On June 8, 2024, Zhejiang Aikang New Energy Technology Co., Ltd. (ST Aikang) issued its sixth warning about the risk of its stocks being delisted due to their price falling below face value. This announcement came after the company’s actual controlling shareholder had previously claimed to increase holdings of the company’s stock, but had actually cashed out 2 billion yuan and exited the market.
In the announcement on June 8, ST Aikang stated that as of June 7, 2024, the closing price of the company’s stock had been below 1 yuan for 14 consecutive trading days. According to the Shenzhen Stock Exchange’s Stock Listing Rules, if the closing price remains below 1 yuan for 20 consecutive trading days, the stock will be delisted. If the stock is delisted due to triggering mandatory delisting conditions, it will not enter the delisting trading phase.
Media outlets like “Hai Bao News” commented that given ST Aikang’s current situation, even if there were consecutive limit-up movements in the future, it would still be difficult to avoid the fate of delisting.
The reasons behind ST Aikang being “capped” were the company’s consecutive three years of negative net profit after deducting non-recurring gains and losses from 2021 to 2023 and the issuance of internal control audit reports that could not express an opinion or issued a negative opinion.
Before the continuous downward trend in ST Aikang’s stock price, the company announced on February 27 its plans for its major shareholder, Jiangsu Aikang Industrial Group Co., Ltd. and its affiliates to increase their holdings within six months, but as of May 27, the shareholder had not increased their stake.
Moreover, ST Aikang released two pieces of negative news: freezing of 62 bank accounts of its subsidiaries with a total freeze of 84.02 million yuan and overdue amounts of 185 million yuan guaranteed for on and off-balance sheet companies. These news accelerated the decline in the company’s stock price.
Based on a report by “Hua Xia Times,” ST Aikang’s actual controller had already cashed out early. The controller’s family had frequently reduced their holdings, with only 6.4% held through four companies as of the end of March 2024. From when Aikang went public in 2011, the controller’s family had held 43.63% of the company’s shares, but they had steadily reduced their holdings from 2017 to 2022, resulting in cashing out 2.054 billion yuan.
For investors holding ST Aikang shares, it may be increasingly difficult to exit as stated by “Hai Bao News”.
As of May 20, over 276,000 shareholders still held ST Aikang, making it the stock with the most shareholders in the ST sector currently.
After the news was released, over 500 internet users participated in discussions on Tencent’s website.
User “zb91daj” stated: “The original meaning of stocks was for the development and future of listed companies, the foundation of enterprises. Nowadays, the stock market has become an unrecognizable gambling den. A healthy and highly regulated financial market is an investor’s paradise, as only conscientious enterprises will be sought after by shareholders.”
User “Yanlonghanshui” asked: “Every now and then it’s the stockholders who get burnt, who set these traps? Is the stock market meant for cutting people’s belly open?”
User “Yilu Kaige” commented: “Major shareholders, directors, and executives of listed companies are reducing their holdings of stocks. Does that mean they are working for the shareholders? It’s hard to understand how a company without a boss but actually having tens of thousands of bosses can operate well. Perhaps companies like these only went public to make shareholders permanent shareholders while the initiators aimed to shed their skin like a cicada. The stock market is indeed a world full of stories and accidents.”
User “Guo Duxiaoqiao” believes: “For releasing false information about increasing stake and providing false information to investors, it should not only result in fines but be punishable under criminal law for enticing and defrauding investors. If the company operates normally and discloses real information without deceit, resulting in investors’ losses, that would be considered normal market behavior.”
In the A-share market, many companies engage in financial fraud to go public or boost stock prices, and delisting allows these major shareholders to exit unscathed.
User “Yun Xing” expressed: “Letting them get delisted means letting them safely leave the stock market with the hard-earned money of shareholders. This is what they dream of. Only by first freezing their illegal income through legal means, returning the hard-earned money to shareholders, and bringing the participants of illegal and irregular market financing to justice can the fairness and justice of the capital market be truly safeguarded.”
By 3:00 pm on June 7, 2024, ST Aikang’s stock was trading at 0.49 yuan per share, a decrease of -5.77%, with a market value of 2.195 billion yuan.