Financial Services Association, January 5 (Reporter Wu Chao) This evening, Hailey Biotech (603718.SH) announced that the company received a decision on administrative supervision measures from the China Securities Regulatory Commission's Shanghai Securities Regulatory Bureau (hereinafter referred to as “Shanghai Securities Regulatory Bureau”). Since the Shanghai Securities Regulatory Bureau carried out double random on-site inspections, it was discovered that there were a series of credit disclosure issues, and the company and relevant responsible persons were taken to issue a warning letter. A Financial Services Association reporter learned that last year, the Shanghai Securities Regulatory Bureau inspected 8 listed companies in its jurisdiction on site through a “double random” sampling method. Currently, all 8 listed companies have disclosed problems with credit disclosure.

According to Hailey Biotech's announcement, the Shanghai Securities Regulatory Bureau will conduct a double random on-site inspection of the company from September 18 to September 28, 2023. After investigation, the company's issues include:

The 2023 semi-annual report revealed less investment income by 43.9056 million yuan; net profit after deduction in the 2023 semi-annual report was more than 7.1317 million yuan; the 2023 semi-annual report disclosed an increase of 9 million yuan in operating income, which affected the total profit by more than 9 million yuan.

The 2021 semi-annual report revealed that financial expenses were underestimated by 3.274 million yuan; the third quarterly report revealed that financial expenses were underestimated by interest on related parties' loans by 6.355 million yuan.

The first quarter report of 2022 disclosed that financial expenses were underestimated by interest on loans from related parties by RMB 2,955 million; the semi-annual report revealed that financial expenses were underestimated by interest on loans from related parties by RMB 5.5833 million; and the third quarterly report disclosed that financial expenses were underestimated by interest on related party loans by RMB 7.151,300.

Previously, on October 28 of last year, Hailey Biotech had already disclosed an error correction announcement regarding the above issues.

The Shanghai Securities Regulatory Bureau decided to adopt supervisory and administrative measures to issue a warning letter against Hailey Biotech. In the next step, it will also be decided whether to take further measures based on the ongoing special inspections. Furthermore, the above issues involved a long time span, so in response to different issues, the Shanghai Securities Regulatory Bureau also issued separate administrative supervision measures decisions for four executives, including then-chairman Zhang Haiming and Zhang Yue.

According to public information, Hailey Biotech is a manufacturer of veterinary biological products. Its main products are swine vaccines. Its predecessor was Shanghai Songjiang Biopharmaceutical Factory. Currently, the company is also seeking development in the field of “human insurance” and operating the in vitro diagnosis industry. In the first three quarters of 2023, Hailey Biotech achieved revenue of 195 million yuan, a year-on-year decrease of 28.56%; net profit to mother was 74.6985 million yuan, up 86.47% year on year, but mainly due to an increase in investment income from disposal subsidiaries and non-operating income received from financial subsidies. After deducting Africa, its net profit was 10.54.32 million yuan, a year-on-year decrease of 67.0%; gross margin fell to 50.85% from 61.37% in the same period last year.

According to our understanding, “double random” means randomly selecting inspection subjects and randomly selecting law enforcement inspectors. According to the supervisory work notice issued on the official website of the Shanghai Securities Regulatory Bureau, starting in June last year, the Shanghai Securities Regulatory Bureau carried out two random spot checks on site inspections of Shanghai listed companies in 2023.

According to the Shanghai Securities Regulatory Bureau, the list of companies and inspectors for this random spot check was randomly generated to ensure fair treatment of all listed companies. The random sampling process uses “random spot check software”. Among them, the listed company inspection directory database follows the principle of “comprehensive coverage and dynamic management”; the law enforcement inspector directory covers, in principle, all cadres of the Shanghai Securities Regulatory Bureau participating in on-site inspections of listed companies. The random sampling process invited the Shanghai Association of Listed Companies and listed companies to witness the random sampling process, and finally, 8 random sampling targets were selected in 2023.

In November of last year, the Shanghai Securities Regulatory Bureau issued a document stating that it had completed the 2023 double random on-site inspection of listed companies. According to the disclosed list of listed companies randomly selected from the 8 jurisdictions, the Finance Association reporter noticed that in addition to Hailey Biotech, the other 7 listed companies have also been published in the announcement, and there are problems with the disclosure of information.

Taihe Water (605081.SH) announced on July 11 last year that it received a decision on corrective measures from the Shanghai Securities Regulatory Bureau. Due to the company's inflated 2018 operating income and total profit, the disclosure of information in the prospectus was untrue and inaccurate. It decided to take supervisory and management measures ordering the company to make corrections, and to take supervisory and management measures to issue warning letters to 3 executives including Chairman He Wenhui. Since then, the company has received a “Notice of Case Filing” issued by the Securities Regulatory Commission, believing that the company is suspected of disclosing information in violation of laws and regulations, and that the focus of filing the investigation is still the target project.

New World (600628.SH) announced on October 17 last year that it was discovered that the company failed to promptly fulfill board review procedures and information disclosure obligations on related transactions, affecting investors' right to know and reasonable expectations. Wu Shengjun, then financial director of Shanghai New World Co., Ltd., and Ma Bingfang, then secretary of the board of directors, was supervised and warned by the Shanghai Stock Exchange.

Shenkai Co., Ltd. (002278.SZ) announced on October 20 last year that it received administrative supervision measures from the Shanghai Securities Regulatory Bureau. Due to the large difference between the performance forecast disclosed by the company and the performance data disclosed in the annual report, and changes in the nature of profit and loss, the disclosure of relevant information was inaccurate, and administrative supervision measures were issued to the company and 3 executives including general manager Zhang Enyu.

Yiyuan Communications (603236.SH) is similar to Hailey Biotech. At the end of October last year, the 2022 Annual Report and the 2023 Semi-Annual Report were corrected. The company found that some information was not disclosed accurately in the aforementioned periodic report.

ST Jiaonang (600530.SH) announced on November 7 last year that the Shanghai Securities Regulatory Bureau issued an “Administrative Penalty Decision”. Since Jiaotong University Onli did not disclose the company's 2022 annual report within the statutory period, it gave a warning and imposed a fine of 500,000 yuan; all four executives, including Ji Lin, the then chairman and acting secretary of the board, were warned and fined.

Jinlu B Shares (900929.SH) announced on December 15 last year that it has received a decision on administrative supervision measures from the Shanghai Securities Regulatory Bureau. Due to failure to promptly disclose the purchase of structured deposits of 335 million yuan, the company and then-financial director Zhuang Qi were both subject to administrative supervision measures issuing a warning letter.

Tianhai Defense (300008.SZ) announced on December 20 last year that it received a decision on corrective measures from the Shanghai Securities Regulatory Bureau. Due to the company's failure to promptly disclose guarantees to subsidiaries in accordance with regulations, inaccurate disclosure of related transactions, and inaccurate confirmation of operating income and operating costs related to the 2021 annual report, 2022 semi-annual report, and quarterly reports, it decided to take corrective supervisory measures against the company and adopt administrative supervision measures to issue warning letters against 5 executives including Chairman He Xudong.