A Share Delisting In 2020

2020 is not only a year of fruitful registration system, but also a year of breakthrough in delisting system.

Since this year, there have been 16 delisting companies in the A-share market, of which Qianshan pharmaceutical machinery, Kaidi ecology, LETV, Fengfeng Group and other typical risk stocks have bid farewell to the A-share market one after another.

Although compared with the delisting rate of about 8% per year in mature markets such as US stocks, the number of delisting is "insignificant", compared with the delisting situation in previous years, the number has increased significantly. In the past five years, from 2015 to 2019, there were only 7, 1, 5, 5 and 10 delisting enterprises in the A-share market respectively.

In addition, * ST Jinyu, * ST Gangtai and other enterprises have decided to terminate the listing. As the daily closing price of the company was lower than the par value of the shares for 20 consecutive trading days, * ST Jinyu and * ST Gangtai both received the supervision letter from the Shanghai Stock Exchange on matters related to the termination of listing of the company's shares. At present, the trading of both stocks has been suspended.

This series of measures is only the starting point for the normalization of A-share market delisting.

On December 14, Shanghai and Shenzhen Stock Exchange revised a number of supporting rules (hereinafter referred to as "delisting rules") such as "Listing Rules of Shanghai Stock Exchange", "Listing Rules of Shenzhen Stock Exchange" (hereinafter referred to as "Listing Rules of stocks"), listing rules of science and technology innovation board of Shanghai Stock Exchange and Listing Rules of Shenzhen Stock Exchange's GEM (hereinafter referred to as "new delisting rules") Solicit public opinions.

In the view of industry insiders, with the curtain of registration system slowly opened and the top-level design rules gradually improved, A-share market is about to enter a new "normal" of delisting.

"The revision of delisting system mainly has two objectives: one is to meet the needs of registration system reform and new economic development; the other is to integrate the delisting system of A-share market. This is to better adapt to the needs of China's economic transformation and industrial upgrading, and enhance the ability to allocate social resources to serve the real economy in China's capital market. " Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, pointed out in an interview.

With the curtain of registration system slowly opened, A-share market is about to enter a new "normal" of delisting. Visual China

16 companies delisted during the year

2020 is the 30th anniversary of the establishment of the capital market, and also a milestone year in the delisting process of the A-share market. According to the statistics of the 21st century economic report, a total of 16 A-share enterprises have withdrawn from the market this year, setting a new high in the number of A-share delisting.

For the 16 companies that delisted during the year, the majority of companies delisted due to face value, up to 9, accounting for 56.25%. Among the other seven companies, Qianshan Pharmaceutical Machinery Co., Ltd., Jinya Technology Co., Ltd., letv.com, Longli biology Co., Ltd., and baoqianli Group Co., Ltd. were terminated by the stock exchange because they continued to lose money in the first accounting year after the suspension of listing, while Fengfeng Group was unable to disclose its annual report on schedule.

Since July 28, 2019, Fengfeng Group announced that the company's actual controller, Mr. Feng Xin, was taken compulsory measures by the public security organs for suspected crimes, and Fengfeng Group was in a desperate situation. In the middle of this year, Fengfeng Group was self destructed, and there were only 10 employees left in the company. At the same time, some employees were in arrears.

Due to the failure to sign an agreement with the relevant audit institutions and the appointment of CFO, Fengfeng Group has failed to complete the disclosure of the annual report of 2019 and the interim report of 2020. From July 8, 2020, Fengfeng Group has been suspended from listing. On September 21, Fengfeng Group entered the delisting consolidation period, becoming the first delisted stock with a decrease of 20%. On November 10, Fengfeng Group officially bid farewell to A-share, ending its five-year listing journey.

It is worth mentioning that five years ago, when windstorm technology was listed, it was once regarded as a model of the new economy. Its stock price fluctuated 37 times in 40 trading days, breaking the A-share trading limit record. The total market value once exceeded 36 billion yuan and the dynamic P / E ratio exceeded 250 times. As of its delisting, windstorm group has 63526 shareholders.

Storm group's experience is only the tip of the iceberg of A-share ecology under the strict implementation of delisting system. According to wind data, 16 delisted companies had 1.3436 million secondary shareholders when they bid farewell to a shares, and 2020 will become the year with the largest number of shareholders affected by delisting companies in China's stock market over the years.

Among them, LETV has the largest number of shareholders, with 280789 shareholders sealed when it delisted.

I still remember when LETV was listed in 2010, LETV was still a star enterprise with no difference. Especially on April 28, 2015, with the advent of the bull market on the gem, LETV's share price soared to 122 yuan, with a market value of more than 100 billion yuan, becoming the fifth Internet company with a market value of more than 100 billion yuan after batj.

One month later, the total market value of LETV rose to 152.689 billion yuan (up to 165.6 billion yuan in intraday trading), which once surpassed Vanke A at that time.

Then, with the emergence of LETV's capital chain crisis, Jia Yueting went to the United States and the prosperity began to end - in 2017, he lost 13.878 billion yuan; in 2018, he lost 4.096 billion yuan; in 2019, he lost 11.279 billion yuan. As of the end of the first quarter of 2020, LETV's equity attributable to its parent is - 14.499 billion yuan.

As the audited net profit attributable to the shareholders of the listed company, the net profit after deducting the non recurring profit and loss, and the net assets at the end of the period are all negative in 2019, LETV shares enter the delisting period on June 5, 2020, and officially delisted on July 21.

Looking back at other companies that have been delisted due to face value, there are also big loopholes in company operation, internal control and compliance. Now Shenwu environmental protection, which was delisted in August, had a huge capital gap before its listing was terminated. Subsequently, the crisis was transmitted to the listed companies, and the non operating capital occupation of Shenwu environmental protection emerged.

Qianshan Pharmaceutical Machinery Co., Ltd., which was delisted on September 16, was identified by the CSRC as having false records in its annual reports in 2015 and 2016, and failed to perform the interim reporting obligation for non operating occupation of company funds by related parties in 2017. It is worth noting that Liu Xianghua, chairman of Qianshan Pharmaceutical Machinery Co., Ltd., who once threw away "gambling theory", was also banned from entering the market for life.

At present, there are also a number of risk warning stocks that have been "capped" and hovering on the edge of delisting. The reporter of 21st century economic report has noticed that by the end of December 29, 7 companies in the A-share market had a share price of less than 1 yuan. In addition to * ST Gangtai and * ST Jinyu have locked in delisting, enterprises such as * ST Pengqi, * ST OPU, * ST fukong, * St Tianxia, and * ST Yisheng are also in danger.

Among them, the stock price of * ST Yisheng has been less than 1 yuan for 11 consecutive trading days, * ST Tianxia has fallen below par value for 10 consecutive trading days, * ST fukong, * ST OPU and * ST Pengqi have been suspended so far.

New rules for delisting to meet new changes

Entering 2021, A-share delisting system will usher in a "new situation". On November 28, Yan Qingmin, vice chairman of the China Securities Regulatory Commission (CSRC), publicly said that for the "empty shell zombies" who have lost the ability of sustainable operation, we should strengthen the rigidity of delisting, and never allow "prolonged delay".

On December 14, Shenzhen and Shanghai Stock Exchange issued the draft for comments on the revision of relevant delisting rules, aiming at adhering to the direction of marketization, legalization and normalization, improving delisting indicators, simplifying delisting procedures, broadening multiple exit channels, and further improving the exit mechanism of listed companies, with a view to breaking the "delisting difficulty" problem of listed companies.

Specifically, for the trading indicators in the new rules, the original par value delisting index is revised to "1 yuan delisting" index, and the market value index of "the daily closing market value of stocks in this exchange for 20 consecutive trading days is lower than RMB 300 million yuan".

However, according to the 21st century economic report, in addition to the fact that the six enterprises mentioned above have fallen below the par value of RMB 1, there is no standard for enterprises to trigger the total market value of RMB 300 million. Therefore, the delisting threshold of 300 million yuan market value has also aroused the question of "hard to trigger" in the market.

Dong Dengxin believes that the combination of the "market value delisting" standard and the $1 delisting standard can more effectively play the role of "voting with feet" of investors. However, "at present, none of the A shares has a market value less than 500 million yuan, including all junk stock markets with a value higher than 500 million yuan. Therefore, if the "market value delisting" standard is raised to 500 million yuan, it will play a more powerful and effective role, and the speculation of junk stocks will disappear completely. "

However, according to Wang Jiyue, a senior investment banker, under the background of the registration system, the threshold of a market value of 300 million yuan is not low, and the supply of enterprises is increasing. "In five years at most, if it is fast, in three years, there will be enterprises with a market value below 300 million yuan. Now, enterprises with occasional trading volume of less than 40000 shares have appeared, and it is common to trade less than 100000 shares a day. After the anchor point appears, it will form the magnetic attraction effect

In addition, the financial delisting provisions in the new delisting regulations have also been updated. Among them, the combination index of "net profit before and after deduction is negative, and the operating income is less than 100 million yuan" is introduced to replace the previous single net profit index. It depicts and accurately identifies "shell" companies in multiple dimensions. It directly points out that some companies try their best to manage earnings to avoid delisting. It also echoes the IPO's concern from "sustainable profitability" to "sustainable operation ability".

In the view of industry insiders, delisting will no longer simply examine the profits of enterprises, but also see whether they have the ability to continue operation. Losses are no longer the main concern of delisting. Delisting supervision will pay more attention to the timely clearance of "zombie enterprises" and "shell enterprises".

In fact, the day after the draft of the new delisting rules was published, 144 of the 208 risk warning companies in the A-share market fell, accounting for nearly 70%.

"The new delisting rules, as a whole, have a certain deterrent effect on the market, not the so-called relaxation of standards, but also further prohibit connivance in the annual report." Zhongshan Securities chief economist Li Zhan analysis.

Li Zhan pointed out that in terms of finance, under the registration system, the new delisting regulation no longer examines a single financial indicator, but replaces it with a combination of indicators. As a result, the idea of delisting standards has changed. When the new and old rules are connected, it is in line with the direction of delisting system reform that we no longer use the standards of the old rules to examine the company's indicators.

Specifically, the optimization of financial delisting indicators mainly includes three categories, including the combination of net profit and revenue indicators, the net assets audited in the latest accounting year being negative, and the financial accounting report of the latest accounting year is issued with audit report that can not express opinions or negative opinions.

In other words, if a listed company touches the combination index of negative net assets, net profit and operating income in the first year (net profit is negative before and after deduction and the operating income is less than RMB 100 million) or any indicator of audit opinion type, its stocks will be subject to delisting risk warning; in the second year, if it touches one of the combination indicators of negative net assets, net profit and operating income again, or the annual report is guaranteed If they leave opinions, can not express their opinions or negative opinions, their shares will be directly terminated from listing.

Based on the analysis of the annual reports of more than 4000 enterprises in the A-share market from 2018 to the first three quarters of 2020, the reporter found that the net profit of 28 enterprises before and after deducting non-profit for two consecutive years in 2018 and 2019 is negative, and the operating income is less than 100 million yuan, accounting for 0.68% of the total number of enterprises in the A-share market. Among them, 18 are from the main board, 5 from the SME board, 4 from the science and technology innovation board, and 1 from the gem. In the first three quarters of 2020, four of the 28 enterprises have realized the change of net profit from negative to positive before and after deducting non-profit, which are * ST Xinyi, St Carey, Asia Pacific industry and Lvting investment.

However, there are 32 listed companies with negative audited net assets in 2019, and 35 companies with negative net assets in the first three quarters of 2020, among which 26 enterprises continue to have negative net assets in the first three quarters of 2019 and 2020; in addition, there are 258 enterprises whose audit reports have been issued with non-standard opinions, including 38 enterprises that are unable to express their opinions, and no enterprises have been issued with negative opinions.

According to Dong Dengxin's analysis, "the delisting standard of the combination of multiple financial indicators will focus on the assessment of the sustainable operation ability of listed companies. It can drive out the empty shell companies, leather bag companies and zombie enterprises that have no main business and no sustainable operation ability. This is a very important institutional breakthrough and institutional innovation. "

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