Scandal-Plagued Kangde Xin Is About to Get Booted From the Shenzhen Bourse

What’s new: Scandal-plagued Kangde Xin Composite Material Group Co. Ltd. (002450.SZ) last month revealed a net loss for four straight years from 2015 to 2018 after it corrected its inflated financial figures, making it subject to mandatory delisting from the Shenzhen bourse, the country’s securities watchdog said in a Friday statement (link in Chinese).

The China Securities Regulatory Commission (CSRC) said that the company inflated its profits by 11.5 billion yuan ($1.8 billion) in its annual reports for 2015 through 2018 by engaging in systematic fraud such as recording fictitious sales, and that the bank account balances it claimed to have in the annual reports were false.

The CSRC did not specify a timeline of delisting, but said that it would make the legitimate rights and interests of investors its first priority during the process, and do its best to help investors recover their losses.

The background: Kangde Xin, a laminating film manufacturer, rattled China’s bond market with several defaults in early 2019.

A CSRC investigation launched in January 2019 found that about 15 billion yuan of cash and bank deposits shown on Kangde Xin’s financial statements were false, triggering a series of further probes into the company.

Trading in Kangde Xin’s shares has been suspended since July 8, 2019.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Luo Meihan contributed to this report.

Related: Investigators Reveal How Kangde Xin Carried Out 11.5 Billion Yuan Fraud

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)

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