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On August 16, Shaanxi Jinye announced that its actual controller Yuan Hanyuan was placed under residential surveillance at a designated location by the public security authorities. Yuan Hanyuan had received a regulatory letter from the China Securities Regulatory Commission at the beginning of the year for failing to disclose important information in a timely manner. On the same day, Zhao Yeqing, actual controller and chairman of Jincheng Pharmaceutical, was also investigated for suspected manipulation of the securities market.

Industry insiders have analyzed that the current large number of listed companies or their actual controllers being investigated or detained is a concentrated reflection of the strict supervision of China's capital market. Under the new "Nine National Regulations", not only are the audits of companies planning to go public strengthened, but also strict and continuous supervision of listed companies is required, especially strengthening information disclosure requirements and increasing regulatory penalties.

The actual controller of Shaanxi Jinye was placed under residential surveillance

Shaanxi Jinye announced on the evening of August 16 that the company's actual controller, chairman of the board and president Yuan Hanyuan is currently under residential surveillance at a designated location by the public security authorities due to related matters.

According to the annual report, Yuan Hanyuan was born on April 16, 1962 in Huilai County, Guangdong Province, and has a postgraduate degree. He has served as the sales manager of Guangzhou South China Textile Co., Ltd., the managing director of Hanhua (Hong Kong) Enterprise Co., Ltd., and the managing director of Hong Kong Wanyu Development Co., Ltd. He is a director of the third board of directors of Shaanxi Jinye Company, the chairman of the fourth, fifth, sixth and seventh boards of directors, the executive director of Shaanxi Jinye Printing Co., Ltd., the executive director of Shaanxi Jinye Real Estate Development Co., Ltd., the executive director of Shaanxi Jinye Wanrun Real Estate Co., Ltd., and the general manager of Handu Hospital Co., Ltd.

In 2023, Yuan Hanyuan received a remuneration of 1.4023 million yuan before tax from the listed company.

Shaanxi Jinye is one of the few listed companies in the country with tobacco supporting concepts. Its business categories cover three categories: education, tobacco supporting industry, and medical and nursing industry. The main business of education is higher education and other educational and teaching business, and education investment business; the main products of tobacco supporting industry are the production and sales of cigarette labels, cigarette wire bundles, and cigarette sticks; the medical and nursing industry has established hospitals and medical and nursing project companies, but has not yet carried out specific business. In 2023, the tobacco supporting industry and education industry will account for 59.12% and 36.72% of the total revenue respectively.

Last year, Shaanxi Jinye achieved operating income of 1.239 billion yuan, a decrease of 4.01% from the same period last year; profit attributable to the parent was 39.7605 million yuan, a decrease of 33.77% from the same period last year.

It is worth mentioning that Shaanxi Jinye was in the spotlight as a "monster stock" three years ago. In November 2021, the Tobacco Monopoly Law issued by the state added new regulations that the management of e-cigarettes can be implemented in accordance with the regulations of traditional cigarettes. Stimulated by this news, the stock prices of A-share tobacco concept listed companies have risen sharply, and Shaanxi Jinye has even gone through 14 daily limit increases, from less than 4 yuan per share to 12 yuan, and has more than doubled in more than 20 trading days.

During the rise, Yuan Wumei, a person acting in concert with the actual controller Yuan Hanyuan, planned to sell off all his shares and reduce his holdings. The number of shares to be reduced shall not exceed 15.8159 million shares, which is no more than 2.06% of the company's total share capital. According to the peak stock price, the cash-out amount is close to 200 million yuan. However, after reaching a short-term high, the stock price immediately stalled. As of August 16, it closed at 3.75 yuan per share, with a year-to-date decline of 25.49%. The current market value is only 2.9 billion yuan.

In March this year, the Shaanxi Regulatory Bureau of the China Securities Regulatory Commission disclosed that the total investment amount of the Xi'an Mingde Polytechnic New Functional Zone Construction Project of Shaanxi Jinyezi Company was about 730 million yuan (283 million yuan for the first phase project and 447 million yuan for the second phase project), which met the review standards of the company's board of directors and shareholders' meeting. Upon investigation, the first phase of the project started construction in September 2021, and the second phase of the project started construction in September 2022. However, the company did not hold a board meeting until April 27, 2022 to review and approve the "Proposal on Investing in the Construction of the New Functional Zone of Xi'an Mingde Polytechnic", and did not hold a board meeting until March 15, 2023 to review and approve the "Proposal on Investing in the Construction of the Second Phase of the New Functional Zone of Xi'an Mingde Polytechnic".

Based on this situation, the Shaanxi Securities Regulatory Bureau decided to take administrative supervision measures of issuing a warning letter against Shaanxi Jinye and its relevant responsible persons Yuan Hanyuan and Yan Kai.

Jincheng Pharmaceutical's actual controller is suspected of manipulating the securities market

On the same day, Jincheng Pharmaceutical announced that the China Securities Regulatory Commission decided to file a case against the company's actual controller and chairman Zhao Yeqing for suspected illegal and irregular manipulation of the securities market.

According to the annual report information, Zhao Yeqing was born in 1976, has Chinese nationality, a doctorate in business administration, a member of the 12th and 13th CPPCC of Shandong Province, vice chairman of the Shandong Federation of Industry and Commerce, and is currently the chairman of the company, chairman of Jincheng Pharmaceutical Research Institute, director of Jincheng Industrial and Jincheng Jinsu, executive director of Jincheng Taier and Jincheng Fanglue, and director of Dongfanglue.

Jincheng Pharmaceutical was founded in 2004 and is headquartered in Zibo, Shandong Province. It is mainly engaged in the research, development, production and sales of pharmaceutical intermediates, APIs, pharmaceutical preparations, health products and synthetic biology products. In the first quarter of this year, the company achieved revenue of 932 million yuan, a year-on-year increase of 12.32%; net profit attributable to the parent company was 82.9713 million yuan, a year-on-year increase of 65.43%. As of August 16, the stock price closed at 14.38 yuan per share, with a market value of approximately 5.5 billion yuan.

Looking through past financial reports, in the third quarter of 2021, the Social Security Fund entered the top ten shareholders of Jincheng Pharmaceutical for the first time. The National Social Security Fund 115 portfolio held 5.21 million shares of the company, ranking the 8th largest shareholder. At that time, the stock price was still hovering around 30 yuan per share. Subsequently, the company's stock price fluctuated and rose to 40 yuan per share. During this period, the Social Security Fund also doubled its holdings, and the peak market value of its holdings once exceeded 400 million yuan. However, the company's stock price immediately turned down. As of the end of the first quarter of this year, the Social Security Fund held 11.3 million shares, but the market value of its holdings was only 174 million yuan.

The power of the new "Nine Articles of the State" is evident

According to institutional analysts, the investigation of the chairman may lead to a vacancy in the decision-making layer of listed companies, which will affect decision-making efficiency and daily operations. Some companies will need other senior executives to perform their duties on their behalf. At the same time, it may also cause market concerns about the company's governance structure and operating conditions, leading to a decline in investor confidence, which in turn affects the company's stock price.

Over the past few months, many executives of listed companies who have crossed the red line have been investigated, which is also a manifestation of the implementation of the new "National Nine Articles" entering the deep water zone. The new "National Nine Articles" clearly strengthen transaction supervision and improve the regulatory standards for abnormal transactions and market manipulation. Issue program trading supervision regulations and strengthen the supervision of high-frequency quantitative transactions. Formulate operating rules for private equity funds. Strengthen bottom-line thinking and improve response measures for extreme situations. Seriously investigate and punish illegal and irregular behaviors such as market manipulation and malicious short selling, and strengthen deterrence warnings.

"This article specifically calls for strengthening bottom-line thinking and improving response measures for extreme situations. This is a clear signal to curb the intervention of abnormal factors in the capital market and the influence on the stock market trend. By severely investigating and punishing illegal and irregular activities such as market manipulation and malicious short selling, we will strengthen deterrence and warnings and promote the positive, steady, high-quality and sustainable development of the capital market." Song Xiangqing, vice president of the China Society of Business Economics, said.

In the view of Tian Xuan, vice president of Tsinghua University PBC School of Finance, the fact that a large number of listed companies or their actual controllers are currently under investigation or detained is a concentrated reflection of the strict supervision of my country's capital market. Under the new "Nine National Regulations", it is required not only to strengthen the review of companies to be listed, but also to strictly and continuously supervise listed companies, especially to strengthen information disclosure requirements and increase regulatory penalties. In this context, audit institutions have strengthened investigations into the operating conditions and internal control conditions of listed companies. More listed companies and senior executives have been issued non-standard opinions, received regulatory inquiries, and even filed for investigation due to information disclosure violations, financial fraud, and shareholder fund occupation. This is closely related to the current strict supervision of listed companies, especially the close monitoring and severe punishment of the "chief culprits" of listed companies.

Source: China Securities

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

Editor: He Yu

Proofreading: Zhao Yan

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