(Original title: Another big case! More than 50 billion financial fraud and the China Securities Regulatory Commission took action!)
*ST Kaile (600260), which was on the verge of delisting, discovered huge financial fraud again.
On December 2, the listed company involved in the “private network communication” scam disclosed the “Announcement on Receipt of Prior Notice of Administrative Penalty and Market Entry Prohibition” (hereinafter referred to as the notice). According to the notice, *ST Kaile has accumulatively inflated its operating income by 51.225 billion yuan from 2016 to 2020, its inflated operating costs by 44.352 billion yuan, and its total inflated profits by 5.936 billion yuan. The scale of the amount is really rare.
*ST Kaile, which was facing bankruptcy due to difficulty in completing the reorganization, can be described as “worse”. The huge amount of fraud for five consecutive years also means that the company’s net profit attributable to the parent company from 2017 to 2020 is negative, and it may touch the situation of forced delisting due to major violations of the law, and further move towards the abyss of delisting.
Inflated operating income of over 50 billion in five years
Inflated profits of nearly 6 billion
As Sui Tianli’s “private network communication” scam that shocked the A-share market was revealed, more and more fraudulent facts of listed companies involved in the case were brought out.
The notice issued by the China Securities Regulatory Commission to *ST Kaile shows that from 2016 to 2020, *ST Kaile and Suitianli cooperated to carry out the “private network communication” business. During the cooperation period, *ST Kaile only had a small amount of private network communication business in 2016. All other private network communication services are false, and only forged purchase warehousing, production warehousing, sales warehousing and other documents in accordance with the contract regulations, without production and logistics matching the false private network communication business, in order to inflate revenue and profits.
Among them, in 2018, *ST Kaile’s inflated revenue reached a peak of 14.638 billion yuan, accounting for 73.31% of that year’s revenue. In 2020, this proportion will reach a peak, reaching 91.13%. In addition, its inflated profits that year were 1.451 billion yuan, accounting for an astonishing 247.45% of the total profits of the year.
The notice shows that the company’s regular reports from 2016 to 2020 have false records, accumulatively inflated operating income of 51.225 billion yuan, inflated operating costs of 44.352 billion yuan, and inflated total profits of 5.936 billion yuan. Moreover, according to calculations, the net profit attributable to the parent of *ST Kaile from 2017 to 2020 is negative.
This also means that *ST Kaile may violate relevant rules such as the “Implementation Measures for the Compulsory Delisting of Listed Companies on Major Violations of the Shanghai Stock Exchange”, and may be subject to forced delisting due to major violations.
In addition, the China Securities Regulatory Commission determined that the above-mentioned behavior of *ST Kaile was suspected of violating the relevant provisions of the “Securities Law of the People’s Republic of China”, and proposed to impose fines and other administrative penalties on *ST Kaile and relevant responsible persons and market access measures.
Regarding Zhu Dixiong, the chairman of the company, the notice stated that he has actual control over the production and operation of *ST Kaile, made decisions, organized and implemented financial fraud, and instructed and directed *ST Kaile to carry out false business. Especially serious, it is the person in charge who is directly responsible for the violation of information disclosure by *ST Kaile. A fine of 5 million yuan was imposed on him, and he was banned from entering the market for life.
has been hovering on the verge of delisting for a long time
On December 1, the company announced that the company’s reorganization application has not yet been accepted by the court. According to the company’s reorganization time plan, the company expects it will be difficult to complete the reorganization work before the end of 2022. If the above-mentioned related situation fails to improve, *ST Kaile’s 2022 annual report will touch the financial delisting index, and the company’s stock will face termination of listing.
According to public information, *ST Kaile was listed in July 2000, and its main business is private network communication, network information materials, real estate, etc.
In fact, since *ST Kaile transformed into private network communication, the revenue and profit of this business have grown rapidly, becoming the “engine” of the company’s performance. In 2016, the company’s private network communication business revenue reached 5.153 billion yuan, accounting for 61.19% of revenue. From 2017 to 2020, the company’s private network communication business revenue was 11.120 billion yuan, 14.733 billion yuan, 13.696 billion yuan, and 7.778 billion yuan, accounting for 73.46%, 86.88%, 86.36%, and 91.51% of revenue.
However, since *ST Kaile launched its private network communication business, the Shanghai Stock Exchange has focused on issues such as the authenticity of the company’s business. It has successively issued inquiry letters to the 2017 annual report and the 2019 annual report, focusing on abnormal financial data related to the private network communication business, upstream and downstream Relationships and potential risks.
Until May 2021, in February after the Shanghai Electric (601727) mine exploded, Sui Tianli’s “private network communication” scam case officially surfaced, and *ST Kaile was immediately beaten back to its original form.
At first *ST Kaile considered himself a “victim”. The company once filed a lawsuit with the Jingzhou Intermediate People’s Court on June 19, 2021. The cause of the case was a dispute over a sales contract. The defendant was a new generation private network, and the amount involved was 1.151 billion yuan. However, at the end of March this year, the court withdrew the lawsuit and closed the case according to the failure to pay the litigation fees on time.
Then in August 2021, *ST Kaile announced that due to the suspension of the private network communication business, it is not expected to resume in the short term. Since the second half of the year, the company’s private network communication business exploded, and a large amount of asset impairment was withdrawn for half a year. Its production and operation activities were seriously affected, the main bank accounts were frozen, and the company’s stock transactions were subject to other risk warnings.
The reporter combed and found that since July 2021, the Shanghai Stock Exchange has urged *ST Kaile to issue risk warning announcements involving stock transactions, filing investigations, etc. as many as 13 times. At the same time, disciplinary or supervisory measures will be imposed on relevant responsible personnel of the company for violations such as the company’s large amount of non-operating capital occupation by the controlling shareholder.
In February this year, *ST Kaile was filed for bankruptcy and reorganization. The company stated in the announcement in April that the audited net assets in 2021 were negative, and the accounting firm issued an audit report that could not express an opinion on the “Company’s 2021 Financial Accounting Statement”, so the company’s stock will be subject to delisting risk. warning. In May of this year, the China Securities Regulatory Commission decided to file a case against the company due to suspected information disclosure violations.
It is worth mentioning that for such a listed company that is on the verge of delisting due to huge financial fraud, many “speculators” in the market still choose to “lick blood”. During the three trading days of November 29, November 30 and December 2, the stock price of *ST Kaile is now at the daily limit. As of December 2, 2022, the company’s total market value is about 2.039 billion yuan, the total share capital is 995 million shares, and the total number of shareholders is about 69,900.