Caixin
Sep 05, 2019 07:22 AM
FINANCE

Unit of Embattled CEFC China Booted From Shenzhen Bourse

CEFC Anhui is the main financing arm of China’s embattled private conglomerate CEFC China Energy. Photo: VCG
CEFC Anhui is the main financing arm of China’s embattled private conglomerate CEFC China Energy. Photo: VCG

The main financing arm of China’s embattled private conglomerate CEFC China Energy is being delisted from the Shenzhen stock exchange after its stock lost most of its value amid the parent’s corruption scandal and financial woes.

Shenzhen-listed CEFC Anhui International Holding Co. Ltd. will enter a 30-day delisting period starting Sept. 30 after its stock traded below the face value of 1 yuan ($0.14) per share for 20 trading days in a row, the Shenzhen stock exchange said Wednesday in a statement. The stock will then be dropped from the exchange.

CEFC Anhui is the third company to be booted from the market because of poor share price performance since China tightened stock delisting rules last year. The first two were Shenzhen-listed developer Zhonghong Holdings Group and meat processor Chuying Agro-Pastoral Group Co. Ltd.

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 founder Ye Jianming was placed under investigation on suspicion of economic crimes last year.

CEFC Anhui’s shares have been suspended since Aug. 19 when they closed at 0.61 yuan. The stock traded below 1 yuan for 20 consecutive trading days between July 22 and Aug. 16, according to the Shenzhen bourse.

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 since Ye’s detention in early 2018.

The Shenzhen stock exchange has last year warned investors that the company was at risk of being delisted.

In 2018, CEFC Anhui’s revenue collapsed by 94% to 986 million yuan, and it reported a net loss attributable to shareholders of 1.2 billion yuan, compared with a net profit of 447 million yuan in 2017, according to the company’s reports.

In the first half of 2019, CEFC Anhui’s revenue declined a further 91% to 73.6 million yuan. The net loss widened 88% to 49 million yuan.

Investors have shunned CEFC Anhui also out of concern that a large portion of its equity has been pledged or frozen by courts for the debt woes of its controlling shareholder. As of Aug. 20, CEFC Shanghai owned 985 million shares of CEFC Anhui, or 40% of the company’s total equity. All of the shares have been frozen by courts while 90% were pledged, market records showed.

In early August, CEFC Anhui proposed a restructuring plan including inviting in Jiaozuo Zhongzhou Carbon Products Co. as a white knight. However, the plan didn’t go through because of pending investigations launched by the securities regulator into CEFC Anhui’s alleged disclosure violations.

Contact reporter Han Wei (weihan@caixin.com)

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