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Less worries about stock trading

The first “market value delisted stock” in the history of A-shares may be born. Which stocks are worth paying attention to?

Lock in market value and delist

*ST Shentiancheng is the first A-share

In the morning session of July 23,*ST ShentianThe stock price hit the limit down again, with nearly 340,000 orders blocked at the limit down. The latest A-share market value is only 251 million yuan.

On the evening of July 22, *ST Shentian issued a risk warning announcement stating that the closing market value of the company's stock has been less than 300 million yuan for 18 consecutive trading days from June 27 to July 22, 2024. According to the relevant regulations of the Shenzhen Stock Exchange, if the closing total market value of the company's stock is less than 300 million yuan for 20 consecutive trading days, the company's stock will be at risk of being delisted.

According to the current share price of *ST Shentian, even if the company's closing price reaches the daily limit in the next trading day, its stock market value will still be less than 300 million yuan. In this way, the closing market value of the company's stock will be less than 300 million yuan for 20 consecutive trading days, thus triggering the market value delisting regulations. If *ST Shentian is delisted for this reason,It will become the first company in the history of A-shares to be delisted due to market valuecompany.

Public data shows that *ST Shentian was listed on the Shenzhen Stock Exchange as early as 1993 and was one of the earliest listed building materials stocks in the A-share market. The company's main business is the production and sales of concrete and the development and sales of real estate. Since its listing, the company's operating performance has been lackluster for many years, and its net profit has fluctuated within 50 million yuan for a long time. Since 2020, its net profit has been in the red for three consecutive years, and the loss amount in 2023 reached 271 million yuan, the largest loss since its listing.

*ST Shentian's operating difficulties have not improved in 2024. The company's performance forecast shows that it expects a net profit loss of 80 million to 100 million yuan in the first half of this year.

According to Databao statistics, at the end of the first quarter of this year, among the top ten circulating shareholders of *ST Shentian, there were four institutions. As of April 30, the company's latest number of shareholders was 8,029, an increase of 183 shareholders compared to the end of the first quarter. Since April 1, as of the close of July 22, the stock has fallen by 51.41%.

Delisting by market value is conducive to the high-quality development of the capital market

In the history of A-shares, delisting indicators mainly include mandatory delisting due to trading, mandatory delisting due to financial reasons, mandatory delisting due to regulatory reasons, and mandatory delisting due to major violations. In the past two years, the number of stocks delisted at par value has increased significantly.

The new delisting rules issued at the end of 2020 added a market value delisting indicator of "the total market value of stocks at closing is less than 300 million yuan for 20 consecutive trading days", but in the following years, trading-related delisting companies were mainly delisted by "face value delisting", and no company reached the market value delisting indicator.

Subsequently, the new "Nine National Regulations" required "improving market value standards and other trading-related delisting indicators". Against this background, at the end of April this year, the Shanghai and Shenzhen Stock Exchanges revised and improved the relevant delisting rules: the market value delisting standard for A-share (including A+B shares) companies on the main board will be increased from 300 million yuan to 500 million yuan starting from October 30, and the transition period from the end of April to the end of October will remain at 300 million yuan; the market value delisting standard for B-share, GEM and Sci-Tech Innovation Board companies will remain unchanged at 300 million yuan.

Yu Yang, deputy director of the Institute of Financial Development and State-owned Assets and Enterprises at the China (Shenzhen) Institute for Comprehensive Development and a registered international investment analyst, pointed out that market capitalization delisting is an indispensable part of the delisting system. Using market capitalization, an indicator determined by the market, as a condition for delisting will guide market funds to reduce the tendency to flow to companies with extremely low market capitalization, and urge low-market-cap companies to increase their market value by improving performance, improving governance, and strengthening communication with the capital market, which will help accelerate the formation of a high-quality development ecosystem for my country's capital market.

These stocks are worth being cautious about

In many delisting cases in the past, whether it is delisting based on par value or financial indicators, performance is an important factor affecting the delisting of listed companies, including continuous losses, insufficient operating income, financial fraud, etc.

According to the Securities Times Databao statistics, as of the close of July 22, there were nearly 250 A-share stocks with a market value of less than 1 billion yuan. Based on these 250 stocks, a list of companies with large performance losses was screened out, with the following conditions: 1. Net profit losses in both 2023 and the first quarter of 2024; 2. Net assets were negative at the end of the first quarter of 2024.

According to statistics, a total of 14 stocks were shortlisted, exceptEast Easy RishengExcept for the above, the rest are ST stocks. Since the beginning of this year, these stocks have fallen by an average of 65.14%, including*ST Meishang, *ST Meiji, *ST Boxin, *ST TianchengThe cumulative decline exceeded 70%.

Judging from the top ten circulating shareholders of the above 14 stocks, at the end of the first quarter of this year, institutional holdings accounted for more than 30% of the circulating shares of Dongyi Risheng, *ST Shentian, *ST Jiayu, *ST Boxin and *ST Meiji.

*ST Jiyao's top ten shareholders at the end of the first quarter were all natural person shareholders. The company focuses on the pharmaceutical and health industry, covering eight major health business sectors: pharmaceutical industry, pharmaceutical commerce, medical care, drug research and development, pharmaceutical capsules, pharmaceutical packaging materials, health foods, and national defense chemicals. Earlier, at the end of the second quarter of 2022, the company was once crowded with institutional holdings, and QFII institutions such as the Swiss Union Bank Group and JPMorgan Chase Bank appeared. Starting from the third quarter of 2023, institutional investors have no longer appeared.

Statement: All information content of Databao does not constitute investment advice. The stock market is risky and investment should be cautious.

Editor: Lin Lifeng

Proofreading: Yang Lilin

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