news

「core tips」

guanghui auto is facing the crisis of delisting, and the rights and interests of investors and car owners have been damaged. can they recover their losses through class action lawsuits?

author | zhu xiaoyu

editor | liu yang

what is unexpected is that on may 29 this year, guanghui auto was ranked first in the "top 100 dealer groups in china's automobile distribution industry" at the china automobile dealers conference. in less than three months, guanghui auto "exploded".

today, guanghui auto has completely fallen from grace. once the largest auto dealer in the country, it has fallen to a point where its share price has been below 1 yuan for 20 consecutive trading days, and was eventually forced to delist, with more than 100,000 shareholders losing all their money. in addition,in many 4s stores under guanghui, car owners were unable to pick up their cars two months after paying the purchase price, and front-line employees had not received wages for two months.

looking back at 2023, guanghui auto's financial report data is remarkable: annual operating income reached 138 billion yuan, a year-on-year increase of 3.3%; it turned losses into profits; net profit attributable to shareholders of listed companies was 392 million yuan. new car sales reached 596,000 units, a year-on-year increase of 1.1%; the number of dealer outlets nationwide reached 735, covering 28 provinces and cities.

with its leading position in the market and outstanding performance, guanghui auto has won the trust of investors and consumers. however, what surprised car owners and shareholders was how guanghui auto's outstanding performance collapsed overnight. where will their "money" and "cars" go?

recently, some investors went to guanghui auto's headquarters to defend their rights, which attracted widespread attention. a participant revealed to leopard change that in order to protect their own rights, investors have begun to organize themselves and seek legal means to resolve the problem through class action lawsuits.

1. the car owner asks for the certificate of conformity, but the company has no money to redeem it from the bank

on douyin, many car owners and stock investors who are seeking to defend their rights are actively taking action. they collect power of attorney letters from other victims through online platforms to ensure that the client will not revoke the power of attorney for any reason during the rights protection process. once the collection is completed, the client will defend their rights in accordance with the law and file a class action lawsuit against guanghui auto on behalf of the victims.

in order to recover their losses, car owners and shareholders spontaneously formed several rights protection groups and collected information about the losses of "victims" through questionnaires.

in the major rights protection groups, everyone's degree of loss and anxiety vary. for example, in july this year, mr. song from jiangsu bought abmw530, but due to the lack of a certificate of conformity, it has not been able to be registered. the 4s store explained that it would need to wait for the customer to pay back before the company could redeem the certificate of conformity from the bank, and said that the company has been trying to find a solution. mr. song repeatedly asked for help but to no avail, so he could only prepare for the lawsuit while continuing to go to the store to defend his rights.

mr. liu from zhejiang said that he had received his vehicle for a month, but the license plate issue had not been resolved. the salesperson at the 4s store said that the company was conducting an audit and that it would take time. mr. liu suspected that the certificate of conformity might have been mortgaged, and that the temporary license plate was about to expire, making the vehicle unusable. faced with this situation, he had no other options.

in comparison, consumers who have already picked up their cars but are unable to register them have suffered relatively small losses.

mr. jiang from jiangsu paid a deposit of 30,000 yuan when he ordered a car at the end of august. the contract clearly stipulated that if the car was not delivered before september 28, the deposit should be refunded within 10 working days. however, some car owners have not been able to pick up their cars for two months after signing the contract, and the deposit has not been refunded.

mr. jiang said that after learning about this, he was anxious every day and had to contact the salesperson at the 4s store once a day, fearing that they would run away. at present, the response he received was just to let him rest assured and guarantee that he could pick up the car on time. "i have no other choice. according to the contract, i can't refund the deposit now. i can only wait until after september 28th."

in fact, many 4s stores under guanghui had encountered financial crises a few months ago.this year, guanghui auto began to issue quarterly and annual sales targets to its 4s stores, and required them to be responsible for their own profits and losses. the situation where the certificates of conformity were mortgaged and could not be redeemed only occurred in a few stores that were not doing well.

a person claiming to be a staff member of a 4s store under the china guanghui automobile group revealed that since last year, the company has lost tens of thousands of yuan for every car sold, and this year, the losses have become even more serious.

"in may this year, the store's cash flow began to become tight. our leaders asked us to urge customers to pay for their cars and restore positive cash flow every day. at that time, the money in the company's account was enough to pay salaries, but now as soon as the car owners' money arrives, it is transferred away by guanghui group. we don't even have the money to redeem the certificate of conformity from the bank, let alone pay our employees. so far, we have been owed more than two months' salary. it is not easy to find a job if i resign now, and i don't know how long the company can last if i continue to stay." said the staff member.

in addition to being unable to deliver vehicles, guanghui auto was also required to delist from the a-share market by regulatory authorities.

on august 28, due to the daily closing price of less than 1 yuan for 20 consecutive trading days from june 20, 2024 to july 17, 2024, guanghui auto met the conditions for delisting and was forced to delist. the stocks in the hands of more than 100,000 shareholders became worthless overnight, and suffered heavy losses. this further exacerbated the rights protection storm of guanghui auto, and many investors also joined the ranks of rights protection.

2. guanghui group’s financial mystery

as a large fuel vehicle dealer, guanghui auto's sudden collapse has left the outside world deeply confused.

according to the 2023 financial report, guanghui auto achieved an operating income of 138 billion yuan and a net profit of 390 million yuan. as of the end of 2023, the company had 11.235 billion yuan in cash on its books. on its last trading day, based on a closing price of 0.78 yuan per share, guanghui auto's market value was 6.466 billion yuan.

although its market value once exceeded 100 billion yuan, guanghui auto has long faced the problem of insufficient profitability, and its debt ratio has remained above 60%.since 2019, the company's operating income has declined year by year, and in 2022 it even suffered a loss of more than 2.669 billion yuan. although it turned losses into profits in 2023, its profitability has declined significantly. in the first quarter of this year, guanghui auto's total liabilities exceeded 69.254 billion yuan, of which short-term loans were as high as 30.463 billion yuan, while the funds on the account were only 8.336 billion yuan.

the financial report shows that guanghui auto's debt burden has exceeded its book cash flow, and it is under tremendous pressure to repay short-term loans.

not long ago, guanghui auto released its 2024 semi-annual financial forecast, predicting that the net profit attributable to shareholders of the listed company in the first half of the year will be a loss of between 699 million yuan and 583 million yuan, while the net profit in the same period last year was 601 million yuan. guanghui auto pointed out in the announcement that this forecast data is a preliminary calculation result and has not been audited by an accounting firm.

despite this, china grand auto's cash flow remained positive, reaching 8.336 billion yuan, and the company still had some positive earnings.in addition, it also has aa+ rated convertible bonds and a market value of more than 7 billion yuan. therefore, guanghui auto's sudden delisting has aroused doubts from many investors.

some industry insiders believe that guanghui auto's delisting is actually a way for a-share listed companies to clear out their non-performing assets through legal means. from the perspective of guanghui's fundamentals, although its revenue is high, its profitability is low; coupled with the intensified changes in the domestic automobile industry, guanghui auto's future loss risk may further increase.

in recent years, guanghui auto has been frequently conducting financing activities. in the past 20 years, through ipo and private placement of shares, the company has raised a total of 37.5 billion yuan, and the company's total share capital has increased from 115 million shares to 8.289 billion shares. according to the latest financial report data, guanghui auto's more than 8 billion outstanding shares are dispersed among more than 100,000 shareholders.for major shareholders, the cost of direct delisting is obviously more economical than self-rescue through secondary market repurchase transactions.

in addition to investors who hold stocks, investors who purchased guanghui auto convertible bonds also suffered heavy losses in this round of delisting.

in august 2020, guanghui auto issued 3.37 billion yuan of "guanghui convertible bonds", which can be converted into stocks at the initial conversion price of 4.03 yuan per share from february 24, 2021. due to the "downward revision" conditions, the conversion price was adjusted to 1.5 yuan per share from may 23, which is only one-third of the original price.

however, on july 17 this year, guanghui convertible bonds also hit the limit down, with the face value of only 45.767 yuan per share, a significant reduction compared to the initial face value of 100 yuan per share.

this is simply unacceptable to investors who bought guanghui convertible bonds on the basis of "guaranteed return". some investors even said in the rights protection group that the delisting of guanghui convertible bonds has broken their trust in the issuance of convertible bonds by a-share listed companies.

3. dealers abandoned by the times

in the guanghui auto rights protection group, although each person suffered different losses, their ultimate demands and goals are the same - to ask guanghui auto to "return the money."

an investor posted in a stockholder rights protection group that the guanghui auto shares in his account were directly cleared. not only was the money gone, but the stocks in his account were also invisible. he felt like he had been robbed but had no place to seek justice.

she also expressed strong doubts about guanghui auto's sudden delisting: "the company's previous financial statements still had billions of funds, and recently there was news of a 4s store bankruptcy. if it's not serious financial fraud, it must be a malicious delisting!"

at the same time,car owners who purchased guanghui cars are also actively looking for ways to save themselves.

a car owner mentioned that at the beginning of this year, more than 80 4s stores under guangdong yongao group closed down on the same day. before that, the certificates of conformity of all vehicles sold by the group were mortgaged to the bank. fortunately, the government intervened in time to save all the vehicles from being towed away by the bank, and in the absence of certificates of conformity, the government coordinated with the vehicle management office to handle the registration procedures for all vehicles. the car owner hopes that even if guanghui auto encounters problems, the government will intervene in time again.

however, the reality is that guangzhou yongao group has entered bankruptcy proceedings and will repay its debts by auctioning its assets. the government intervened on the premise that it was confirmed that the company was unable to repay its debts.

in contrast,guanghui auto is still in normal operation. although the second quarter performance forecast showed a loss, judging from its financial situation, the cash flow is still normal and it is likely to continue operating.it is difficult for the government to take over directly before entering the bankruptcy liquidation stage.

at present, fuel vehicle dealers are having a hard time. the "2024 first half national automobile dealer survival status survey report" released by the circulation association shows that in the first half of this year, the loss rate of dealers was as high as 50.8%, and the profit rate was 35.4%. the average gross profit per store was significantly reduced compared with 2023, especially for the new car business, with an average loss of 1.78 million yuan per store.

guanghui auto also repeatedly emphasized in its financial reports that the "price war" has had a huge impact on the automobile dealership industry, causing guanghui auto to suffer tremendous financial pressure.in the context of an overall environment where there is a lack of room for growth, delisting may be a self-protection measure taken by guanghui auto to save costs.

going back in time, guanghui auto issued an announcement one month before it was delisted that the company's controlling shareholder guanghui group was discussing equity transfer with xinjiang jinzheng new materials technology co., ltd. according to the agreement, after december 19 this year, guanghui group will transfer its 24.5% stake in the company (i.e. 2.03 billion shares) to jinzheng technology. the transaction price will be determined by negotiation between the two parties. once the equity transfer is completed, the control of guanghui auto will be transferred from guanghui group to jinzheng technology.

in other words, guanghui auto's major shareholders and actual controllers not only hid from the company's debts, but also earned a considerable amount of money from it. guanghui auto not only fell in the tide of the times, but was also a choice made by the company's major shareholders after weighing their interests, and the majority of investors became victims of this change.