Being investigated, unexpected! 50 year old A-share actual controller

China Fund News Dawn

Another listed company's actual controller has been filed by the China Securities Regulatory Commission, this time involving Ningke Biotechnology.

On the afternoon of September 10th, Ningke Biotechnology announced that its actual controller, Yu Jianming, received a notice of filing issued by the China Securities Regulatory Commission on September 7th. Due to suspected illegal and irregular information disclosure, the China Securities Regulatory Commission has decided to file a case against Yu Jianming.

In May of this year, the Ningxia Securities Regulatory Bureau issued a warning letter to Ningke Biotechnology due to the issue of information asymmetry. After investigation, Ningke Biotechnology has issues such as failure to timely disclose the progress of subsidiary capital increase plans, failure to timely disclose major litigation matters, and failure to timely disclose performance forecast correction announcements. At the same time, several directors, supervisors, and senior executives of Ningke Biotechnology were also taken into regulatory talks and included in the securities and futures integrity records.

In addition to the actual controller being filed, Ningke Biotechnology has also recently been involved in a dispute over an equity transfer contract. On the evening of September 7th, Ningke Biotechnology disclosed a major lawsuit announcement, stating that its controlling subsidiary, Zhongke New Materials, has filed a lawsuit against Shanghai Zhongneng, Ningke Biotechnology, and Zhongke New Materials with Ningxia Industry Guidance Fund Management Center as the plaintiff, involving a total amount of 113 million yuan.

Take a look at the details——

The actual controller has been filed by the China Securities Regulatory Commission

Previously taken compulsory measures

Yu Jianming, the actual controller of Ningke Biotechnology, has been filed by the China Securities Regulatory Commission on suspicion of illegal and irregular information disclosure.

According to the disclosure by Ningke Biotechnology, it has received a notice from its actual controller, Yu Jianming. On September 7, 2023, Yu Jianming received a "Notice of Filing" issued by the China Securities Regulatory Commission. Due to suspected illegal and irregular information disclosure, the China Securities Regulatory Commission has decided to file a case against Yu Jianming.

Ningke Biotechnology emphasizes that the current case is an investigation into Yu Jianming's personal situation, and the company's current production and operation are normal. During the investigation period, Yu Jianming will actively cooperate with the relevant work of the China Securities Regulatory Commission. The company will continue to monitor the progress of the above matters and strictly fulfill its information disclosure obligations in accordance with relevant laws and regulations. Investors are advised to pay attention to investment risks.

Regarding the issue of information disclosure, in May this year, the Ningxia Securities Regulatory Bureau took administrative regulatory measures against Ningke Biotechnology by issuing a warning letter. After investigation, Ningke Biotechnology has issues such as failure to timely disclose the progress of subsidiary capital increase plans, failure to timely disclose major litigation matters, and failure to timely disclose performance forecast correction announcements.

At the same time, several directors, supervisors, and senior executives of Ningke Biotechnology have also been subject to regulatory talks and included in the securities and futures integrity records. However, at that time, Yu Jianming was not included in the talk list.

According to public information, Yu Jianming was born in 1973 and is currently 50 years old with a bachelor's degree. Yu Jianming served as the General Manager of Guangdong Dejun Investment Co., Ltd. from September 2008 to January 2015, and has been the Chairman of Shanghai Zhongneng Enterprise Development Co., Ltd. since January 2015. Shanghai Zhongneng is the controlling shareholder of Ningke Biotechnology, holding 29.2% of the shares.

It is worth mentioning that an administrative penalty released by the China Securities Regulatory Commission in 2019 showed that Li and his wife, a former president of the Southern Guangdong Bank, had been punished for insider trading of "New Sun Hengli". Among them, the insider information source is Yu Jianming. After investigation, it was found that Li had a close relationship with Yu Jianming and frequently contacted him before the disclosure of insider information. Li used 5 million yuan in insider trading funds borrowed by Yu Jianming.

In August 2022, the Shanghai Stock Exchange issued regulatory warnings to Shanghai Zhongneng, Yu Jianming, and relevant responsible persons, due to inaccurate and timely correction of the 2021 annual performance forecast disclosure and non operating capital occupation by the controlling shareholder of New Sun Hengli. The Shanghai Stock Exchange pointed out that Yu Jianming and Shanghai Zhongneng failed to maintain the independence of the company, and the controlling shareholder occupied the company's funds for non operational purposes through the company's advance of expenses, damaging the company's interests.

In addition, last month Ningke Biotechnology disclosed that Yu Jianming was taken by the competent authorities in July 2020 to cooperate with the investigation due to his involvement in manipulating the securities market. In March 2023, the First Branch of the Shanghai People's Procuratorate decided not to prosecute Yu Jianming, and the case is currently under trial. Ningke Biotechnology stated that it will continue to monitor the progress of the matter.

8 years ago, I joined the company and underwent transformation

Attempt to sell failed

It is understood that Ningke Biotechnology, formerly known as New Rihengli, had already entered the A-share market as early as 1998. It was originally a steel wire rope and prestressed concrete steel strand manufacturing enterprise. But since 2003, New Japan Hengli has been experiencing losses for many years.

In 2015, Yu Jianming took over New Rihengli through Shanghai Zhongneng and began leading the company's transformation. In 2018, New Sun Hengli divested its assets and liabilities related to its metal products business from the listed company, and its main business shifted to the production and sales of activated carbon products, stem cell preparation and storage, and trade. In February 2023, the abbreviation of Xinri Hengli Securities was changed to Ningke Biotechnology.

Since Yu Jianming took over 8 years ago, the performance of Ningke Biotechnology has not significantly improved, and it is still in a state of making less and losing more. However, many of the acquisition actions promoted by Yu Jianming were not ideal, such as lower than expected performance of Boya stem cells and failed acquisition of Aerospace Automobile.

In September 2022, Ningke Biotechnology announced that its controlling shareholder, Shanghai Zhongneng, had signed a "Share Transfer Intention Agreement" with Jintou New Materials, intending to transfer the shares of the listed company through an agreement transfer. Jintou New Materials is a wholly-owned subsidiary of Jintou Agricultural Science and Technology, which is an important state-owned enterprise under the jurisdiction of Shouguang Finance Bureau. However, the transaction was terminated in March this year.

In the first half of 2023, Ningke Biotechnology achieved a revenue of 102 million yuan, a year-on-year decrease of 78.54%; Realized a net profit attributable to the parent company of -137 million yuan, from profit to loss.

For the reasons for the losses, Ningke Biotechnology stated that the main reason is that its subsidiary Zhongke New Materials was not fully paid in due to the impact of the capital increase, resulting in insufficient working capital and insufficient production capacity, leading to a significant decrease in gross profit; The provision for second quarter shutdown losses resulted in an increase in management expenses; The provision of interest on non related party loans resulted in an increase in financial expenses.

Trapped in equity transfer disputes

113 million yuan involved in the case

In fact, Ningke Biotechnology is currently plagued by negative news, and there are many risk issues that need to be paid attention to. In addition to the actual controller being filed, Ningke Biotechnology was also involved in a dispute over an equity transfer contract.

On the evening of September 7th, Ningke Biotechnology disclosed a major lawsuit announcement, stating that due to a dispute over the equity transfer contract, the shareholder of the company's controlling subsidiary, Zhongke New Materials, Ningxia Industry Guidance Fund Management Center, as the plaintiff, submitted a civil lawsuit to the Yinchuan Intermediate People's Court, filing a lawsuit against Shanghai Zhongneng, Ningke Biotechnology, and Zhongke New Materials, involving a total amount of 113 million yuan.

From the perspective of the cause of the lawsuit, as early as August 2019, Ningxia Industrial Fund signed relevant agreements with Ningke Biotechnology and Zhongke New Materials. Ningke Biotechnology transferred 10% equity of Zhongke New Materials with 0 yuan to Ningxia Industrial Fund, and Ningxia Industrial Fund injected 100 million yuan into Zhongke New Materials. Zhongke New Materials paid investment returns to Ningxia Industrial Fund at a rate of 6%, and two years later, Ningke Biotechnology repurchased shares with 100 million yuan.

Subsequently, in March 2023, Ningxia Industrial Fund determined that Ningke Biotechnology had operational risks and commissioned law firms to issue separate "lawyer letters" requesting Ningke Biotechnology to fulfill its equity repurchase obligations in advance. Later, Ningxia Industrial Fund filed a lawsuit and applied for property preservation.

According to Ningke Biotechnology, as of the disclosure date of the announcement, the bank accounts related to Zhongke New Materials, the 138.48 million shares of Ningxia Yellow River Rural Commercial Bank held by Ningke Biotechnology, and 61.5385% shares of Zhongke New Materials have all been frozen by the Yinchuan Intermediate People's Court. In addition, the Yinchuan Intermediate People's Court has also ruled to freeze multiple assets held by Shanghai Zhongneng, including 29.2% of shares in Ningke Biotechnology and 100% of shares in Guoxin Leasing.

Ningke Biotechnology stated that the value of the relevant preserved assets has seriously exceeded the litigation claim amount of 107.5 million yuan. The company's legal department and legal team will actively protect the legitimate rights and interests of the company and investors in accordance with relevant laws and regulations.

In April 2023, Ningke Biotechnology announced that its controlling subsidiary, Zhongke New Materials, was unable to organize production as planned due to insufficient liquidity. However, two months later, Ningke Biotechnology announced that it had raised relief funds through the government financing platform in Huinong District, Shizuishan City, specifically for the resumption of production of its subsidiary, Zhongke New Materials, and declared the risk of being "ST" eliminated.

In addition, at the end of May this year, Ningxia Yellow River Rural Commercial Bank also filed a lawsuit against Shanghai Zhongneng, Ningke Biotechnology, Zhongke New Materials, Hengli International Trade, and Yu Jianming, claiming that Zhongke New Materials loans were overdue and caused other loans to mature faster, with a total amount involved exceeding 100 million yuan.

As of the close on September 8th, the stock price of Ningke Biotechnology was 3.88 yuan per share, a sharp drop of 5.6% on the same day, with a total market value of only 2.7 billion yuan.