Financial Services Association, May 8 (Reporter Xiao Lianghua) The incident where Dingxin Communications (603421.SH) was blown up by the State Grid has made recent progress. On the evening of May 8, Dingxin Communications announced that it received the “Notice from State Grid Hubei Electric Power Co., Ltd. on the Handling of Supplier Misconduct” issued by the State Grid Hubei. The company was “blacklisted” by the State Grid Hubei for 2 years. The company disclosed on the same day that it had received an “Administrative Penalty Decision” from the Securities Regulatory Commission due to major changes in external conditions of production and operation without timely disclosure.

On March 29, Dingxin Communications announced that the State Grid decided to launch a “fusing mechanism” for bidding and procurement for all of the company's procurement categories from February 18, and to launch an investigation into the company's suspected irregularities. The company's eligibility to win bids for all products and services will be suspended during the fusing period.

An earlier report by the Financial Services Association suggested that the company was destroyed by the State Grid or is related to a bribery case involving a former employee. In response, the company stated many times that bribing to win the bid was an employee's personal act. Some industry insiders pointed out that the company's move was similar to a “firewall” built to avoid legal risks. “This form understood by the industry is not recognized (permitted) by the National Grid, so eligibility for the bid has been suspended. Of course, whether there are any problems with the company in the end, and how big they are, still needs to be investigated.”

Now, the results of the State Grid Hubei processing have been released, verifying that the company has indeed failed to escape responsibility. The company said in tonight's announcement that the State Grid Hubei Electric Power Co., Ltd. determined that the company had committed irregularities in the Wuhan Company's systematic bidding activities based on the criminal judgment of the People's Court of Duodao District, Jingmen City, Hubei Province issued on December 27, 2023 and verified by the discipline inspection and supervision agency. From February 23, 2024 to February 22, 2026, all categories of the company were blacklisted for 2 years in a centralized tender in Hubei Province.

Simply being blackmailed by the State Grid in Hubei had little impact on the company. According to data provided by the company, in 2022, the company won the bid amount of about 22.56 million yuan (tax included) on the State Grid Hubei Province, of which the amount of confirmed revenue in 2022 was about 3.04 million yuan, accounting for 0.10% of the company's 2022 revenue, and the confirmed revenue amount in 2023 was about 4.93 million yuan, accounting for 0.14% of the company's 2023 revenue. In 2023, the company won the bid amount of about 65.93 million yuan (tax included) in the State Grid Hubei Province, and the confirmed revenue amount in 2023 was about 17.5 million yuan, accounting for 0.48% of the company's 2023 revenue.

However, the processing results at the State Grid level have not yet been announced. Assuming that the State Grid's fusing period for the company is 1 year. According to estimates of the company's winning bid amount and confirmed revenue in the national grid system in the past two years, the “fusing mechanism” will cause the company's total revenue to drop by about 1.65 billion yuan in the next 3-4 years, reduce the company's revenue by about 550 million yuan in 2024, and reduce the company's revenue by about 870 million yuan in 2025.

Dingxin News revealed on the same day that due to a major change in the external conditions of production and operation, the company received an “Administrative Penalty Decision” from the Securities Regulatory Commission, which issued a warning and imposed a fine of 700,000 yuan on the company's relevant responsible personnel, and imposed a total of 2.05 million yuan in fines.