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[Introduction] ST Zhihe was filed for suspected illegal information disclosure

China Fund News reporter Zhao Gang and Zhao Xinliang

On the evening of August 15,ST ZhiheThe announcement stated that due to the company Suspected of illegal information disclosureAccording to relevant laws and regulations, the China Securities Regulatory Commission decided to file a case against the company.

ST Zhihe stated that during the investigation, the company will actively cooperate with the relevant investigations of the China Securities Regulatory Commission, and strictly fulfill its information disclosure obligations in a timely manner in accordance with relevant laws and regulations.

The company and relevant responsible persons have been warned

In June this year,Guangxi Securities Regulatory Bureau issued a warning letter to ST Zhihe and relevant responsible persons, because the company had violated regulations by "failing to disclose the 2023 annual performance forecast as required" and "disclosing inaccurate information in financial reports of previous years."

The Guangxi Securities Regulatory Bureau pointed out that ST Zhizhi’s 2023 annual report showed that the company’s net profit attributable to shareholders of the parent company in 2023 was -70.8734 million yuan.ST Zhizhi's net profit in 2023 was negative, which triggered the situation where the performance forecast should be disclosed, but ST Zhizhi did not disclose the performance forecast for 2023.

In addition, the "Announcement on Correction of Prior Accounting Errors" disclosed by ST Zhizhi shows that from 2019 to 2020, the company had some businesses that recognized revenue in advance and transferred costs, and some of the recognized revenue was not promptly reduced according to the financial audit. There were unfair transactions with minority shareholders from 2019 to 2021; from 2021 to 2022, there were inaccurate reporting or classification of some asset accounts.

For the above-mentioned violations, the company's current chairman and general manager Shi Yujiang, the then chairmen Zhang Yadong and Zhang Yuying, the then general managers Yang Rui and Hu Fang, the current board secretary and then financial director Zhang Yanfeng, and the current financial director Wang Wenbo bear primary responsibility.

In accordance with relevant regulations, the Guangxi Securities Regulatory Bureau decided to take administrative supervision measures against ST Zhihe and the above-mentioned relevant responsible persons by issuing a warning letter, and record it in the securities and futures market integrity file.

The Guangxi Securities Regulatory Bureau also proposed that the company should formulate a rectification plan as soon as possible, speed up the correction of financial statements and notes from 2019 to 2022, and disclose them in a timely manner.

Losses in 2023 are still in doubt

On July 30, ST Zhizhi announced that it had received a disciplinary penalty decision issued by the Shanghai Stock Exchange.

The above decision letter shows that ST Zhihe suffered a loss of 70.8734 million yuan in 2023, and its net profit attributable to shareholders after deducting non-recurring items was -114 million yuan.

Regarding this situation, the company should have disclosed its performance forecast in a timely and accurate manner within one month after the end of the 2023 fiscal year, but the company did not disclose the expected loss announcement as required.

In response, the Shanghai Stock Exchange issued a notice of criticism to the company and relevant responsible persons.

In fact, even the loss-making performance still failed to fully and accurately reflect the financial situation of ST Zhihe.

Since the accounting firm issued a negative opinion on the company's 2023 internal audit report,ST Zhihe has been subject to other risk warnings since May.

On the evening of August 15, ST Zhihe responded to the annual report supervision work letter issued by the Shanghai Stock Exchange, which involved many details such as accounts receivable customers and three years of business dealings.

For example, regarding the reason why Shenzhen Chuangxinke Technology Co., Ltd. failed to pay as agreed in the contract, the company stated that the customer has not received the corresponding payment for the goods from the final owner, and therefore owes the company's accounts receivable.

In response, the annual auditor stated that the company was unable to provide a valid client contact and, as of the date of the audit report, was unable to visit the client or perform confirmation procedures, nor was it able to implement other necessary alternative procedures.

It further stated that it was unable to comment on the company’s response to the relevant questions as to whether sufficient and appropriate audit evidence had been obtained as to whether the relevant transactions were genuine and revenue recognition was accurate.

As of the close of August 15, ST Zhihe was priced at 4.47 yuan per share, with a latest market value of 2.3 billion yuan.

Editor: Xiaomo

Review: Xu Wen

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