On December 25, Tianjin Zhuolang Technology Development Co., Ltd. (*ST Zhuolang) announced that the company will undergo a major forced delisting due to significant violations of the law. The company’s stock will be suspended from trading starting December 26, 2024.
According to *ST Zhuolang, the company received an administrative penalty decision issued by the China Securities Regulatory Commission, which found that its subsidiary, Tianjin Zhuolang Technology Development Co., Ltd., falsified the sales of servers, software, and system integration services, leading to inflated revenue and profits. This resulted in false disclosures in the annual reports from 2019 to 2023. The total falsely reported operating income for 2021 and 2022 amounted to 995 million yuan, accounting for 57.85% of the total annual operating income disclosed in those two years; the total falsely reported profit amounted to 696 million yuan, representing 56.31% of the total annual profit disclosed in those two years. Due to the serious nature of the violations, the company will face a major forced delisting, with its stock being suspended from trading effective December 26, 2024, and a fine of 10 million yuan imposed.
The announcement further stated that if *ST Zhuolang’s stock is subjected to a forced delisting decision by the Shanghai Stock Exchange, it will resume trading on the next trading day after the expiration of 5 trading days from the date of the announcement of the delisting decision, entering a delisting consolidation trading period and having the “delisted” label added before its stock abbreviation. The trading period of the delisting consolidation is 15 trading days. Within 5 trading days after the expiration of the delisting consolidation period, the Shanghai Stock Exchange will delist the company’s stock, leading to its termination from listing.
On December 25, *ST Zhuolang’s stock hit the limit down, with a record of 2.0726 million blocked orders, and the closing price dropped to only 1.24 yuan per share.
According to a report by the Economic Daily News on December 26, Zhongxing Caiguanghua Certified Public Accountants (Special General Partnership) issued a qualified audit report on *ST Zhuolang’s 2023 annual report, mentioning discrepancies in the payment timing of server procurement contracts compared to the contract agreements. Additionally, in March of this year, the China Securities Regulatory Commission initiated a case against *ST Zhuolang for suspected violations of information disclosure regulations.
Financial data shows that for the third quarters of 2022, 2023, and 2024, *ST Zhuolang reported a net profit attributable to the parent company of 401 million yuan, -122 million yuan, and -248 million yuan respectively.
As of September 30, 2024, *ST Zhuolang had 50,700 shareholders, with an average shareholding amount of 160,800 yuan per person.
Following the announcement on the evening of December 25, many investors expressed their concerns on investment forums. Some said, “What should I do? I have over 200,000 yuan invested.” Others commented, “Finally, I can stop worrying about it and remove it from my watchlist.” “Will it still recover?” one investor questioned. The revelation of financial fraud committed by the company five years later has also triggered dissatisfaction among netizens.
“shi2021” stated, “Five years of false reporting and then delisted. What about the investors?”
“liLI” asked, “Why was it only discovered after five years?”
“Max_today起飛” remarked, “Delisting due to financial fraud, a recurring issue in A-shares. However, to falsely report even server-related matters, that’s too audacious. Regulators need to thoroughly investigate and prevent such companies from harming the stock market.” “Music Enthusiast JayChou” also commented, “Delisting due to financial fraud, the case of *ST Zhuolang ultimately reflects an issue of corporate integrity. Financial fraud and disclosure violations harm not only investors but the entire market.”
Public information indicates that *ST Zhuolang’s main business is in software and information technology services, with its main products/services falling into three categories: software development and cloud services, information system integration, and construction of internet data centers for hosting services. The company has been listed since the year 2000 and has undergone several name changes since its initial public offering.
It’s noted in public records that the ultimate controlling entity of *ST Zhuolang is the State-owned Assets Supervision and Administration Commission of Tianjin Municipality.