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Another non-ST stock is locked in for delisting at par value. Today, Zhongyuan Cashmere Industry (000982.SZ) once again hit the daily limit down, closing at 0.4 yuan per share.

As of now, the stock has been trading below 1 yuan for 12 consecutive trading days, and even if it hits the daily limit up for the next 8 trading days, it cannot rise back above 1 yuan. This also means that Zhongyuan Cashmere Industry has prematurely locked in a delisting at par value.

First Financial Daily reporters noticed that Zhongyuan Cashmere Industry has previously escaped from delisting risks on multiple occasions. This time, it is finally unable to avoid the "final chapter" of delisting, which, apart from policy factors, is also related to its shareholder structure and the failure of performance after transformation.

Delisting at Par Value

After several consecutive days of decline, the crisis of delisting at par value for Zhongyuan Cashmere Industry continues to ferment.

Today, Zhongyuan Cashmere Industry fell again, closing at 0.4 yuan per share. Considering that the stock has been below 1 yuan for 12 trading days, and even if it hits the daily limit up for the next 8 trading days, it cannot rise above 1 yuan, meeting the condition of "the stock price being less than 1 yuan for 20 consecutive trading days," many in the industry believe that the stock has locked in a delisting at par value. In the afternoon, the company once again issued a risk warning announcement for the termination of listing.

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According to Article 9.1.15 of the "Shenzhen Stock Exchange Stock Listing Rules" (2024 Revision), if a company's stock is delisted due to a mandatory delisting situation related to trading, the company's stock will not enter the delisting adjustment period. This also means that the stock will not enter the delisting adjustment period, becoming the second non-ST stock facing delisting.

Looking back at the stock price evolution of Zhongyuan Cashmere Industry in the past month, it is comparable to a "roller coaster." From May 13th to May 23rd, Zhongyuan Cashmere Industry began to hover above the 1 yuan warning line. On May 24th, the stock first fell below 1 yuan, and then the stock price began to accelerate downwards. From May 27th to 29th, it hit the daily limit up for three consecutive days, and after a brief daily limit up on May 30th, it continued to decline. As of the close on June 7th, the stock price was fixed at 0.44 yuan per share.

With the stock price rapidly sliding below the warning line, Zhongyuan Cashmere Industry also took self-help measures. According to the announcement, the board of directors of Zhongyuan Cashmere Industry announced on May 5th that it would use an amount not less than 30 million yuan and not more than 40 million yuan to repurchase the company's shares. As of May 31st, the total amount of repurchases had reached 39.419 million yuan (excluding transaction costs), with the highest purchase price at 1.14 yuan per share and the lowest at 1 yuan per share. However, the repurchase seems to be difficult to reverse the downturn, and when the "ammunition" was used up, the stock price of Zhongyuan Cashmere Industry on May 31st was only 0.71 yuan per share.

Looking at a longer timeline, since 2024, the stock price of Zhongyuan Cashmere Industry has fallen from a high of 1.77 yuan per share on January 13th to the current 0.4 yuan per share, with a decline of over 76% during the period.Once a Phoenix of the Stock Market

It is noteworthy that data indicates that Zhongyuan Cashmere Industry was established in 1998, initially focusing on the operation of cashmere and related products. Since 2015, Zhongyuan Cashmere Industry has suffered losses in non-IFRS net profits for several years, has been repeatedly labeled with special risk warnings, and has relied on selling assets, bankruptcy reorganization, and other measures to maintain its listing status, becoming a "phoenix" of the A-share market.

Looking back at the history of Zhongyuan Cashmere Industry's efforts to maintain its listing, it can be described as a rollercoaster ride. Shortly after going public, the company first entered a "loss mode" in 2005, and was labeled with special risk warnings (*ST) in 2006 due to a second consecutive year of losses. It had to rely on non-operating gains to successfully maintain its listing in 2007. From the second half of 2014, the company was back on the brink of profitability and loss. Two consecutive years of losses from 2015 to 2016 led to its stocks being labeled with special risk warnings (*ST), but the company planned a transformation into the gaming sector, once again raising market expectations and causing its stock price to soar.

The most classic battle to maintain its listing occurred in 2017-2018. At that time, Zhongyuan Cashmere Industry's operating conditions deteriorated, and the risk of delisting loomed large. In the second half of 2017, Zhongyuan Cashmere Industry first disclosed in an announcement its intention to sell assets and liabilities other than cashmere, wool, and other trade businesses to its then controlling shareholder, Zhongrong Group. This business accounted for 81.95% of Zhongyuan Cashmere Industry's total assets at the end of 2016 and was the main source of the listed company's losses.

In the first half of 2018, Zhongyuan Cashmere Industry once again launched a "listing maintenance combination punch," successively announcing government subsidies and debt forgiveness. According to the announcement at the time, the company received a total of 645 million yuan in "operating financial subsidies" from local governments on December 29, 2017, and long-term business partners collectively forgave a debt amount of 112 million yuan. That year, the company's performance turned from loss to profit, temporarily escaping the delisting crisis.

Behind the Continuous Decline

The continuous decline in the stock price of Zhongyuan Cashmere Industry, which makes it difficult to recreate the previous "listing maintenance" myth, is widely believed in the industry to be related to the company's shareholder structure and performance status.

On one hand, Zhongyuan Cashmere Industry's inability to continue to take strong measures to support its stock price is directly related to the company's current dispersed equity structure.

As of the end of April, the largest shareholder of Zhongyuan Cashmere Industry is Hengtian Juxin (Shenzhen) Investment Center (Limited Partnership) (hereinafter referred to as "Hengtian Juxin"), with a shareholding ratio of only 6.39%. The company's second and third largest shareholders are the Shaanxi Branch of the Export-Import Bank of China and the Ningxia Hui Autonomous Region Branch of the Bank of China Limited, holding 5.99% and 4.02% of the shares, respectively. In addition, Hengtian Jinshi Investment Management Co., Ltd. (hereinafter referred to as "Hengtian Jinshi") holds a shareholding ratio of 4.01%.

What's worse, Hengtian Juxin and Hengtian Jinshi, which hold a larger proportion of shares, are considered by the industry to have a "Zhongzhi System" background and are unlikely to have the ability to resolve this crisis.According to Qichacha information, the shareholder behind Hengtian Juxin is Hengtian Jinshi, holding a stake of 99.86%. The major shareholder of Hengtian Jinshi is Beijing Qingyang Investment Center (Partnership) (hereinafter referred to as "Qingyang Investment"), with a holding ratio of 30%. Behind Qingyang Investment, the major shareholder is Zhongzhi Enterprise Group Co., Ltd.

As early as last year, the Zhongzhi Group had already experienced a liquidity crunch, was severely insolvent, faced significant ongoing operational risks, and was essentially too preoccupied to focus on anything else.

On the other hand, although Zhongyin Cashmere has transitioned to new energy business, its performance has not improved due to the impact of cyclical fluctuations. According to financial reports, in 2023, Zhongyin Cashmere achieved a revenue of 499 million yuan, a year-on-year decrease of 20.47%. The net profit attributable to the parent company of Zhongyin Cashmere in 2023 was a loss of 135 million yuan, a year-on-year decrease of 1416.11%. In the first quarter of 2024, the company's net profit attributable to the parent company continued to be a loss of 10.63 million yuan.

The cyclical fluctuations in the fields of lithium iron phosphate and graphitization processing business may be the "trigger." The company stated in its reply to the annual report inquiry letter that in 2023, the price of lithium iron phosphate products fluctuated significantly due to the fluctuation of raw materials such as lithium carbonate and iron phosphate. The revenue and gross margin of comparable listed companies in the same industry have mostly declined.

In addition, the company acquired Henan Wanguan Industrial Co., Ltd. (hereinafter referred to as "Wanguan Industry") in 2022. According to public information, Wanguan Industry has obtained relevant approvals for an annual production project of 30,000 tons of special graphite products. However, in 2023, due to the significant decline in the price of anode material graphitization processing and anode materials, the performance completion rate of Henan Wanguan for that year was 28.97%. This led to the provision for impairment of goodwill of 100 million yuan.

However, some industry insiders believe that under the recent strict supervision, the outflow of funds from small and micro-cap stocks is the key reason for Zhongyin Cashmere's delisting crisis. On April 30, the Shanghai and Shenzhen stock exchanges issued new delisting rules, which strictly set multiple delisting indicators, and since then, small and micro-cap stocks have started to fluctuate downwards. According to Wind data, since May, the Wind Micro-cap Index (8841431.WI) has fallen by more than 9%, with many stocks approaching the 1 yuan warning line.

Zhang Yi, CEO of iMedia Consulting, analyzed to the First Financial Daily reporter that under the new delisting rules of the "New Nine Articles," some small and micro-cap stocks are relatively weak in performance and scale, and the possibility of triggering a mandatory delisting risk is relatively high.

Small and medium investors are "hurt."

According to the financial report, as of the end of the first quarter, the total number of shareholders of Zhongyin Cashmere was 116,200, with an average of 36,700 shares per person.

Some small and medium investors have participated in the delisting game. According to the Shenzhen Stock Exchange, from May 27 to June 7, during the period of serious abnormal decline, Zhongyin Cashmere's cumulative decline was 55.56%, with natural persons cumulatively purchasing 1.599 billion yuan, accounting for 95.14%; among them, small and medium investors cumulatively purchased 1.276 billion yuan, accounting for 75.91%. Institutional investors cumulatively purchased 54.1476 million yuan, accounting for 3.22%.It is worth noting that Zhongyuan Cashmere is not an isolated case. This year, other non-ST stocks facing delisting risks include Pengdu Agriculture (002505.SZ), Huawen Group (000793.SZ), and Zhengyuan Shares (600321.SH). Currently, Zhengyuan Shares has also locked in a delisting due to its face value, Pengdu Agriculture has had its stock price below 1 yuan for 5 consecutive trading days, and after Huawen Group's stock price was below 1 yuan for 6 consecutive trading days, it has recently rebounded above 1 yuan in the last two trading sessions.

Recently, discussions on the protection of small and medium investors involved in delisting have also been heating up in the market.

A senior industry insider told the reporter that due to the frequent delisting of listed companies recently, investors' mentality is also quietly changing. The previous trend of "over-speculating on penny stocks" is gradually disappearing, and even different versions of risk enterprise lists are circulating in the market.

Regulatory actions have also been taken. When answering reporters' questions about the recent implementation of ST and delisting of listed companies' stocks, Guo Ruiming, Director of the Listed Company Supervision Department of the China Securities Regulatory Commission (CSRC), mentioned that after a listed company is delisted, the company and related responsible persons should still bear the corresponding civil, administrative, and criminal legal responsibilities for any illegal and irregular acts that may have existed before the delisting according to the law. The CSRC attaches great importance to the protection of investors involved in delisting and insists on "pursuing to the end" the illegal and irregular acts of the aforementioned entities.