On April 29, several Chinese listed companies including Guoxin Culture, Gengxing Stock, Li Hang Technology, Jinglun Electronics, and others have been warned of potential delisting risks by having the *ST label added to their stock names.
According to a report by Caijing News on April 27, following the delisting indicator implemented in 2024 for companies listed on the Shanghai and Shenzhen main boards with “negative net profit and revenue below 300 million yuan”, over 50 listed companies (based on performance forecasts) have triggered this clause.
Based on performance forecasts, more than 50 main board companies have triggered this new red line indicator so far. Among them, over 20 are listed on the Shanghai Stock Exchange main board and over 30 on the Shenzhen Stock Exchange main board. Within these companies, only 2 have a market value exceeding 5 billion yuan, with the majority having market values around 2 billion yuan.
Additionally, among these over 50 listed companies, state-owned enterprises account for approximately 20%. Among them, companies like ST Bushen, Hekeda, and Dasheng Culture had local state-owned assets injected only last year. However, post-state intervention, the businesses have not shown signs of improvement, indicating that state-owned capital does not guarantee acquisition of quality assets.
A seasoned investor told Caijing News that most desirable targets’ controlling shareholders are generally unwilling to transfer ownership, making it difficult for local state-owned assets to obtain high valuations. Companies in crisis usually face issues such as high proportion of pledged shares by major shareholders and tight cash flow, but this offers state-owned assets a reasonable negotiation space for purchasing at an appropriate price.
The report indicates that 2025 will be a critical year for these recently adorned or soon-to-be adorned *ST labeled listed companies. However, these companies have the opportunity to return to normalcy in 2025 after adjustments. Through integration and operational enhancements, some companies may have the chance to withdraw from the delisting risk warning.