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The secretary of the board of directors of Xinya Processing has resigned again!

On August 19, New Asia Process announced that the company's board of directors recently received a written resignation report from the company's board secretary, Chen Chongqin. Chen Chongqin applied to resign from the position of board secretary of the company due to personal and family reasons. After his resignation, the company will appoint him to another position.

Despite the strong public opinion, Xinya Process closed at the daily limit, with its share price rising 9.97% that day and closing at 3.86 yuan.

After the market closed, Xinya Process issued an announcement on abnormal fluctuations in stock trading. The company's stock trading price had a closing price increase deviation of more than 20% for two consecutive trading days on August 16, 2024 and August 19, 2024. Investors are advised to pay attention to the risks.

The announcement stated that up to now, the company's daily production and operation are normal. Due to the acquisition of 51% of the equity of Xinya Shanshan, the company has recently had legal disputes with relevant parties.

Cross-border risks

Public information shows that Xinya Process was established in 2003 and successfully listed on the main board of the Shenzhen Stock Exchange in April 2010.

Before 2023, Xinya Process's main business is chemical material manufacturing and electronic process business, mainly serving the downstream electronic information manufacturing industry. The company's downstream customers include electronic manufacturing companies such as Huawei, Lite-On Electronics, OPPO, Honor, and Flextronics.

Huawei has been the company's largest customer for many years. The company's main business with it includes providing it with supporting sales and after-sales services such as electronic tools, instruments, chemical materials and equipment related to production and operation. In 2023, Huawei and its affiliates accounted for 35.06% of the revenue.

In February 2023, Xinya Process completed the acquisition of 51% of the equity of Xinya Shanshan through its subsidiary Xinya Zhongning, officially entering the lithium battery electrolyte field.

Xinya Shanshan is a subsidiary of Shanshan Co., Ltd., and its main products are electrolyte and lithium hexafluorophosphate. Among them, lithium hexafluorophosphate is the core raw material of electrolyte. It will first be used for its own electrolyte production, and the excess lithium hexafluorophosphate will be sold to the outside.

Affected by changes such as the slowdown in the growth of the downstream lithium-ion battery industry and the temporary imbalance in supply and demand, the prices of Xinya Shanshan's electrolyte and lithium hexafluorophosphate products have dropped sharply, resulting in losses in 2023. In addition, according to accounting standards, it is necessary to make impairment provisions for goodwill, resulting in a large loss in the company's net profit.

In 2023, the company achieved total operating revenue of 2.146 billion yuan, a year-on-year increase of 23.21%, a net loss of 241 million yuan, and a year-on-year loss. The net profit of the same period last year was 5.8328 million yuan. In the first quarter of 2024, the company achieved total operating revenue of 461 million yuan, a year-on-year increase of 0.61%, and a net profit attributable to the parent of 4.3208 million yuan, a year-on-year decrease of 57.18%.

It is worth noting that due to the acquisition of 51% of the equity of Xinya Shanshan, the company has recently been involved in legal disputes with relevant parties.

According to the announcement, the company and its subsidiary Xinya Zhongning have submitted a "Civil Complaint" and other relevant litigation materials to the People's Court of Quzhou Zhizao New City. During the delivery and subsequent management of the target company, the company found that the defendant Ningbo Yongquan's commitment in the "Equity Transfer Agreement" regarding the production capacity of some production lines of the target company was inconsistent with the actual situation.

In order to further safeguard the interests of the company and its shareholders, the company and its subsidiary Xinya Zhongning, as plaintiffs, filed a lawsuit against Ningbo Yongquan and its related parties. At present, the court has accepted the case, but the trial has not yet begun. The total amount involved in the case is RMB 165,992,415.38.

Trouble continues

To this day, Xinya Process is still paying the price for past violations.

Xinya Process was originally controlled by Xinlida Group, Xu Qi and others. At the end of 2022, due to the occupation of non-operating funds by Xinlida Group and other issues, the company and some directors and senior management were subject to administrative supervision measures by the Guangdong Securities Regulatory Bureau. Combined with the state of having no actual controller, the company has suffered certain adverse effects in corporate governance, business management, bank credit, employee stability and other aspects.

On November 16, 2022, Xinya Process announced that the company's original actual controller intends to change control through an overall plan of "share transfer + waiver of voting rights + private placement" and introduce a controlling shareholder or actual controller with better management capabilities and resource channels.

In February 2023, Xinya Process completed the change of ownership. The company's controlling shareholder was changed to Baoxin Yangdi, and the actual controller was changed to Wang Weihua. The company's former actual controller Xu Qi and former chairman Xu Leiyu have no longer served as directors, supervisors or senior executives in the listed company since February 16, 2023.

In May 2023, the CSRC filed a case against New Asia Process for suspected illegal and irregular information disclosure. Four months later, the CSRC concluded its investigation and imposed penalties on New Asia Process.

On January 10, 2024, Xinya Process announced that it had received the "Notice of Case Filing" from the China Securities Regulatory Commission. Because the company was suspected of illegal and irregular information disclosure, it decided to file a case against it on December 18, 2023.

The regulatory measures decision issued on the same day showed that the Zhejiang Securities Regulatory Bureau found during an on-site inspection that Xinya Process had failed to fulfill its information disclosure obligations in a timely manner regarding the occupation of funds, inaccurate provision for bad debts of accounts receivable, inappropriate methods of recognizing some main business income, inaccurate disclosure of some information in the 2022 annual report, and inaccurate disclosure of information on the pledge of shares of the original controlling shareholder.

In accordance with relevant regulations, the Zhejiang Securities Regulatory Bureau decided to take administrative supervision measures of ordering Xinya Process to correct its mistakes, and to take supervisory management measures of issuing warning letters to Wang Weihua, Chen Duojia, Wu Na, Xu Leiyu, Hu Dafu and Hu Dan respectively, and include them in the integrity files of the securities and futures markets.

Before Chen Chongqin took over the position of secretary to the board of directors of New Asia Process in March this year, Wu Na was the company's secretary to the board of directors, with a term of office from July 18, 2018 to March 12, 2024.

Since the beginning of this year, seven directors, supervisors and senior executives of Xinya Process have resigned, including two deputy general managers, two secretaries, two supervisors and one independent director. Among them, the resigned independent director Bu Gongtao also stated that he could not guarantee that the company's "2023 Annual Report" and "2024 First Quarter Report" were true, accurate, and complete, and that there were no false records, misleading statements or major omissions.

Now, less than half a month before New Asia Process discloses its 2024 annual report, Chen Chongqin, the secretary to the board who has been in office for only 5 months, has chosen to resign, which has undoubtedly aroused attention and speculation.

During the vacancy of the position of Secretary to the Board, the company's board of directors appointed Chairman Wang Weihua to perform the duties of Secretary to the Board.