Another A-share has been filed!, Reply from China Securities Regulatory Commission | Opinion | A-share

*ST Weihai has been filed again for violating laws and regulations in the field of information technology.

On the evening of July 27th, * ST Weihai announced that it had received a notice of filing a case. Due to suspected violations of information disclosure, the China Securities Regulatory Commission decided to file a case against the company.

It is worth noting that in February last year, the company just received the "Administrative Penalty Decision" issued by the Ningbo Regulatory Bureau of the China Securities Regulatory Commission. Due to the failure to disclose the provision of guarantees for related parties and the non operational occupation of funds by related parties in accordance with regulations, as well as the long duration and large amount of illegal information disclosure activities involved. The company and related responsible persons were fined 2.59 million yuan, and multiple responsible persons were taken measures to prohibit entry into the securities market.

As of the close on July 27th, * ST Weihai reported a price of 2.7 yuan per share, with its stock price dropping by over 42% this year and its market value shrinking to 3.1 billion yuan.

Once again suspected of violating laws and regulations in the field of espionage

On the evening of July 27th, * ST Weihai announced that the company received a "Notice of Filing" from the China Securities Regulatory Commission on the same day. Due to the company's suspected illegal and irregular information disclosure, in accordance with laws and regulations such as the Securities Law of the People's Republic of China and the Administrative Penalty Law of the People's Republic of China, the China Securities Regulatory Commission has decided to file a case against the company.

*ST Weihai stated that the company will actively cooperate with the relevant work of the China Securities Regulatory Commission and strictly fulfill its information disclosure obligations in accordance with regulatory requirements.

Received inquiry letter and only replied to some questions

It is worth noting that on May 12th of this year, * ST Weihai received an inquiry letter from the Shenzhen Stock Exchange regarding the company's 2022 annual report. On May 20th, the company announced an extension of its response to the inquiry letter. On June 9th, the company only responded to some issues in its response announcement. And as of now, the response announcement regarding the first issue in the inquiry letter has not been disclosed.

According to the inquiry letter, the first issue concerns Shanghai Millennium, an important subsidiary of * ST Weihai that had previously lost control* ST Weihai and Shanghai Millennium once exposed a farce of "grabbing official seals" at the end of 2019. Shortly after, * ST Weihai announced that it had lost substantive control over Shanghai Millennium. It was not until the end of 2021 that the two sides finally signed an agreement, and Shanghai Millennium shareholders cooperated with * ST Weihai to restore control over Shanghai Millennium.

In the inquiry letter, the Shenzhen Stock Exchange noticed that * ST Weihai's 2020 financial report was issued with an audit report that cannot express an opinion. The 2021 financial report was issued with a standard unqualified audit report. The 2022 financial report was issued with an audit report that cannot express an opinion, indicating that the matters involved in the opinion are still related to Shanghai Millennium. Although the company resumed control over Shanghai Millennium on December 31, 2021 and gradually appointed management personnel to Shanghai Millennium. And from October 14, 2022, Shanghai Millennium began its internal inspection work. But as of the date of the audit report, the inventory work has not been completed yet.

The Shenzhen Stock Exchange requires the company to explain the reasons for incomplete reconciliation, the progress of internal inspections, and the problems discovered. Based on the inspection results, the company should also explain the impact of relevant matters on the financial data of the reporting period and previous years, and whether accounting error correction is necessary. At the same time, explain whether there are significant deficiencies in the internal controls related to the company and Shanghai Millennium's accounting and financial information disclosure.

*ST Weihai stated in its response announcement disclosed in June that the company has not yet completed the verification of the issues mentioned in the inquiry letter, and will complete the verification of these issues in the future, obtain the opinions of the annual review agency, and respond in a timely manner to fulfill its information disclosure obligations. However, more than a month has passed since the announcement was released, and there has been no response to the remaining questions.

Being sued by hundreds of investors

Previously, in July 2019, * ST Weihai was investigated by the China Securities Regulatory Commission on suspicion of illegal information disclosure.

In February 2022, the company received an Administrative Penalty Decision issued by the Ningbo Regulatory Bureau of the China Securities Regulatory Commission. Due to the failure to disclose the provision of guarantees for related parties and the non operational occupation of funds by related parties in accordance with regulations, as well as the long duration and large amount of illegal information disclosure. Several parties involved, including the company, actual controller, general manager, deputy general manager, CFO, and chairman of the supervisory board, were fined a total of 2.59 million yuan. In addition, the company's actual controller Feng Quanhong was banned from entering the securities market for 10 years, general manager Yang Xianshui was banned from entering the securities market for 5 years, and executive vice general manager Ge Mingliang and CFO Hu Shousheng were respectively banned from entering the securities market for 3 years.

Subsequently, in March, August, December of that year, and March of this year, investors successively sued the company in court. According to the announcement on the progress of investor litigation matters disclosed by the company on June 27th, 195 investors filed a lawsuit with the Ningbo Intermediate People's Court in Zhejiang Province on the grounds of securities false statement liability dispute, demanding that the company bear civil compensation liability for the aforementioned illegal information disclosure behavior, with a claim amount exceeding 4.74 million yuan.

According to official website information, Weihai Co., Ltd. was established in 1984 and was listed on the main board of the Shenzhen Stock Exchange in 2011. The company is a large-scale and highly specialized integrated urban-rural construction service provider in China, with multiple qualifications including first level general contracting for water conservancy, municipal engineering, and construction, and second level blasting. It provides clients with engineering survey, design, construction, scientific research, equipment, management, consulting, and other services.

The semi annual performance forecast for 2023 shows that * ST Weihai is expected to incur a net profit loss of 32 million to 45 million yuan from January to June 2023, a decrease of 214.51% to 261.04% year-on-year. For the reasons for performance changes, * ST Weihai stated that its important subsidiary Shanghai Millennium experienced significant losses in the first half of the year.

According to the first quarter report of 2023, the company's main operating income during the period was 211 million yuan, a year-on-year increase of 22.76%; The net loss attributable to the parent company was 11.991 million yuan, a year-on-year increase of 34.55%. Deducting a net loss of 16.9895 million yuan, a year-on-year increase of 31.6%; At the end of the period, the company's asset liability ratio reached 51.21%.

As of the end of the first quarter, the total number of shareholders in the company was 11600, a slight increase of 0.38% compared to the end of last year.