ST Chengxing announced today that it will lift other risk warnings on June 24th, after more than three years of 'wearing hats'. The company stated that it has comprehensively reviewed internal control issues and deficiencies. In addition, during the 'hat-wearing' period, the company underwent a change of ownership, and the actual controller and chairman are Li Xingxing, the son of Li Shufu. The company also announced that the phosphoric acid production line of its Jiangyin factory has resumed production today. The Jiangyin factory has a phosphoric acid production capacity of 300,000 tons per year.
On June 20th, Caixin reported that after a series of rectification measures, the son of Li Shufu, Li Xingxing, who is in charge of Jiangsu Chengxing phosph-chemical (600078.SH), has reached an important turning point. After more than three years of being "capped", the company announced tonight that it will lift other risk warnings on June 24th. In addition, the company also announced that its phosphoric acid production line at the Jiangyin factory resumed production today. The auspicious "double happiness" also means that the company is in a new stage of development.
Jiangsu Chengxing, a well-known chemical enterprise in Jiangyin, has been "capped" since May 2021. At that time, it was subjected to other risk warnings because of the internal control audit report with negative opinions on the 2020 annual report and the situation of fund occupation by the controlling shareholders and their related parties. Because the audited net assets at the end of 2020 were negative, it was subjected to delisting risk warnings.
During the period of being "capped" and facing the liquidity crisis, creditors applied to the court in November 2021 for the restructuring of *ST Chengxing. In April 2022, *ST Chengxing reached a settlement agreement with the creditors and was recognized by the court. Subsequently, on August 15th, Chengxing Stock revoked the risk warning of delisting. The original controlling shareholder, Chengxing Group, needed to repay the bank, so its 25.78% equity of the listed company was auctioned on the Alibaba auction bankruptcy platform. The Wuxi Xingshengzhou Science and Technology Partnership Enterprise, controlled by Li Xingxing, the head of Geely Group, won the auction on August 23. Since then, ST Chengxing also changed hands, and the actual controller and chairman of the board of directors were changed from the founder Li Xing to Li Xingxing.
According to tonight's announcement, ST Chengxing will be suspended on June 21st for one day, and other risk warnings will be lifted starting from June 24th. The stock abbreviation will be changed from "ST Chengxing" to "Chengxing Stock", achieving a thorough "hat removal".
According to ST Chengxing, the company has thoroughly combed through the problems and defects in its internal control, actively implemented rectification measures, and strengthened daily management of business and finance. At the same time, the issues involved in the China Securities Regulatory Commission's "Administrative Punishment Decision" ([2022] No. 47) and the "Market Ban Decision" ([2022] No. 12) have been rectified by the company. The company's board of directors believes that the impact of the matters involved in the negative internal control audit report in 2020 and the emphasized sections of the audit report in 2021 on the company's business have been eliminated.
In addition, the accounting firm of Suay Chin Cheng issued an audit report, agreeing with the company's opinions above. It has also audited the company's financial reports and internal controls for 2022 and 2023 and issued a standard unqualified audit report and internal control audit report. Meanwhile, ST Chengxing announced tonight that the phosphoric acid production line at its Jiangyin plant has been shut down for inspection since May 20, 2024, due to the expiration of its production safety license. The company has recently received a production safety license issued by the Jiangsu Provincial Emergency Management Department. The Jiangyin plant has completed all the preparation work for the phosphoric acid production line and has resumed production on June 20th.
During the shutdown, product delivery to Jiangyin plant customers was achieved through inventory prepared earlier. As of today, the Jiangyin plant has resumed normal production and operation status. The impact of this shutdown on the company's financial data such as revenue and profit is relatively small and will be subject to the financial data of the annual audit report issued by the annual audit accountant.
According to the company's reply to the inquiry letter from the Shanghai Stock Exchange about the shutdown of the Jiangyin plant, ST Chengxing also stated in the supplementary announcement tonight that during the shutdown, the products of Jiangyin plant customers were delivered using the inventory prepared earlier. As of today, the Jiangyin plant has resumed normal production and operation status. The impact of this shutdown on the company's financial data such as revenue and profit is relatively small and will be subject to the financial data of the annual audit report issued by the annual audit accountant.
According to the information from ST Chengxing's 2023 annual report, the company has a total phosphoric acid production capacity of 600,000 tons/year, of which 300,000 tons/year each are at Jiangyin and Qinzhou factories. The capacity utilization rate was 33.72% last year, and the annual phosphoric acid production was 122,300 tons at the Jiangyin plant and 80,000 tons at the Qinzhou plant.