On June 17th, Cailian Press reporter Ren Chaoyu reported that Shenzhen Hongtao Group, which is engaged in building decoration business, is attempting to 'save itself' from 'par value delisting', but a series of 'operations' have been questioned by the market. This afternoon, the actual controller and chairman Liu Nianxin issued an open letter stating that 'for Hongtao, I have been on the verge of bankruptcy', and emphasized that 'there is no subjective and intentional delisting' personally.

However, from the perspective of regulatory inquiries, there are significant uncertainties concerning the transfer of control of Shenzhen Hongtao Group. If the transfer of control fails, what should investors who have recently invested in Shenzhen Hongtao Group do?

Public information shows that Shenzhen Hongtao Group has recently staged a great drama. First, investors in the stock bar called for 'retail investors to save themselves' during the Dragon Boat Festival holiday, and then confidential documents related to changes in actual controllers were leaked online, which led to a rise in the stock price. Later, the news was confirmed by the company on its public account last Friday afternoon (and related articles were deleted because important information was released on non-legal information disclosure channels and was named in the regulation). Shenzhen Hongtao's stock price immediately hit a limit-down. According to Wind data, the company issued 10 announcements between 2:31 and 3:59 a.m. on June 17th, announcing changes in controlling shareholders, resignations of presidents, and receipt of attention letters and regulatory letters.

Some self-media suspect that a series of recent operations by Shenzhen Hongtao Group are 'a conspiracy highly coordinated by insiders of listed companies, which successfully helped part of the main force and large funds to get rid of their positions. The plot is so serious and full of malice!'

In the regulatory inquiry, the Shenzhen Stock Exchange raised a number of questions to Shenzhen Hongtao Group, including the risk of Liu Nianxin's holding of shares in the listed company being forced to liquidate or execute, which will lead to significant uncertainties in the acquisition of Shenzhen Hongtao Group's controlling rights by the intended transferee Winergy Energy Group. Secondly, in the situation where Shenzhen Hongtao Group faces significant risks in operation, finance, funding, personnel loss and internal control chaos, there are significant uncertainties concerning whether Winergy Energy Group can assist the company to expand and strengthen its main business of building decoration. In addition, Winergy Energy Group itself has 'less monetary funds and extremely high asset-liability ratio,' which raises significant uncertainties as to whether it has sufficient financial strength to complete the acquisition of controlling rights this time and provide the company with financial relief.

Liu Nianxin said in an open letter from the Hongtao Group's chairman released this afternoon that the crisis of Shenzhen Hongtao Group comes from 'the impact of economic downturn, regulatory control of the real estate industry, epidemic impact, etc., coupled with bank pressure on breaking and recalling loans, as well as failing to meet expectations of accounts receivable collection,' and accuses mainstream funds of malicious short selling.

Liu Nianxin also stated, 'My family and I have provided financial support of about 500 million yuan to the company on several occasions and provided more than 1 billion yuan in guarantees. Most of the funding provided for the Hongtao Group's financial support comes from stock pledges and real estate mortgages, and I have been on the verge of bankruptcy.' 'The 'unable to retain opinion' (unable to issue an opinion) in the 2023 annual audit report is unacceptable, and there is no subjective and intentional delisting on a personal level.'

Looking at the financial statements, Shenzhen Hongtao Group has recorded net losses for four consecutive years. The accounts receivable for the 2023 annual report was 2.532 billion yuan, accounting for 37.18% of the total assets, and the asset-liability ratio was as high as 77.10%.

Public information shows that if the closing price of a listed company's stock has been less than 1 yuan RMB for 20 consecutive trading days, the par value delisting mechanism will be triggered. Shenzhen Hongtao Group has been less than the standard for 11 consecutive trading days, and today's closing price is 0.59 yuan, facing par value delisting.