Beijing News (Reporter Zhang Xiulan) With the supervision work issued by the Shanghai Stock Exchange on April 10 Letter, *ST Jitang (Tongjitang) delisting risk once again attracted attention. After it was found that more than 1 billion yuan of illegal guarantees and the controlling shareholder occupied more than 1 billion yuan of funds, Tongjitang, which has been “stars and hats”, has exploded continuously. As the first Chinese patent medicine company listed in the United States, Tongjitang may enter the countdown to delisting.
Annual report may be delayed due to the possibility of stock deposit termination
On April 11, *ST Jitang fell by the limit again and closed at 0.96 Yuan/share. On the evening of April 10, *ST Jitang disclosed the Shanghai Stock Exchange’s supervisory work letter on urging companies to remind that they cannot disclose their audited annual reports and related delisting risks on schedule, which mentioned that *ST Jitang’s 2021 annual report may be delayed in disclosure.
Shenzhen Lianchuangxin Accounting Firm (hereinafter referred to as Lianchuangxin), the 2021 annual audit accountant to be hired by Tongjitang, has issued a letter stating that it cannot complete all audit work before April 30 this year And issued an audit report, continue to hire the firm, Tongjitang shares have the risk of direct delisting, and suggested that it hire another accounting firm. The Shanghai Stock Exchange stated in the working letter that if Tongjitang fails to disclose the audited 2021 annual report before April 30 this year, it will be delisted in the financial category and will suspend trading on the next trading day after the statutory period expires. The decision to terminate the listing of the shares shall be made within one trading day.
Tongjitang, which mainly deals in medicines, health care products and medical equipment, has its main customers including medical institutions, wholesale enterprises, and retail pharmacies. As early as March 2007, Tongjitang landed on the New York Stock Exchange and raised US$120 million, becoming the first Chinese patent medicine company listed in the United States at that time. Four years later, in April 2011, Tongjitang announced that it was merged by Fosun Pharma’s holding subsidiary Fosun Industrial (Hong Kong) Co., Ltd. and Hanmax Investment Limited, becoming a wholly-owned private company of the two, and its shares were immediately suspended on the New York Stock Exchange. trade.
Subsequently, Tongjitang began to plan to land in A shares. In April 2015, Hops announced that it would acquire 100% equity of Tongjitang. In 2016, Tongjitang, through a major asset restructuring, backdoored hops to the A-share market. Tongjitang’s initial performance was good. From 2016 to 2018, its net profit rose continuously, reaching 473 million yuan, 515 million yuan, and 529 million yuan respectively.
It is exposed to illegal guarantees and the funds are occupied and the scenery is no longer good
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2019 became a watershed in Tongji Church’s performance. Profits fell sharply, of which net profit was 122 million yuan, a year-on-year decrease of 77%. In that year, the internal control of many subsidiaries of Tongjitang failed, and there were major deficiencies in the internal control of capital activities, procurement business, sales business, asset management, and accounting and financial reporting. During the reporting period, Tongjitang received RMB 1.046 billion for non-operating funds from its controlling shareholder Hubei Tongjitang Investment Holding Co., Ltd. at the end of the period, but it failed to provide complete information on capital transactions. Its 2019 annual report was also issued an audit report with no opinion expressed by an accounting firm, Tongjitang was issued a delisting risk warning, and the stock abbreviation was also changed to *ST Jitang from July 1, 2020.
By October 2021, Tongjitang received the “Advance Notice on Administrative Penalties and Market Prohibition” from the China Securities Regulatory Commission, and the company may be forced to delist. At that time, the China Securities Regulatory Commission found that Tongjitang had a number of illegal facts, such as false records, financial fraud, and failure to disclose the occupied funds in a timely manner. It is precisely these problems that have sent the once-bright Tongjitang into the countdown to delisting.
According to the investigation by the China Securities Regulatory Commission, Tongjitang’s 2016, 2017 and 2018 annual reports contained false records, falsely inflated operating income, operating costs, sales and administrative expenses, resulting in false records from 2016 to 2018. The total increased profits were 680 million yuan, 920 million yuan, and 830 million yuan, accounting for 90.43%, 120.65%, and 107.61% of the total disclosed profits for the current period, respectively. In the 2019 annual report, there are also false records, falsely increasing other business income by 386 million yuan, falsely increasing the total profit by 386 million yuan, and falsely increasing the net profit by 299 million yuan, accounting for 226.53% of the net profit disclosed in the current period.
In addition, from January 2016 to December 2019, Tongjitang directly or indirectly through a number of companies accumulatively paid the controlling shareholder Hubei Tongjitang Investment Holdings Co., Ltd. The company and its related parties provided non-operating funds of 2.592 billion yuan. The annual report did not disclose the above-mentioned related-party transactions that occupied funds for non-operating purposes, nor did it truthfully disclose the deposit and actual use of the company’s raised funds, illegal guarantees and lawsuits, etc. Major issues. According to the facts stated in the prior notice, after the retrospective adjustment of Tongjitang’s financial and accounting report, there will be a situation where the net profit will be negative for four consecutive years from 2017 to 2020. Tongji Church 2The financial reports for two consecutive years in 019 and 2020 were also issued by the accounting firm and could not express their opinions.
Since then, Tongjitang’s share price has also fallen to the level of 2 yuan. Statistics from reporters from the Beijing News show that in the 12 trading days from March 23 to April 11, *ST Jitang The stock price has been below 1 yuan for 11 trading days, and only on April 8 it closed at a price of 1.01 yuan per share.