Four A-share Companies Delisted Overnight, Many ST Stocks at Risk

On the evening of May 28th, four A-share listed companies announced that their stocks will be delisted from the A-share market. Additionally, several other companies are teetering on the edge of delisting.

ST Yuancheng, ST Tongda, and ST Tanyuan successively announced on the 28th that they had received the decision from the Shanghai Stock Exchange to delist their stocks. Their stocks will enter a delisting preparation period on June 5th, with the expected final trading date on June 26th.

Zhengyuan Group also issued an announcement on the same day indicating that due to the stock price being below 1 RMB for 18 consecutive trading days, they are subject to early delisting under trading suspension conditions.

Specifically, these four companies are delisting due to financial problems. ST Tanyuan is delisting because of “negative net profit + operating income less than 100 million yuan,” while ST Yuancheng and ST Tongda are delisting due to “non-standard audit opinions issued in financial accounting reports.” ST Mall is delisting for meeting both of the aforementioned criteria.

The final path to delisting for these four companies is linked to their long-term lack of core business operations and the ongoing loss of operating capabilities. ST Yuancheng has faced other risk warnings six times since its listing due to negative net assets and profits. ST Tanyuan has been in continuous losses for five years, with current assets significantly lower than current liabilities. ST Tongda has had revenues consistently below 100 million yuan since 2015. ST Mall has had negative non-recurring net profit for 18 years, with operating income stagnating around 100 million yuan in recent years.

On the evening of May 28th, ST Yuancheng, ST Tongda, and ST Tanyuan announced that their stocks will enter a delisting preparation period on June 5th, with the expected final trading date on June 26th.

As of May 29th, ST Yangguang’s stock price has been below 1 RMB for 10 consecutive trading days. ST Yilian, ST Yili, ST Dima, ST Furun, ST Meixun, and other companies are facing varying degrees of operational or compliance risks.

Additionally, Zhengyuan Group hit the limit down on May 29th, marking the fifth consecutive trading day of limit down and the 19th consecutive trading day of each stock price below 1 RMB. As of the 29th, the latest closing price was only 0.55 RMB per share. Even if the stock hits the limit up on the last trading day, it will still be difficult to change the fact of being below 1 RMB for 20 consecutive trading days and triggering the delisting criteria. The company may become the first non-ST stock to face delisting solely based on the face value in 2024.

ST Yangguang, ST Yilian, ST Yili, ST Dima, ST Furun, ST Meixun, and other companies are all facing different levels of operational or compliance risks. Some companies have been reported or penalized, and are deeply trapped or may not escape the fate of delisting.

In the A-share market, many companies engage in financial fraud to get listed or inflate stock prices, and delisting allows major shareholders to exit unscathed. Some industry insiders told “China Business News” that delisting does not mean being exempt from responsibility. For delisted companies involved in illegal activities, investors who suffer losses due to their illegal actions can seek legal recourse to protect their legitimate rights.

Netizen “Yunxing” commented: “Delisting ST companies means letting them leave the stock market with the hard-earned money of investors. This is what they dream of. Only by first freezing their illegal income through legal means, returning investors’ hard-earned money, and bringing those involved in illegal fundraising to justice can we truly uphold fairness and justice in the capital market.”

As of May 22nd, 57 listed companies in mainland China have been subject to other risk warnings or delisting warnings (marked with ST or *ST in front of their stock symbol), with over 80% of these companies receiving non-standard opinions on their 2023 financial reports or audit reports. This includes 28 companies with audit reports that cannot express an opinion, as well as issues of financial fraud.

In the Chinese A-share market, if a stock symbol is prefixed with “ST,” it indicates a “special treatment” stock bearing investment risks. The addition of *ST signifies “delisting risk,” with a stock facing delisting if it incurs losses for three consecutive years.