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[Since the beginning of this year, there have been many cases of convertible bond repayment risks caused by the decline in the underlying stock's business. Soute and Landun's convertible bonds defaulted in May and August respectively. The impact of Lingnan's delisting is that this may be the first case of a convertible bond defaulting before the underlying stock is delisted, and the actual controller of Lingnan shares is a state-owned asset. The market is worried that the actual default of Lingnan's convertible bonds may cause weak-quality convertible bonds to experience another round of price bottoming.]

This week, the credit risks in the convertible bond market ushered in a concentrated "end". Blue Shield's bond repayment and Lingnan's convertible bonds expired and stopped conversion on August 13 and 14, respectively becoming the second and third convertible bonds in history that could not repay principal and interest, sparking heated discussions in the market.

On the evening of August 14, Lingnan Shares (002717.SZ) "unsurprisingly" announced that the remaining amount of "Lingnan Convertible Bonds" was 489 million yuan, and the company's existing cash was unable to repay the principal and interest of the "Lingnan Convertible Bonds".

Since May this year, Lingnan shares have repeatedly warned of repayment risks regarding the current status of monetary funds and operating conditions. The Zhongshan Torch High-tech Industrial Development Zone Management Committee (hereinafter referred to as the "Torch Zone Management Committee"), as the actual controller of Lingnan shares, did not lend a hand to help with repayment.

The fundamental reason why Lingnan convertible bonds cannot be redeemed is the decline in debt repayment ability caused by the continuous decline in profitability of the underlying stock. Since the first quarter of 2022, Lingnan shares' net profit attributable to shareholders after deducting non-recurring items has been in the red for nine consecutive quarters. As of the end of the first quarter of this year, the listed company's retained earnings loss was 1.167 billion yuan, and its monetary funds were only 246 million yuan.