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the case of st san sheng (002742) manipulating the securities market has reached the final judgment.

on the evening of september 3, the company disclosed that the chongqing higher people's court had recently made a final judgment on the above case, upholding the original verdict, namely, deciding to execute a fixed-term imprisonment of two years and six months, suspended for three years, and a fine of 1 million yuan.

in june 2021, st san sheng disclosed that the company's actual controller pan xianwen was taken compulsory measures of criminal detention by the chongqing public security bureau on suspicion of manipulating the securities market. he was released on bail pending trial on june 30 of the same year and was placed under residential surveillance on november 6, 2023.

the criminal judgment of the first people's court of chongqing, which the company received in january this year, showed that the defendant pan xianwen was guilty of manipulating the securities market (from august 17, 2018 to march 1, 2019, he colluded with others to concentrate his capital advantage to continuously buy and sell stocks. during this period, the number of shares bought and sold in the securities account involved in the case exceeded 30% of the total trading volume of the company's stocks in the same period for 20 consecutive trading days, which constituted the crime of manipulating the securities market). he was sentenced to two years in prison and a fine of 1 million yuan; he was guilty of issuing stocks without authorization (as the directly responsible supervisor of chongqing beisheng pharmaceutical technology co., ltd., he issued stocks to more than 200 specific objects without the approval of the relevant state authorities, and his behavior constituted the crime of issuing stocks without authorization), and was sentenced to one year in prison. it was decided to execute a sentence of two years and six months in prison, suspended for three years, and a fine of 1 million yuan.

st san sheng was originally engaged in building materials and chemical businesses mainly including comprehensive utilization of gypsum resources, commercial concrete and admixtures. later, it implemented a diversified development strategy and, through mergers and acquisitions, initiated the layout of the second-industry chain pharmaceutical manufacturing sector, forming a pharmaceutical manufacturing business based on intermediate raw materials and centered on preparations.

after compulsory measures were taken against the actual controller, st sansheng's operating performance has continued to lose money since 2021. in the first half of 2024, the company achieved operating income of 736 million yuan, a year-on-year decline of 30.94%; the net profit attributable to the parent company was a loss of 66.48 million yuan, a year-on-year increase of 31.83%.

against this backdrop, st sansheng's stock price has been fluctuating downward in recent years, hitting a low of 1.24 yuan per share in early june this year. however, in recent months, the company's stock price has rebounded from the bottom, and after several consecutive daily limits, it closed at 2.8 yuan per share as of september 3.

in addition to the downward performance, st sansheng received the "administrative supervision measures decision" issued by the chongqing securities regulatory bureau of the china securities regulatory commission in may this year. after investigation, it was found that chongqing beisheng pharmaceutical technology co., ltd. (hereinafter referred to as "beisheng pharmaceutical") and ssc construction plc (hereinafter referred to as "ssc company") are companies controlled by pan xianwen, the actual controller of the company. the listed company, as a co-borrower of beisheng pharmaceutical, borrowed money from chongqing wansheng district henghui microfinance co., ltd. and guaranteed the loan of ssc company. the above matters were not approved by the board of directors and the shareholders' meeting.

the listed company recognized liabilities due to its assumption of the joint loan of beisheng pharmaceutical and fulfilled its guarantee obligation to ssc and repaid its debts, which constituted non-operational occupation of the listed company's funds by the controlling shareholder, actual controller and its affiliates.

according to st sansheng's 2023 annual report, as of the date of disclosure of the 2023 annual report, the controlling shareholder, actual controller and its affiliates had occupied the listed company's funds (including interest) for non-operating purposes, amounting to 113 million yuan, accounting for 32.79% of the listed company's latest audited net assets. in addition, the listed company had a balance of 13.6736 million yuan in illegal guarantees.

the "administrative supervision measures decision" clearly states that if st san sheng fails to recover the 113 million yuan of occupied funds and interest within six months as required by the corrective measures, the shenzhen stock exchange will suspend trading of the company's shares. if the rectification is not completed within two months after the suspension, the shenzhen stock exchange will implement a delisting risk warning for the company's stock trading. if the rectification is still not completed within two months thereafter, the shenzhen stock exchange will decide to terminate the company's stock listing.

according to the latest progress disclosed by st sansheng on august 28, as of the announcement date, ssc has settled the loan ahead of schedule, and the bank has lifted the mortgage on the plant and machinery of sansheng pharmaceutical. the company has initiated local and domestic law firms to verify ssc's repayment procedures and related materials. the actual controller of the company and its affiliates have a balance of 105 million yuan of non-operating funds (including interest) occupied by the company, accounting for 30.33% of the company's latest audited net assets.

in june 2023, st san sheng disclosed that it intended to apply to the people's court with jurisdiction over the company for reorganization and pre-reorganization on the grounds that the company could not repay its due debts on time and obviously lacked the ability to repay, but had reorganization value.

in an announcement on the evening of august 28, st san sheng also disclosed that the company's restructuring work continues to advance, and it is currently actively communicating with all stakeholders, and plans to use the resources of all stakeholders to prioritize resolving violations.

regarding the impact of the final judgment on the company's actual controller, st san sheng also stated that pan xianwen is not currently serving as a director, supervisor or senior executive in the company. the above judgment does not affect the company's normal business operations, and the company's current operations are normal.