Unit of Troubled Conglomerate CEFC Edges Closer to Delisting
It looks like there is more trouble on the horizon for embattled energy conglomerate CEFC China Energy Co. Ltd. — this time in the form of a potential delisting of one of its subsidiaries.
Shenzhen-listed CEFC Anhui International Holding Co. Ltd., a unit of CEFC China, has released six risk warning announcements this month as of Wednesday. The documents said that if the company’s auditor gives its 2018 annual report a “disclaimer of opinion” or “an adverse opinion,” it will have to halt trading of its shares on the day the report is released. Under those circumstances, the Shenzhen Stock Exchange would have to decide whether to suspend the company’s stock from trading within 15 trading days. If so, the company would face a much higher risk of being delisted.
The audited report is scheduled to be released on Tuesday, according to the announcements.
Last year, the stock exchange warned investors that the company was at risk of being delisted. CEFC Anhui’s 2017 report was given a “disclaimer of opinion” by the accounting firm, Shanghai Certified Public Accountants. When auditors issue such a disclaimer, they are effectively stating that they can offer no opinion on whether an entity’s financial statements fairly represent its financial results.
The China Securities Regulatory Commission had also investigated the company for alleged false disclosure.
In 2018, CEFC Anhui’s revenue collapsed 94% to 991 million yuan ($148 million), and it reported a net loss attributable to shareholders of 3.49 billion yuan, compared with a net profit of 447 million yuan in 2017, according to the company’s 2018 preliminary report (link in Chinese).
CEFC Anhui, which listed in Shenzhen in 2004, is principally engaged in fertilizers, agricultural chemicals and energy businesses. It is directly controlled by CEFC China’s main business subsidiary, CEFC Shanghai International Group Ltd., which has been mired in debt.
CEFC China is one of the private Chinese conglomerates that spent several years amassing sprawling assets abroad through debt-backed investments. But the company has been under regulatory and financial pressure since its founder Ye Jianming was placed under investigation on suspicion of economic crimes last year.
Contact reporter Timmy Shen (firstname.lastname@example.org)
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