New Third Board, on August 28, the management of the New Third Board market, the first department of the listed company of the National Small and Medium-sized Enterprise Transfer System Co., Ltd., also issued the "Letter of Inquiry on Guilin Hengrui Environmental Protection Technology Co., Ltd." (No. 058 [2024] No. 058 of the company) to inquire about the company's situation.
▼Image source: National Small and Medium-sized Enterprise Share Transfer System
The management requires that the company should make a written explanation within 5 trading days, whether the controlling shareholder and actual controller of the company have lost contact? If so, please fully disclose the reasons for the loss of contact between the controlling shareholder and the actual controller, its impact on the company's daily operation and management, and the measures that the company intends to take or has taken.
After receiving the letter of inquiry, on September 4, Guilin Hengrui officially issued an announcement, revealing that Li Zhiyang's family had received a detention notice from the Xifeng County Public Security Bureau on September 3 (Tie Gong Xi (Jing) Kutong Zi [2024] No. 69), which showed that the bureau had criminally detained Li Zhiyang at 00:00 on August 30, 2024, and is now detained in the Xifeng County Detention Center.
The category of Li Zhiyang's suspected violations of laws and regulations is "suspected of contract fraud".
It is understood that Xifeng County is a county under the jurisdiction of Tieling City, Liaoning Province, located at the eastern end of Tieling City. The "environmental circle" checked public information and found no information about Guilin Hengrui's business in Xifeng County.
2
In May, the first waste incineration project was signed
It has been proposed to "occupy more than 45% of the county-level waste incineration market share"
Although it is not yet possible to determine the specific reason for Li Zhiyang's detention, it is generally certain that it has little to do with environmental protection business.
It wasn't until May this year that they signed the first waste incineration project after cross-border environmental protection.
It is understood that Guilin Hengrui is mainly engaged in the breeding and sales of beef cattle. The company takes the development model of "company + base + farmer + market" as the core, drives the development of beef cattle breeding for farmers with enterprises, improves the income of farmers and growers, and creates a green and healthy food enterprise that can drive the industrial chain and promote the development of circular economy.
In the past 2023, although the general situation is sluggish, Guilin Hengrui's performance is still good. operating income reached 158 million yuan, an increase of 273.17% year-on-year; The net profit attributable to the parent company was 21.4351 million yuan, an increase of 128.11% year-on-year.
▼Image source: Guilin Hengrui
In addition to basing itself on its own business, Guilin Hengrui has also begun to cross the border in the field of environmental protection in recent years. In December 2018, the holding subsidiary, Yanhe Hengrui Domestic Waste Renewable Energy Power Generation Co., Ltd., was established, mainly focusing on the use of new energy for power generation and biomass power generation.
According to Guilin Hengrui's 2023 semi-annual report, the company's future business development plan is:
1. Steadily replicate new power generation projects;
2. Authorized use of power generation project technology;
3. Sales of waste incineration power generation treatment equipment and waste new energy additive products;
4. In the future, we will strive for waste-to-energy technology projects to account for more than 45% of the domestic county-level waste-to-energy business market share.
The goal of "striving to occupy more than 45% of the county-level waste-to-energy market share" shows the company's optimism about the county-level waste-to-energy market and its ambitions in this field.
However, on April 30 this year, Guilin Hengrui's 2023 annual report was released, in which the business development plan has been quietly adjusted to "strive for waste-to-energy technology projects to account for more than 10% of the domestic county-level waste-to-energy business market share in the future".
▼Image source: Guilin Hengrui
From 45% to 10%, for some reason, Guilin Hengrui quietly lowered their market expectations.
At the same time, they also said in the annual report that because the waste treatment project is in its infancy, the company's main revenue business is still based on beef cattle breeding and sales, but the company is committed to developing new business, and new business is the main revenue direction of the company's medium and long-term planning.
In fact, in May this year, Guilin Hengrui signed the "Yanhe County Domestic Waste Incineration Power Generation Project Franchise Agreement" with the Urban Administration Bureau of Yanhe Tujia Autonomous County, Tongren City, Guizhou Province, and the company intends to be responsible for the specific implementation of the project through its wholly-owned subsidiary, Yanhe Hengrui Domestic Waste Renewable Energy Power Generation Co., Ltd.
It is understood that the concession period of the project is 30 years, the total investment is 242.6888 million yuan, and the construction scale is 400 tons of garbage per day.
According to the "Environmental Sanitation Science and Technology Network", this project is also the first waste incineration project signed by Guilin Hengrui.
3
Trading in the company's shares has been suspended
There is a risk of termination of listing in the future
The criminal detention of the actual controller does not know whether it will affect Guilin Hengrui's long-term goal of "striving to occupy more than 10% of the county-level waste incineration market share". However, in the short term, its impact on the company's production and operation is undoubtedly huge.
First of all, in terms of operation, since Li Zhiyang is the controlling shareholder, actual controller and general manager of Guilin Hengrui, his criminal detention will have an adverse impact on the company's daily operation and management.
Secondly, on the financial side, this matter will also adversely affect the company's financial management.
Third, because Li Zhiyang was criminally detained, Guilin Hengrui failed to disclose the 2024 semi-annual report within the statutory deadline. If the semi-annual report cannot be disclosed within two months from the date of expiration of the statutory period, the company's shares will be at risk of being terminated.
As you know, some time ago, major listed companies were disclosing semi-annual reports. As a listed company on the New Third Board, Guilin Hengrui also has the obligation to disclose information in this regard.
However, on August 30, due to the inability to contact Li Zhiyang, the controlling shareholder, actual controller, director, person in charge of information disclosure and general manager Li Zhiyang (who did not know that Li Zhiyang was criminally detained at that time), Guilin Hengrui had to issue the "Indicative Announcement that the 2024 Semi-Annual Report is expected to be unable to be disclosed on time".
Due to Guilin Hengrui's failure to disclose the 2024 semi-annual report before August 30 (including that day), the company's shares have been suspended since September 2 in accordance with the provisions of the "Business Rules for the National Small and Medium-sized Enterprise Share Transfer System (Trial)" and other relevant rules.
▼Image source: Guilin Hengrui
In the future, Guilin Hengrui is expected to disclose the 2024 semi-annual report by October 31.
If Guilin Hengrui fails to disclose the 2024 semi-annual report within two months from the date of expiration of the statutory period (that is, before October 31), the company's shares will be at risk of being terminated.
Guilin Hengrui said that the company will actively promote the preparation and disclosure of the 2024 semi-annual report. During the suspension of stock trading, the company will also fulfill its information disclosure obligations in a timely manner in accordance with relevant laws and regulations.