Investigation On The Great Failure Of The "Chinese Technology Department": The Appearance Of A Capital Broker

At the end of June, * ST fukong (600634. SH), once known as the A-share market, received the prior notice of administrative punishment and market ban (punishment Zi [2020] No. 49) from the CSRC, which turned from glory to silence.

According to the investigation of the CSRC, there are four major problems in the information disclosure of * ST rich Holdings: the false increase of the total profit in the periodic report; the failure to disclose the related party transactions in the periodic report; the failure to disclose the external guarantee in time or in the periodic report; and the failure to disclose the contingent liabilities in the periodic report.

The "notice in advance" reveals a large number of details of Yan Jinggang's organization, planning, leadership and implementation of all the illegal cases involved in the rich control interaction as the actual controller of * ST wealth control.

In fact, this is the second time that Mr. Yan has been banned from entering the market this year.

In March this year, * ST Yufu (002427. SZ), a member of the "China Science and Technology Department", also received the notice on administrative punishment and market ban issued by the CSRC for suspected violations of laws and regulations, such as related party transactions, external guarantees, and undisclosed contingent liabilities.

The Securities Regulatory Commission (SFC) has been banned from entering the securities market for life.

In 2013, Yan Jinggang, who became the actual controller of * ST wealth control through the backdoor listing of St Chenghai (later renamed as "fukong interaction"), once mastered the "troika" of * ST fukong, * ST Youfu and Hongda mining (600532. SH), and frequently tried to merge and acquire popular industries such as layout game, dajiankang and new energy.

The 21st century economic reporter's investigation found that the merger and acquisition failed and the tide was fading. This capital broker who did not focus on industrial management began to show his true shape.

*Four crimes brought about by St Fu

As early as January 19, 2018, three listed companies, * ST fukong, * ST Youfu and Hongda Mining Co., Ltd., disclosed that Yan Jinggang, the actual controller of the company, was investigated by the CSRC for "suspected violation of securities laws and regulations". At the same time, * ST fukong and * ST Yufu also received a notice of investigation against the company.

One year later, according to the "notice in advance" received by * ST wealth control, the CSRC found out that * ST rich control falsely increased the total profit in the periodic report; failed to disclose the related party transactions in the periodic report; failed to disclose the external guarantee in time or in the periodic report; and failed to disclose the contingent liabilities in the periodic report.

It is worth mentioning that one of the motives for the false profit increase of * ST rich control is related to the high performance commitment made by Yan Jinggang when the China Technology pile industry borrowed from the * ST wealth control.

Back to December 12, 2013, Zhongji piling industry controlled by Yan Jinggang was listed on the backdoor of St Chenghai. Chenghai shares issued 217 million shares at RMB 8.12 per share to acquire 92.95% of the shares of China Technology piling industry. After the transaction, Yan Jinggang held 30.79% of the shares of the listed company, and St Chenghai was renamed "Zhongji holding".

After deducting the net profit of RMB 290 million to the non listed shareholders in 2015, the net profit of RMB 290.2 million was deducted from the non listed shareholders of Zhongji and Yan Jingye respectively. If the performance is not up to standard, compensation will be made.

For this reason, the company's net profit margin in 2015 was only 9264 million yuan, which was not fulfilled in 2015.

According to the CSRC, in order to fulfill the high performance commitment and other goals, Yan Jinggang falsely increased the income of patent royalties, technical service fees and trademark royalties from its subsidiaries to other enterprises. In 2013, Yan Jinggang made a virtual increase of nearly 28 million yuan in the 2013 annual report, 109 million yuan in the 2014 annual report, 188 million yuan in the 2015 annual report, and nearly 119 million yuan in the 2016 annual report The investment income is nearly 1.9 billion yuan.

In addition, most of the non disclosure related party transactions of "Jingyan ST" and "non disclosure of related party transactions" are not disclosed in the "regular reports" of "Jingyan ST" and "non disclosure of related party transactions".

For the above related party transactions, the new amount in 2014 was 913 million yuan; in 2015, 1.244 billion yuan; in 2016, 1.7 billion yuan; in 2017, 3.305 billion yuan; and in the first half of 2018, 285 million yuan.

According to the statistics of public data, the reporter of 21st century economic report found that in the semi annual report of 2014 to the semi annual report of 2018, * ST wealth control did not disclose the new external guarantee, with a total amount of 18.186 billion yuan.

In addition, from 2017 to the first half of 2018, * ST wealth control and Yan Jinggang or other companies controlled by Yan Jinggang, as joint debtors, jointly borrowed money, but no contingent liabilities were disclosed in the relevant periodic reports, involving an amount of RMB 70 million.

"Related party transactions are not not not allowed, but should comply with the decision-making and credit standards." A person who studies corporate governance analyzed the 21st century economic report reporter and pointed out that if through the related party transactions under the table, "buy the big shareholders' things at a high price and sell the good things to the large shareholders at a low price", it will damage the interests of the small and medium-sized shareholders. The failure to disclose external guarantee and disclose contingent liabilities are all suspected of hollowing out listed companies.

"After obtaining control of listed companies through a series of means such as mergers and acquisitions, some capital brokers take the listed companies as cash machines and collect money crazily through related party transaction guarantee, and on the other hand, because of the high performance commitment in previous acquisitions, financial fraud and other behaviors are the focus of the regulatory crackdown." Those close to regulators also pointed out.

Based on the above facts, China Securities Regulatory Commission (CSRC) plans to impose a fine of 600000 yuan on * ST wealth control; ban Yan Jinggang, the actual controller of * ST wealth control, with a lifelong ban on the securities market and a fine of 600000 yuan; and impose fines ranging from 30000 to 200000 yuan on 15 responsible persons, including the then chairman and general manager Wang Xiaoqiang, the then chairman Zhu Jianzhou, and the then chief financial officer LV Yandong 2.65 million yuan.

Stories made by capital brokers

After the illegal cover was lifted, there was more than a sigh.

Yan Jinggang, from Wenling, Zhejiang Province, established Shanghai Zhongji pile Industry Co., Ltd. in November 2005, mainly engaged in prestressed concrete hollow square piles. The company is known as "the largest manufacturer of hollow square piles in China". In 2008, it was transformed into Shanghai Zhongji pile Industry Co., Ltd. ("Zhongji pile industry").

However, the capital road of Zhongji pile industry was not smooth at the beginning. In 2010 and 2012, the secondary IPO of China Tech piling industry, which was changed into a joint-stock company as a whole, failed due to several safety accidents.

In December 2013, after the core asset Zhongji pile industry backdoor st Chenghai was listed, in April 2014, Yan Jinggang renamed the listed company as "Zhongji holding" (renamed as "fukong interaction" since March 20, 2017), and "China technology system" began to emerge in a shares.

In December 2015, Liang Xiuhong, Yan Jinggang's wife, transferred 77.41 million shares (15% shares) of Hongda mining with 10 yuan / share, thus becoming the actual controller of Hongda mining.

Yan Jinggang took over the third listed company Yufu shares in May 2017.

On May 13, 2017, China Technology Group acquired 100% equity of Suzhou Zhengyue from the original actual controller of Yufu shares, at a cost of 2.681 billion yuan. Since then, China Technology Group holds 29.8% of the listed companies.

In the process of winning the three A-share listed companies of * ST fukong, * ST Yufu and Hongda mining, some official media called Yan Jinggang's technique "magic" of "from whether the IPO was approved or not to playing with the three listed companies". However, his control of asset restructuring was not so comfortable.

After China Tech Holdings landed in the capital market, Yan Jinggang did not dig deep into the construction industry, but instead laid out popular industries such as games, big health and new energy. He started a "high premium + high gambling" M & a journey.

The plan of holding shares increased by RMB 8.6 billion in 2014.

Of the 8.672 billion yuan of financing, 6.021 billion yuan was used to acquire Diandian interactive holding and 100% equity of Diandian interactive (Beijing) Technology Co., Ltd., and 1.5 billion yuan was used to acquire Beijing Ruyi Xinxin Film Investment Co., Ltd.

Games and film and television were hot projects in the capital market at that time. However, after waiting for nearly 10 months, in August 2015, the fixed increase of China Technology Holdings was finally rejected by the CSRC.

In September 2015, China Tech Holdings signed an intention clause to acquire no less than 51% of Wuhan Xiaolong automobile's equity, which was finally closed.

In December 2017, Yan Jinggang planned to acquire 51% equity of Ningbo Baidai, a chess and card game company. At that time, the net assets of Ningbo Baidai were no more than 78 million yuan, and the overall valuation of Ningbo baipai corresponding to the acquisition price of * ST fukong was as high as 2.7 billion yuan, with a premium of more than 30 times.

However, the acquisition also failed.

Frequent cross-border acquisitions, in addition to promoting assets to be included in the statements of listed companies and avoiding triggering performance compensation clauses, may also be one of Yan Jinggang's motivations to push up the share price and avoid closing the Pledged Shares.

Shortly after the backdoor listing of China Technology piling industry, on July 3, 2014, Yan Jinggang pledged 105 million shares of the listed company, accounting for 18.24% of the total share capital; on the 12th of the same month, Yan Jinggang pledged 72.7334 million shares, so far, all his shares were pledged.

In addition, in July 2016, China Tech Holdings disclosed a report on the sale of major assets, which showed that Yan Jinggang and Liang Xiuhong both increased leverage to the extreme. Among them, the market value of the equity property directly and indirectly held by Yan Jinggang is 3.431 billion yuan, and about 90% of the equity has been pledged. Liang Xiuhong holds the equity property market value of 1.328 billion yuan, and has pledged more than 93% of the equity.

According to the data, from the end of 2013, when the assets of zhongtech piling industry had just been injected into the listed companies, by June 2015, * ST fukong had soared from 7.09 yuan / share (the former reinstatement rights) to 38.94 yuan / share, with an interval increase of 449%.

Glory and defeat, a sigh

When frequent mergers and acquisitions failed, Yan Jinggang and his "China Technology Department" also had to accept the bitter fruit of the defeat.

Now, Yu Hongda and Yu Hongda are both suspected of violating the laws and regulations of the China Securities Regulatory Commission, and they are both suspected of violating the laws and regulations of China Securities Regulatory Commission in January 2018.

Yan Jinggang himself will also face the situation of life-long securities market ban.

The market also voted on the "China Technology Department" with its feet, and the stock prices of * ST fukong and * ST Yufu fell sharply.

As of July 8, 2020, the total market value of * ST fukong is only 570 million yuan, that of * ST Yufu is 2.6 billion yuan, and that of Hongda mining is less than 6 billion yuan.

Those high light moments, in the face of today's rout, especially conspicuous.

From 2011 to 2011, the net profit of ZTC exceeded RMB 88.73 million.

At the time of borrowing from St Chenghai, the restructuring report believes that "in the next few years, the underlying assets (i.e., the China Technology piling industry) will show rapid growth, and the market share is expected to further increase".

However, in the second half of 2016, Sinotech holdings chose to sell back its stake industry to Yan Jinggang at a price of 2.416 billion yuan, stripping off the related business of precast concrete piles.

At present, * ST wealth control is on the verge of delisting, with a net profit loss of 5.509 billion yuan and 141 million yuan in 2018 and 2019, and a further loss of 340 million yuan in the first quarter of 2020.

Before Yan Jinggang became the owner, Youfu shares, which mainly engaged in polyester industrial filament, had a net profit of 169 million yuan in 2016 and a net profit of 324 million yuan in 2017, which peaked in recent years. However, after Yan Jinggang became the owner, the net profit in 2018 was a huge loss of 1.05 billion yuan.

What makes people sigh is that three years ago, * ST yof spent nearly 2.09 billion yuan to acquire 100% equity of Jiangsu Zhihang new energy Co., Ltd. ("Zhihang new energy") in two times, hoping to turn around the performance with the help of the new energy automobile industry. Now, it has been decided to sell by * ST Youfu.

On March 27, 2020, * ST Yufu announced that it planned to sell 65% and 35% equity of Zhihang new energy to Ruihong lithium.

I still remember that on November 13, 2017, when * ST Yufu launched the plan to acquire smart air new energy, its share price doubled from 17 yuan, and on December 25, 2017, it hit the highest price since listing (former right recovery).

An investment banker in Shanghai pointed out that "under the comprehensive promotion of the registration system, as long as the companies that meet the requirements of the securities law can be put on record for listing, shell resources are no longer scarce, listed companies facing delisting will not spend a lot of energy on shell protection, and the hype of shell resources will also be curbed."