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after disclosing the signing of a large computing power order of 343 million yuan, taihe water (605081)'s stock price closed up 8% on september 11. however, behind the sharp rise in stock prices, there are many doubts about taihe water's signing of this order. from the content of the order transaction to the two parties to the order transaction, regulators and taihe water investors are also full of doubts about this large order of ai computing power services. due to the possible risk of financial delisting, the shanghai stock exchange directly pointed out whether taihe water temporarily constructed a trade contract to avoid financial delisting risks. whether there is any trick in this transaction still needs to be carefully checked by regulators.

a large order of 343 million yuan

on september 10, taihe water disclosed an announcement stating that the company's wholly-owned subsidiary shanghai weiyan technology co., ltd. (hereinafter referred to as "shanghai weiyan") and its customer shanghai jiatang information technology co., ltd. (hereinafter referred to as "shanghai jiatang") signed the "2024 high-performance computing equipment procurement contract", stipulating that shanghai weiyan will provide shanghai jiatang with artificial intelligence high-performance computing servers, and provide installation and debugging and other services. the total contract price (including tax) is approximately 343 million yuan.

the announcement shows that this transaction is a contract related to the daily business activities of taihe water and its subsidiary shanghai weiyan, and the total amount accounts for approximately 187% of the company's audited operating income in 2023. if the relevant contracts are successfully fulfilled, it will have a positive impact on the company's operating performance in 2024, which will be conducive to expanding the market competitiveness of the company and its subsidiaries in computing servers and improving the company's profitability.

it is worth noting that financial data shows that in the first half of 2024, taihe water achieved operating income of approximately rmb 75.1454 million, corresponding to an attributable net profit of approximately rmb -19.9644 million. the net profit was a loss and the revenue was far below rmb 300 million, which may pose a financial delisting risk.

taihe water was questioned by the shanghai stock exchange for signing a large contract despite the risk of delisting. that evening, the shanghai stock exchange issued an inquiry letter, requiring taihe water to explain whether the company has the ability to implement the relevant transactions based on the company's qualifications, personnel arrangements, site facilities, and technical reserves in the relevant fields, and whether the trade contract was temporarily constructed to avoid financial delisting risks.

in addition, taihe water focuses on deepening its professional capabilities in the field of water ecological restoration and the refined layout of the big health consumer market, and the transaction content involved in this major contract is not relevant to the main business of the listed company.

in response to this, the shanghai stock exchange requires taihe water to combine relevant regulations, compare and explain item by item whether the above-mentioned business carried out by the company is unrelated to the main business or lacks commercial substance, and whether it is a type of business that requires deduction of operating income.

bai wenxi, vice chairman of the china enterprise capital alliance, said that generally speaking, when a listed company faces the risk of delisting, its operating and financial conditions may be relatively tight. at this time, signing a major contract that is not related to the main business may reflect the decision made by the company's management in order to alleviate the current financial pressure or business difficulties under the current difficult situation. however, such a decision lacks consideration for the company's long-term development and may cause the company to fall into deeper difficulties. at the same time, such a contract may also reflect the company's unfamiliarity with or neglect of the laws and regulatory environment, which may cause the company to face legal risks and regulatory pressure.

is there a potential interest arrangement?

beijing business daily reporters noticed that in addition to the above content, there are still many doubts about the major contract signed by taihe water this time.

the announcement shows that the transaction was implemented by shanghai weiyan, a subsidiary of taihe water that was newly established only three months ago. at the end of august, taihe water disclosed an announcement stating that li weigang, general manager of shanghai weiyan, was nominated by he wenhui, the controlling shareholder and actual controller of taihe water, as a candidate for non-independent director of the company's third board of directors.

from the perspective of the counterparty, the announcement and industrial and commercial information show that the transaction involves a large amount of money, but the counterparty shanghai jiatang was established in november 2021 with a registered capital of 80 million yuan, no paid-in capital, and the number of insured persons is 0.

fu jian, director of henan zejin law firm, believes that due to the huge amount of the contract, companies usually need to fully consider the safeguards in terms of funds, personnel, technology, etc. during the execution of the contract, and consider factors such as market risks and policy risks during the execution of the contract to avoid economic losses caused by poor execution of the contract. if both parties to the transaction are newly established companies, there are many risk points. for example, the reputation and credit status of both companies may be uncertain, and they may lack sufficient experience and strength to execute major contracts, which may affect the quality and efficiency of contract performance and increase the company's operating risks.

in response to relevant circumstances, the shanghai stock exchange also requires taihe water to disclose the equity structure, capital contribution and key management personnel of shanghai jiatang, and verify whether shanghai jiatang and relevant personnel have any affiliated relationship with the company, and whether there are any financial business transactions or potential interest arrangements with the company's director candidate li weigang and the company's controlling shareholder.

performance "changed" after listing

taihe water, which has been repeatedly questioned by the shanghai stock exchange, has previously released unconventional signals.

beijing business daily reporters noticed that taihe water went public in february 2021, but the company's performance "changed" the following year. financial data showed that from 2021 to 2023, the company's operating income was approximately 460 million yuan, 205 million yuan, and 183 million yuan, respectively, and the corresponding attributable net profits were approximately 92.4083 million yuan, -160 million yuan, and -287 million yuan, respectively.

it is not difficult to see that in the year after its listing, taihe water's net profit turned from profit to loss.

it is worth mentioning that in july 2023, taihe water was filed by the china securities regulatory commission for suspected illegal and irregular information disclosure. afterwards, the company received the "administrative penalty decision" in february this year, which showed that since 2017, taihe water has undertaken the dream lake and fenggang river water ecological governance projects in fuzhou city, jiangxi province. taihe water did not carefully consider the impact of the governance dispute of the fenggang river project on revenue recognition, and did not properly estimate the completion progress of the fenggang river project in accordance with relevant regulations, falsely increasing the 2018 revenue by 7.9896 million yuan. at the same time, the accounts receivable formed by taihe water's falsely increased revenue in 2018 have been in existence and bad debt reserves have been made every year, resulting in inaccurate bad debt reserves and total profits in the company's publicly disclosed 2018 and 2019 annual financial statements and 2020, 2021, and 2022 annual financial reports.

taihe water's share price has been falling due to its unsatisfactory performance. trading data shows that since its listing, the company's share price has fallen by about 60%. at the same time, the company hit a historical low of 7.96 yuan per share during trading on february 7 this year. as of the close of september 11, taihe water's share price was 11.74 yuan per share, with a total market value of 1.33 billion yuan.

in addition, beijing business daily reporters noticed that taihe water has been continuously reduced by shareholders this year. in april this year, taihe water disclosed an announcement that shanghai chengyi new energy venture capital co., ltd. (hereinafter referred to as "shanghai chengyi") and its concerted actor shanghai zhiyi enterprise management consulting co., ltd. (hereinafter referred to as "shanghai zhiyi") intend to reduce their holdings of no more than 3% of the company's shares through centralized bidding transactions and block transactions. at that time, shanghai chengyi and shanghai zhiyi held a total of approximately 4.76% of taihe water's shares. in july this year, shanghai chengyi and shanghai zhiyi reduced their holdings by a total of 2.99% of the shares, and then announced in august that they would continue to reduce their holdings of no more than 1.77% of the company's shares. as of the date of the announcement, shanghai chengyi and shanghai zhiyi held a total of approximately 1.77% of taihe water's shares.

regarding the relevant issues, a beijing business daily reporter sent an interview letter to taihe water, but no reply was received as of press time.

beijing business daily reporter ma huanhuan and ran lili