On June 7th, Caixin reported (by Huang Lu) that ST Bai Li (603959.SH), which faced multiple crises, finally received some good news. After being detained for 100 days, the former chairman and CEO of the company, Wang Hairong, has resumed his duties and fulfilled his responsibilities as a director and CEO of the company.

ST Baili issued a statement tonight announcing that the company's actual controller and director, who also serves as CEO, has resumed his duties. Specifically, on February 20, 2024, the company issued an announcement stating that the actual controller, chairman, and CEO of the company were unable to perform their duties for personal reasons. One of the actual controllers, former chairman and CEO Wang Hairong, was unable to perform his duties because he needed to assist relevant departments in an investigation.

On June 5th, 2024, after assisting in the investigation, Wang Hairong has now resumed his duties and fulfilled his responsibilities as a director and CEO of the company. The current chairman of the company, Wang Liyan, will no longer act as CEO of the company.

Wang Hairong's return after 100 days of detention is met with the challenges of financial reports, performance and stock prices, which are not an easy feat to overcome.

First, let's take a look at the financial reports. ST Bai Li's internal control audit report and annual audit report did not pass. Dahua Certified Public Accountants conducted an audit on the effectiveness of ST Bai Li's internal control for the 2023 financial year and issued a negative opinion on the "Internal Control Audit Report".

The issues involved in the negative opinions mainly relate to two aspects: one is that Baili Technology had large amounts of capital flows with multiple vendors in 2023, mostly paid to vendors for equipment, resulting in a prepaid amount of 196 million yuan as of December 31, 2023. The company has not provided sufficient or appropriate evidence to demonstrate the commercial rationality and recoverability of the prepaid expenses.

Secondly, in 2023, Bai Li Technology recognized business revenue of 54.2073 million yuan and business costs of 50.4796 million yuan for Inner Mongolia Qianyun Gaoke. The basis for the recognition of the above business income is insufficient, and the company will retrace the income cost back to 2023 after the period.

According to the relevant provisions of Article 9.8.1 of the Shanghai Stock Exchange Listing Rules, the company's stock was subject to other risk warnings on May 6, 2024.

Secondly, let's take a look at the performance. In 2023, ST Bai Li achieved operating income of 2.069 billion yuan, a year-on-year decrease of 35.74%, and a net loss of 118 million yuan last year. In the first quarter of this year, operating income was 270 million yuan, a year-on-year decrease of 43.54%, and a net loss of 84.0855 million yuan.

Finally, let's take a look at the stock price. As of the close on June 6th, the company's stock price closed at 1.40 yuan/share, down more than 70% from the closing price of 5 yuan/share on February 19th. During Wang Hairong's 100-day detention, ST Bai Li's stock price fell more than 70%. After being subject to risk warnings, 22 consecutive limit-downs were imposed. On May 29th, ST Bai Li announced that some directors, supervisors, and senior management personnel plan to increase their shareholdings in the company through centralized bidding within 6 months from the date of this announcement, with a total proposed amount of no less than 1.61 million yuan and no more than 2.51 million yuan. From the perspective of the secondary market performance, this is obviously a drop in the bucket.

The company's controlling shareholder, Tibet Xin Hai Xin, holds approximately 146 million shares of the company, accounting for 29.80% of the total share capital of the company. The total number of pledged shares by the controlling shareholder accounts for 79.83% of its total holdings. Currently, all of the controlling shareholder's equity is under judicial freeze.

The company recently stated in an interaction with investors that in recent years, Wang Hairong has tried to solve the Xin Hai Xin high proportion equity pledge problem through various means, but the results have not met expectations. In order to solve the debt pressure brought by the high pledge, Xin Hai Xin mainly reduced its holdings through agreement transfers and bulk trades, and all funds from the reduction were used to pay off pledge financing debts, which have not been personally received by Wang Hairong. The pledge problem has not been fully resolved as of now.

From the changes in senior management to financial losses, from audit issues to consecutive stock price limit downs, every aspect reflects the company's business situation, which is not optimistic. Wang Hairong's return after 100 days of detention presents many challenges and uncertainties for ST Bai Li's future.