Who's on the 2024 Delisting List?

Delisting companies continue to increase, reflecting the intensified management and enforcement of delisting systems in recent years.

Since 2024, the "metabolism" of the A-share market has accelerated, with the number of delisted companies reaching a historical high.

On September 13, *ST Yaxing (600213.SH) reached a critical juncture in its voluntary delisting.

On that day, the company submitted an application to the Shanghai Stock Exchange to withdraw its stocks from trading, pending the exchange's decision to accept it.

If delisted successfully this year, the company will become the first voluntary delisting case in the A-share market this year.

Prior to this, on September 5, ST Dinglong (002502.SZ) was terminated from listing due to its closing price being below 1 yuan for 20 consecutive trading days and was delisted on the same day.

With the exit of ST Dinglong, there have been 47 stocks delisted in the A-share market (excluding B-shares, the same below) in 2024, surpassing the total number in 2023 and setting a new historical record.

Among them, companies such as Noble Bird (now ST Noble (delisted), 603555.SH) and Guanghui Auto (600297.SH), were once star enterprises in their industries.

In addition, there are companies like ST Xudian (000413.SZ), Haiyin Shares (000861.SZ), and *ST Wei Chuang (002308.SZ) that have received delisting notices from the exchange and are waiting to be delisted.

*ST Yaxing, due to its persistently poor performance, plans to voluntarily terminate its listing through a shareholders' meeting resolution.

According to the current trend, the list of delisted companies in the A-share market in 2024 may continue to lengthen.

Investment banker Hou Dawei said that the continuous increase in the number of delisted companies is a reflection of the regulatory strengthening of delisting system management and enforcement in recent years.

"The increase in the number of delisted companies means that the pace of survival of the fittest in the A-share market is accelerating.

With more poorly performing companies being eliminated, the remaining ones are mostly high-performing stocks or potential companies on the STAR Market, which is beneficial for market funds to flow to industries and companies that align with the national strategic direction, and is conducive to the healthy development of the investment and financing market."

Looking at the reasons for delisting, among the companies that have completed the delisting process since 2024, there are 31 companies that delisted due to face value, accounting for about two-thirds.

In terms of industry classification, the power equipment industry (Shenwan first-level industry classification, the same below) has six delisted companies, becoming the largest delisting industry this year.

Some securities firms have pointed out that from the initial lack of delisting system-related rules, leading to some companies being stagnant and not being delisted, to the breakthrough of the delisting system and the emergence of delisted companies, the regulatory authorities have been continuously promoting the institutionalization and normalization of the delisting system, which is in line with the development trajectory of the capital market and sets the tone for the future development of the capital market.

Since the delisting reform in 2020, the regulatory authorities have continued to increase the delisting efforts.

The new "Nine National Articles" in 2024 clearly state the policy orientation of "delisting as much as possible," starting from five aspects such as strictly enforcing delisting standards, smoothing out multiple delisting channels, and strengthening delisting supervision.

At the same time, the China Securities Regulatory Commission (CSRC) and the Shanghai and Shenzhen Stock Exchanges have also issued new delisting regulations.

The new delisting regulations mainly optimize four aspects, including expanding the scope of forced delisting for serious violations, adding three new types of normative delisting situations, tightening financial delisting indicators, and improving market value standards and other trading-related delisting indicators.

"With the increased enforcement of new delisting regulations, poorly performing and illiquid 'zombie enterprises,' as well as 'black sheep' that disrupt market order, will be cleared out of the market.

And due to the regulatory transitional arrangements being relatively sufficient, and according to observations, listed companies facing delisting risks have taken measures such as increasing holdings and repurchase to save themselves, and subsequent delistings will gradually enter a normalized rhythm."

Tian Xuan, Dean of the National Institute of Financial Research at Tsinghua University, said to Caijing.

Some market participants have said that the new delisting regulations have set a certain transition period, and it is expected that the number of delisted companies will not increase significantly in the short term.

In the long term, the market's survival of the fittest mechanism is gradually taking shape.

Face value delisting becomes the main force.

Compared with previous years, the delisted companies since 2024 have shown two new signs: the number of face value delistings has set a new historical record, and market value delisting has appeared for the first time.

2024 has become a big year for "1 yuan delisting."

From the reasons for delisting, it is mainly face value delisting, that is, the daily closing price of the stock is below 1 yuan for 20 consecutive trading days.

There are 31 companies that have delisted due to face value, accounting for about two-thirds.

In addition to face value delisting, other reasons for delisting include consecutive four-year losses, suspension of listing without disclosing regular reports, and serious violations of laws and regulations.

Among the companies that have delisted due to face value, Guanghui Auto, a giant auto dealer with annual revenue of over 100 billion yuan, has attracted much attention.

When the company was locked for delisting, the total market value was still 6.5 billion yuan.

In 2015, Guanghui Auto went public on the A-share market through a reverse takeover, and its stock price once reached a high of 32.12 yuan per share, and then fell all the way.

Since 2024, under the pressure of operations and the outbreak of debt problems, the stock price of Guanghui Auto has been halved again, triggering the compulsory delisting clause of the exchange.

Although the controlling shareholders and management have tried to increase their holdings to save themselves, they are still unable to reverse the situation.

After nine years of listing, the stock price of Guanghui Auto has fallen by more than 90%.

In 2024, there was also a first-time occurrence of market value delisting.

*ST Shen Tian (000023.SZ) is the first case of market value delisting in the A-share market.

On the evening of July 26, *ST Shen Tian announced that it received a "Prior Notice Letter" from the Shenzhen Stock Exchange, and the exchange intends to decide to terminate the listing and trading of the company's stocks.

Because the stock of *ST Shen Tian closed below 300 million yuan for 20 consecutive trading days from June 27, 2024, to July 24, it triggered the market value delisting situation.

The company's stock was delisted on September 2, 2024.

It is worth mentioning that this year, the Shanghai and Shenzhen Stock Exchanges further revised the market value delisting standards: the market value delisting standard for the main board A-shares (including A+B shares) will be increased from 300 million yuan to 500 million yuan starting from October 30, 2024.

That is to say, the number of companies facing the risk of market value delisting will tend to increase in the future.

In addition, this year there have also been companies that intend to delist voluntarily.

According to the announcement of *ST Yaxing, the company plans to voluntarily withdraw the listing and trading of A-shares on the Shanghai Stock Exchange through a shareholders' meeting resolution and apply for transfer on the National Equities Exchange and Quotations.

The termination of the listing has been reviewed and passed by the shareholders' meeting in August 2024.

*ST Yaxing previously announced that the controlling shareholder, based on the current market environment and the company's situation, proposed to voluntarily withdraw the company's stock listing.

According to the termination of the listing plan, the company's controlling shareholder, Weichai (Yangzhou), provides a cash option to all registered A-share shareholders of the company, including dissenting shareholders.

During the cash option declaration period, the number of shares declared effectively is about 96 million shares.

According to the exercise price of the cash option of 6.42 yuan per share, Weichai (Yangzhou) is expected to prepare more than 600 million yuan in funds.

*ST Yaxing is a bus manufacturing company, and its operating performance has been poor in recent years, and there is also a problem of same-industry competition between Yaxing Bus and Zhongtong Bus, which also belongs to Shandong Heavy Industry Group.

Compared with the other, Zhongtong Bus is superior to *ST Yaxing in terms of sales and performance.

The controlling shareholder of *ST Yaxing stated that in order to protect the interests of small and medium investors, it intends to provide a cash option to other shareholders, with the exercise price of the cash option being 6.42 yuan per share.

In recent years, the delisting efforts of the A-share securities market have been further strengthened.

In April 2024, the new "Nine National Articles" proposed to increase the intensity of delisting supervision and deepen the reform of the delisting system.

At the same time, the CSRC issued the "Opinions on Strictly Implementing the Delisting System," requiring strict enforcement of delisting standards and gradually expanding diversified exit channels.

Subsequently, the Shanghai, Shenzhen, and Beijing stock exchanges revised and issued new "Stock Listing Rules," further tightening the compulsory delisting standards.

Under this series of measures, the A-share market has accelerated the survival of the fittest.

Wind data shows that before 2021, the number of delisted companies in the A-share market never exceeded 20 per year.

In 2022, the number of delisted companies reached 46, almost the total of the previous three years.

In 2023, the number of delisted companies was 45.

As of now in 2024, there have been 47, and if the companies that have been locked for delisting but have not yet been delisted are added, the number of delisted companies this year may exceed 50.

Guo Ruiming, Director of the Listed Company Supervision Department of the CSRC, said at a press conference at the beginning of 2024, "In the three years since the reform, a total of 127 companies have been delisted, of which 104 were forcibly delisted.

The number of forced delistings is nearly three times that of the ten years before the reform, showing two characteristics: First, the number of face value delistings has increased significantly, with the number of face value delistings in 2023 approaching half of all delistings; second, the number of serious illegal delistings has increased, with eight companies entering the delisting process in 2023 due to reaching serious illegal standards."

Regarding the market view that "the delisting rate of A-shares is not high," Guo Ruiming pointed out that the delisting in overseas markets represented by the United States is mainly through privatization and being absorbed and merged by other listed companies, which is voluntary delisting, and some markets have a voluntary delisting ratio of more than 90%.

The proportion of forced delisting is not high either.

There are quite a few companies in A-shares that are forcibly delisted, but the cases of reorganization delisting and voluntary delisting are much less than in overseas markets.

The power equipment industry has the most delistings.

Looking at the industry, as of September 13, 2024, the delisted companies in the A-share market are mainly concentrated in the power equipment, real estate, and textile industries.

Wind data shows that different from the distribution of industries of delisted companies in 2023, the power equipment industry has surpassed real estate with six delisted companies, becoming the industry with the most delistings this year.

In 2023, there were three delisting companies in this industry.

The six delisted power equipment industry companies all delisted due to stock prices below face value.

Universal losses have been the norm for the above companies in recent years.

Among the above companies, five companies suffered losses in 2022, and from 2023 to the first half of 2024, all six companies suffered losses.

Among them, ST Aikang (002610.SZ) had a loss of more than 800 million yuan in 2022 and 2023, ranking first.As the first listed company specializing in photovoltaic accessories in China, ST Aikang has undergone several strategic transformations and developments.

In 2023, the company's main products included high-efficiency solar cells and modules, aluminum frames for solar modules, and photovoltaic mounting systems.

At that time, the manufacturing business of solar cells and modules, which accounted for over 90% of the company's revenue, had a gross margin of less than 6%.

Coupled with management and financial expenses totaling over 500 million yuan, this led to a loss of 826 million yuan for the company.

In the first half of 2024, the company's loss amounted to 600 million yuan.

ST Aikang, which was struggling with poor performance, also faced difficulties before delisting, such as overdue external guarantees, some bank accounts of the company and its subsidiaries being frozen, and the suspension of production at the wholly-owned subsidiary that provided the main source of income for the company.

Some power equipment companies or shareholders were also under investigation by regulatory authorities.

ST Aikang, whose stock was delisted on August 12, 2024, had its actual controller, Zou Chenghui, receive a "Notice of Case Filing" from the China Securities Regulatory Commission (CSRC) on June 12, 2024, for suspected illegal and irregular information disclosure.

*ST Tiancheng (600112.SH), which was delisted on August 15, 2024, was also under investigation by the CSRC in January 2024 for suspected illegal and irregular information disclosure.

The continuous poor performance and negative news about the company led to a continuous outflow of market funds, which became the main reason for the aforementioned power equipment companies to be delisted due to stock prices falling below par value.

As the industry has been in a slump in recent years, several real estate A-share listed companies have not been able to wait for the dawn.

As of September 13, among A-share real estate companies, five companies have officially delisted, temporarily ranking second in the industry alongside textiles and apparel.

In 2023, the number of real estate companies that delisted was eight.

Among the five real estate companies that have delisted in 2024, except for Tongda (600647.SH), the rest are all delisted due to face value.

Large losses are a characteristic of the aforementioned real estate companies.

Wind data shows that except for Tongda, the other four companies have an annual net profit loss of more than 3 billion yuan from 2022 to 2023.

Due to the net profit for the year 2022 being negative and the operating income being less than 100 million yuan, Tongda's stock has been subject to delisting risk warning since May 5, 2023.

On April 30, 2024, the company's financial report for 2023 was issued with an audit report from the audit institution stating "unable to express an opinion," triggering the delisting regulations.

As a former real estate star company, *ST Fanhai (000046.SZ) had a net profit of more than 900 million yuan from 2015 to 2019.

After entering 2020, it began to suffer continuous losses, with the company's loss amount continuing to exceed 10 billion yuan from 2021 to 2023.

In the first half of 2024, the company continued to lose 7.7 billion yuan.

On February 7, 2024, *ST Fanhai's stock was delisted.

The reason is that the company's stock closed at less than 1 yuan per day for twenty consecutive trading days from November 30, 2023, to December 27, 2023.

In other industries, since 2024, there have been five delisting companies in the A-share textiles and apparel industry and three in the automotive industry, with three and one delisting companies in the two major industries in 2023, respectively.

In addition, the computer industry, which had seven delisting companies in 2023, currently has one delisting company this year.

There are still companies facing delisting risks as the list of A-share delisting companies continues to lengthen.

There are two types of delisting in A shares: compulsory delisting and voluntary delisting.

Compulsory delisting is divided into four types: trading compulsory delisting, financial compulsory delisting, standardization compulsory delisting, and major illegal compulsory delisting.

Among them, there are corresponding indicators for implementing delisting risk warnings in financial compulsory delisting and standardization compulsory delisting.

Wind data shows that as of September 13, there are more than 80 companies in the A-share delisting risk warning, including trading delisting risk, financial delisting risk, and standardization delisting risk.

Among them, there are more than 40 companies with financial delisting risk and more than 10 companies with trading delisting risk.

According to the "Stock Listing Rules" (revised in 2023), in the financial compulsory delisting of the main board of Shanghai and Shenzhen stock markets, the situations where stock trading is subject to delisting risk warning include: the net profit (the lower of the audited net profit before and after deductions) for the most recent fiscal year is negative and the operating income is less than 100 million yuan; the net assets at the end of the most recent fiscal year are negative; the financial accounting report for the most recent fiscal year is issued with an audit report that cannot express an opinion or a negative opinion.

The same applies to the STAR Market and the ChiNext board.

Caijing has organized the data from Wind, and according to the above regulations, there are about 46 A-share companies with financial delisting risk.

Among them, there are about 17 companies with operating income less than 100 million yuan and net profit loss in 2023, all of which have been subject to delisting risk warning.

Among them, there are about 12 main board companies, all of which are *ST companies, accounting for more than 70%.

Zhongdi Investment (000609.SZ), which includes real estate development and equity investment in its business, was subject to delisting risk warning due to operating income of 60 million yuan and a loss of 180 million yuan in 2023, and its stock abbreviation was changed to *ST Zhongdi.

Ligong Navigation (688282.SH), a STAR Market company mainly engaged in the research and development, production, and sales of inertial navigation systems and their core components, was subject to delisting risk warning due to operating income below 100 million yuan and negative net profit in 2023, and its stock abbreviation was changed to *ST Navigation.

In April 2024, the Shanghai and Shenzhen stock exchanges revised the aforementioned "Stock Listing Rules," modifying the income and profit indicators for financial compulsory delisting risk warnings.

Among them, the profit indicator for the main board companies of Shanghai and Shenzhen stock markets was increased to include the total profit, and the operating income was raised from the previous less than 100 million yuan to less than 300 million yuan.

The STAR Market and the ChiNext board also added the total profit indicator.

It is worth noting that the aforementioned indicator changes apply to the accounting year of 2024 as the first applicable year.

With the significant increase in the operating income indicator for the main board delisting risk warning, it is expected that the number of companies subject to delisting risk warning due to financial indicators will increase after the release of the 2024 annual report.

Wind data shows that in the first half of 2024, there were about 91 companies on the Shanghai and Shenzhen main board with operating income below 150 million yuan and net profit loss to the mother company, an increase of about 7% compared to the same period last year's about 85 companies.

At the same time, there were 11 companies on the ChiNext board with operating income below 50 million yuan and net profit loss to the mother company, an increase of about 175% compared to the four companies in the same period last year.

In the standardization delisting risk, there are 14 companies that have been issued with an audit report that cannot express an opinion or a negative opinion for two consecutive fiscal years.

Among the companies with significant defects in information disclosure and operation in the past year, many companies have false, misleading statements, or significant omissions in information disclosure.

In June 2024, Guo Ruiming answered reporters' questions on delisting-related issues, stating that according to calculations, it is estimated that there will be about 30 companies in the Shanghai and Shenzhen stock markets that will be subject to delisting in 2025 due to the combination of financial indicators; about 100 companies may be subject to the indicator and implement delisting risk warning in 2025, and these companies still have more than a year and a half to improve operations and improve quality.

Only those that still do not meet the standards by the end of 2025 will be delisted.