Who's on the 2024 Delisting List?

The number of delisted companies continues to increase, reflecting the recent strengthening of regulatory oversight and enforcement of delisting systems.

Since 2024, the "metabolism" of the A-share market has accelerated, with the number of delisted companies reaching a historical high.

On September 13th, *ST Yaxing (600213.SH) reached a crucial point in its voluntary delisting.

On that day, the company submitted an application to the Shanghai Stock Exchange to withdraw the trading of its stocks, pending the decision of the exchange whether to accept it.

If it successfully delists this year, it will become the first voluntary delisting case in the A-share market for the year.

Prior to this, on September 5th, ST Dinglong (002502.SZ) was terminated from listing due to its closing price being below 1 yuan for 20 consecutive trading days and was delisted on the same day.

Along with ST Dinglong's exit, 47 A-share stocks (excluding B-shares, the same below) have been delisted in 2024, surpassing the total number of 2023 and setting a historical record.

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Among them, companies such as Noble Bird (now ST Noble (delisted), 603555.SH) and Guanghui Auto (600297.SH) were once star enterprises in their industries.

Additionally, companies like ST Xudian (000413.SZ), Haiyin Shares (000861.SZ), and *ST Wei Chuang (002308.SZ) have clearly received delisting notices from the exchange and are waiting to be delisted.

*ST Yaxing, due to its persistently poor performance, plans to voluntarily terminate its listing through a shareholders' meeting resolution.

According to the current trend, the list of delisted companies in the A-share market in 2024 may continue to lengthen.

Investment banker Hou Dawei told Caijing that the continuous increase in the number of delisted companies is a manifestation of the regulatory strengthening of delisting system management and enforcement in recent years.

"The increase in the number of delisted companies means that the speed of survival of the fittest in the A-share market is accelerating.

More companies with poor performance are eliminated, and those left are mostly high-performing stocks or potential companies on the STAR Market, which is conducive to the flow of market funds to industries and companies that align with the national strategic direction, and helps the healthy development of the investment and financing market."

Looking at the reasons for delisting, among the companies that have completed the delisting process since 2024, there are 31 companies that delisted due to face value, accounting for about two-thirds.

In terms of industry classification, the power equipment industry (Shenwan first-level industry classification, the same below) has six delisted companies, becoming the largest delisting industry this year.

Some securities firms have pointed out that from the initial absence of delisting system-related rules, leading to some companies being stagnant and not delisting, to the breakthrough of the delisting system and the emergence of delisted companies, the regulatory authorities have been promoting the institutionalization and normalization of the delisting system, which is in line with the development trajectory of the capital market and sets the tone for the future development of the capital market.

Since the delisting reform in 2020, the regulatory authorities have continued to increase the intensity of delisting.

The new "Nine National Articles" in 2024 clearly state the policy orientation of "delisting as much as possible", starting from five aspects such as strictly enforcing delisting standards, smoothing out multiple delisting channels, and strengthening delisting supervision.

At the same time, the China Securities Regulatory Commission and the Shanghai and Shenzhen stock exchanges have also issued new delisting rules.

The new delisting rules mainly optimize four aspects, including expanding the scope of compulsory delisting for serious violations, adding three new types of normative delisting situations, tightening financial delisting indicators, and improving market value standards and other trading delisting indicators.

"With the increased enforcement of the new delisting rules, 'zombie enterprises' with poor operating performance and liquidity, as well as 'black sheep' that disrupt market order, will be cleared out of the market.

And due to the regulatory transitional arrangements being relatively sufficient, and according to observations, listed companies facing delisting risks have taken measures such as increasing holdings and buybacks for self-help, and subsequent delisting will gradually enter a normalized rhythm."

Tian Xuan, Dean of the National Institute of Finance at Tsinghua University, said to Caijing.

Some market participants have said that the new delisting rules have set a certain transition period, and it is expected that the number of delisted companies will not increase significantly in the short term, and in the long term, the market's survival of the fittest mechanism is gradually taking shape.

Face value delisting becomes the main force.

Compared with previous years, the delisted companies since 2024 have shown two new signs: the number of face value delistings has set a historical record, and market value delisting has appeared for the first time.

2024 has become a big year for "1 yuan delisting."

Looking at the reasons for delisting, it is mainly face value delisting, that is, the daily stock closing price is below 1 yuan for 20 consecutive trading days.

There are 31 companies that have delisted due to face value, accounting for about two-thirds.

In addition to face value delisting, other reasons for delisting include four consecutive years of losses, suspension of listing without disclosing regular reports, and serious violations of laws and regulations.

Among the companies that have delisted due to face value, Guanghui Auto, a giant car dealer with annual revenue of over 100 billion yuan, has attracted much attention.

When the company was locked for delisting, its total market value was still 6.5 billion yuan.

In 2015, Guanghui Auto went public on the A-share market through a reverse takeover, and its stock price once reached a high of 32.12 yuan per share, and then continued to fall.

Since 2024, the pressure of operations has been superimposed with the outbreak of debt problems, and the stock price of Guanghui Auto has been halved again, triggering the compulsory delisting clause of the exchange.

Although the controlling shareholders and management have tried to increase their holdings to save themselves, they are still powerless to turn things around.

In nine years of listing, the stock price of Guanghui Auto has fallen by more than 90%.

In 2024, the market value delisting situation also appeared for the first time.

*ST Shen Tian (000023.SZ) is the first case of market value delisting in the A-share market.

On the evening of July 26, *ST Shen Tian announced that it had received a "Prior Notice" from the Shenzhen Stock Exchange, and the Shenzhen Stock Exchange intends to decide to terminate the listing and trading of the company's stocks.

Because the stock of *ST Shen Tian had a market value below 300 million yuan for 20 consecutive trading days from June 27, 2024, to July 24, it touched the market value delisting situation.

The company's stocks were delisted on September 2, 2024.

It is worth mentioning that this year, the Shanghai and Shenzhen stock exchanges further revised the market value delisting standards: the market value delisting standard for main board A-shares (including A+B shares) will be increased from 300 million yuan to 500 million yuan starting from October 30, 2024.

That is to say, in the future, the number of companies facing the risk of market value delisting is likely to increase.

In addition, this year has also seen companies planning to delist voluntarily.

According to the announcement of *ST Yaxing, the company plans to voluntarily withdraw the listing and trading of A-share stocks on the Shanghai Stock Exchange through a shareholders' meeting resolution, and then apply for transfer in the National Equities Exchange and Quotations.

The termination of the listing has been reviewed and passed by the shareholders' meeting in August 2024.

*ST Yaxing previously announced that the controlling shareholder, based on the current market environment and the company's situation, proposed to voluntarily withdraw the company's stock listing.

According to the termination of the listing plan, the controlling shareholder Weichai (Yangzhou) provides a cash option to all registered A-share shareholders of the company, including dissenting shareholders.

During the cash option declaration period, the number of shares declared effectively is about 96 million shares.

According to the exercise price of the cash option of 6.42 yuan per share, Weichai (Yangzhou) is expected to prepare more than 600 million yuan of funds.

*ST Yaxing is a bus manufacturing company, and its operating performance has been poor in recent years, and there is also a problem of competition between Yaxing Bus and Zhongtong Bus, which also belongs to Shandong Heavy Industry Group's listed companies.

Compared with the other, Zhongtong Bus is superior to *ST Yaxing in terms of sales and performance.

The controlling shareholder of *ST Yaxing stated that in order to protect the interests of small and medium investors, it plans to provide a cash option to other shareholders, with the exercise price of the cash option at 6.42 yuan per share.

In recent years, the intensity of delisting in the A-share securities market has been further strengthened.

In April 2024, the new "Nine National Articles" proposed to increase the intensity of delisting supervision and deepen the reform of the delisting system.

At the same time, the China Securities Regulatory Commission issued the "Opinions on Strictly Implementing the Delisting System", requiring strict implementation of delisting standards and gradually expanding diversified exit channels.

Subsequently, the Shanghai, Shenzhen, and Beijing stock exchanges revised and issued new "Stock Listing Rules", further tightening the compulsory delisting standards.

Under this series of measures, the A-share market has accelerated the survival of the fittest.

Wind data shows that before 2021, the number of delisted companies in the A-share market never exceeded 20 per year.

In 2022, the number of delisted companies reached 46, almost the total of the past three years.

In 2023, the number of delisted companies was 45.

As of now in 2024, there are 47, and if the companies that have been locked for delisting but have not yet been delisted are added, the number of delisted companies this year may exceed 50.

Guo Ruiming, Director of the Listed Company Supervision Department of the China Securities Regulatory Commission, said at a press conference at the beginning of 2024, "In the past three years of reform, a total of 127 companies have been delisted, of which 104 have been forcibly delisted, and the number of forcibly delisted companies is nearly three times that of the ten years before the reform, showing two characteristics: First, the number of face value delistings has increased significantly, and the number of face value delistings in 2023 is close to half of all delisted companies; Second, the number of serious violations of laws and regulations has increased, and eight companies entered the delisting process in 2023 due to serious violations of laws and regulations."

Regarding the market view that "the A-share delisting rate is not high," Guo Ruiming pointed out that the delisting in overseas markets represented by the United States is mainly based on privatization and absorption and merger by other listed companies, which is voluntary delisting, and some markets have a voluntary delisting ratio of more than 90%, and the proportion of forced delisting is not high.

There are many companies in the A-share market that are forcibly delisted, but the cases of reorganization delisting and voluntary delisting are much less than in overseas markets.

The power equipment industry has the most delistings.

Looking at the industry, as of September 13, 2024, the delisted companies in the A-share market are mainly concentrated in the power equipment, real estate, and textile industries.

Wind data shows that different from the distribution of industries of delisted companies in 2023, the power equipment industry has surpassed real estate with six delisted companies, becoming the largest delisting industry.

In 2023, there were three delisted companies in this industry.

The six delisted power equipment industry companies all delisted due to stock prices below face value.

Universal losses are the norm for the above companies in recent years.

Among the above companies, five companies suffered losses in 2022, and from 2023 to the first half of 2024, all six companies suffered losses.

Among them, ST Aikang (002610.SZ) suffered losses of more than 800 million yuan in 2022 and 2023, ranking first.As the first domestic listed company specializing in photovoltaic accessories, ST Aikang has undergone several strategic transformations and developments.

In 2023, the company's main products included high-efficiency solar cells and modules, aluminum frames for solar modules, and photovoltaic mounting systems.

During this period, the manufacturing business of solar cells and modules, which accounted for more than 90% of the company's revenue, had a gross margin of less than 6%.

Coupled with management and financial expenses totaling over 500 million yuan, the company suffered a loss of 826 million yuan.

In the first half of 2024, the company's loss reached 600 million yuan.

ST Aikang, with its poor performance, also faced difficulties before delisting, such as overdue external guarantees, some bank accounts of the company and its subsidiaries being frozen, and the suspension of production by the wholly-owned subsidiary that provided the main source of income for the company.

Some power equipment companies or shareholders were also under investigation by regulatory authorities.

ST Aikang, whose stock was delisted on August 12, 2024, saw its actual controller, Zou Chenghui, receive a "Notice of Case Filing" from the China Securities Regulatory Commission on June 12, 2024, for suspected illegal and irregular information disclosure.

*ST Tiancheng (600112.SH), which was delisted on August 15, 2024, was also under investigation by the China Securities Regulatory Commission in January 2024 for suspected illegal and irregular information disclosure.

The poor performance, intertwined with continuous negative news about the company, led to a continuous exodus of market funds, becoming the main reason for the aforementioned power equipment companies to be delisted due to their stock prices falling below par value.

As the industry has continued to slump in recent years, several real estate A-share listed companies have not been able to wait for the dawn.

As of September 13, among A-share real estate companies, five companies have officially been delisted, temporarily ranking second in the industry alongside textiles and apparel.

In 2023, the number of delistings in the real estate industry was eight.

Among the five real estate companies that have been delisted in 2024, except for the delisting of Tongda (600647.SH), the rest of the companies were delisted for being below par value.

Significant losses are a characteristic of the aforementioned real estate companies.

Wind data shows that, except for Tongda, the other four companies had net losses of more than 3 billion yuan per year from 2022 to 2023.

Due to a negative net profit for the 2022 fiscal year and operating revenue below 100 million yuan, Tongda's stock was issued a delisting risk warning on May 5, 2023.

On April 30, 2024, the company's financial report for 2023 was issued with an "unable to express an opinion" audit report by the auditing institution, triggering delisting regulations.

As a former real estate star company, *ST Fanhai (000046.SZ) had a net profit of more than 900 million yuan from 2015 to 2019.

After entering 2020, the company began to suffer continuous losses, with losses exceeding 10 billion yuan from 2021 to 2023.

In the first half of 2024, the company continued to lose 7.7 billion yuan.

On February 7, 2024, *ST Fanhai's stock was delisted.

The reason was that the company's stock closed at less than 1 yuan per day for twenty consecutive trading days from November 30, 2023, to December 27, 2023.

In other industries, since 2024, there have been five and three delistings in the A-share textile and apparel and automotive industries, respectively, with three and one delistings in the aforementioned two industries in 2023, respectively.

In addition, the computer industry, which had seven delistings in 2023, has seen a temporary delisting of one company this year.

As the list of A-share delisting companies continues to lengthen, there are still many companies at risk of delisting.

The types of A-share delistings include compulsory delisting and voluntary delisting.

Compulsory delisting is divided into four categories: trading-related compulsory delisting, financial-related compulsory delisting, regulatory-related compulsory delisting, and major violation-related compulsory delisting.

Among them, there are corresponding indicators for implementing delisting risk warnings in financial-related compulsory delisting and regulatory-related compulsory delisting.

Wind data shows that as of September 13, there are more than 80 companies in the A-share delisting risk warning, including those with trading-related delisting risks, financial-related delisting risks, and regulatory-related delisting risks.

Among them, there are more than 40 companies with financial-related delisting risks and more than 10 companies with trading-related delisting risks.

According to the "Stock Listing Rules" (revised in 2023), in the financial-related compulsory delisting of the main board of the Shanghai and Shenzhen stock markets, the situations where stock trading is issued with a delisting risk warning include: the net profit (the lower of the audited net profit before and after non-recurring gains and losses) for the most recent fiscal year is negative and the operating revenue is below 100 million yuan; the net assets at the end of the most recent fiscal year are negative; the financial accounting report for the most recent fiscal year has been issued with an audit report that cannot express an opinion or a negative opinion.

The same applies to the STAR Market and the ChiNext board.

According to Caijing's collation of Wind data, according to the aforementioned regulations, there are about 46 A-share companies with financial-related delisting risks.

Among them, there are about 17 companies with operating revenue below 100 million yuan and net profit losses in 2023, all of which have been issued with delisting risk warnings.

Among them, there are about 12 main board companies, all of which are *ST companies, accounting for more than 70%.

Zhongdi Investment (000609.SZ), which is engaged in real estate development and equity investment, was issued a delisting risk warning due to operating revenue of 0.6 billion yuan and a loss of 1.8 billion yuan in 2023, and its stock name was changed to *ST Zhongdi.

Linggong Navigation (688282.SH), a STAR Market company mainly engaged in the research and development, production, and sales of inertial navigation systems and their core components, was issued a delisting risk warning due to operating revenue below 100 million yuan and a negative net profit in 2023, and its stock name was changed to *ST Navigation.

In April 2024, the Shanghai and Shenzhen stock exchanges revised the aforementioned "Stock Listing Rules" to modify the revenue and profit indicators for financial-related compulsory delisting risk warnings.

Among them, the profit indicator for the main board companies of the Shanghai and Shenzhen stock markets was increased to include the total profit, and the operating revenue was raised from below 100 million yuan to below 300 million yuan.

The STAR Market and the ChiNext board also added a total profit indicator.

It is worth noting that the aforementioned indicator modifications apply to the first accounting year in 2024.

With the significant increase in the operating revenue indicator for the main board delisting risk warning, it is expected that the number of companies issued with delisting risk warnings due to financial indicators will increase after the release of the 2024 annual report.

Wind data shows that in the first half of 2024, there were about 91 companies on the Shanghai and Shenzhen main boards with operating revenue below 150 million yuan and net profit losses to the mother company, an increase of about 7% compared to the same period last year's about 85 companies.

At the same time, there were 11 ChiNext board companies with operating revenue below 50 million yuan and net profit losses to the mother company, an increase of about 175% compared to the four companies in the same period last year.

In the regulatory-related delisting risk, there are 14 companies that have been issued with an audit report that cannot express an opinion or a negative opinion for two consecutive fiscal years.

Among the companies that have had significant defects in information disclosure and operations in the past year, many companies have made false, misleading statements, or significant omissions in information disclosure.

In June 2024, when Guo Ruiming answered reporters' questions about delisting issues, he said that according to the calculation, it is estimated that there will be about 30 companies in the Shanghai and Shenzhen stock markets that will be delisted due to the combination of financial indicators in 2025; there will be about 100 companies that may touch the indicator and implement delisting risk warnings in 2025, and these companies still have more than a year and a half to improve operations and improve quality, and will only be delisted at the end of 2025 if they still do not meet the standards.

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