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Caixin Online News on September 9 (Reporter Huang Lu): The turmoil continues for ST hunan baili (603959.SH). Following the application for pre-reorganization of the controlling shareholder of the company in early September, we see another partial equity of the company's controlling shareholder being judicially auctioned.

ST hunan baili announced tonight that it recently learned through public channels that Peking First Intermediate People's Court will auction 40.0092 million shares of the company's unlimited circulating shares held by the controlling shareholder Peking xin ocean xinchuang Investment Co., Ltd. (referred to as 'controlling shareholder' or 'Peking xin ocean xinchuang') on the jd.com judicial auction platform, accounting for approximately 8.16% of the company's total share capital.

The company stated that the judicial auction of the above-mentioned shares is still in the public notice stage, and the subsequent steps will involve bidding, payment, equity transfer, and other processes, with the auction results still uncertain.

The announcement indicates that Peking First Intermediate People's Court will conduct a public auction activity on the jd.com judicial auction network platform from 10:00 on September 25th to 10:00 on September 26th (excluding extensions). The assessed price for ST hunan baili's partial equity is 1.54 yuan/share, with a starting bid price of 1.24 yuan/share.

As of the close of trading today, ST hunan baili's stock price is 1.8 yuan/share, with a market cap of only about 0.88 billion yuan.

In fact, the partial equity of ST hunan baili's controlling shareholder being auctioned is already the third time. The jd.com asset trading platform website shows that the 40.0092 million shares of the company held by the controlling shareholder were publicly auctioned on the jd.com judicial auction network platform from 10:00 on May 24th to 10:00 on May 25th this year by Peking First Intermediate People's Court, with the auction ending in failure.

From 10:00 on August 12 to 10:00 on August 13, the holding shareholder held 40.0092 million shares of the company's stock were publicly auctioned on JD's judicial auction network platform by the Beijing First Intermediate People's Court, with the auction resulting in a failure to sell.

Why did the last two auctions end in failure? This may be related to various troubles that the controlling shareholder has been facing in recent years.

At the performance briefing for 2023 in early June of this year, the company clearly stated that from 2019 to 2022, Xinhaixin has reduced its holdings of some company shares to alleviate the debt pressure brought by high-quality pledges through agreement transfers, centralized bidding, and block trades. The controlling shareholder's stock pledge and debt issues have not been effectively resolved yet.

Tibet Xinhai Xin, controlled by the actual controller and president Wang Hairong of ST Baili, holds 90%, while Chairman Wang Liyan holds 10%. On February 19 of this year, Wang Hairong needed to assist relevant departments with an investigation for personal reasons and temporarily could not perform his duties normally. ST Baili did not disclose the reason why Wang Hairong needed to assist relevant departments with the investigation. On June 5, Wang Hairong finished assisting with the investigation and has now resumed his duties as director and president of the company.

According to past announcements, as early as October 2023, Wang Hairong's direct holding of the shares of the major shareholder of ST Bai Li, Tibet Xinhai Xin, was frozen by the Shanghai Chongming District Court due to a lawsuit filed by CMB Ruiyan Asset Management. Subsequently, from the end of 2023 to the beginning of 2024, ST Bai Li successively issued multiple notices of 'Freezing of the controlling shareholder's shares.'

Public information shows that Tibet Xinhai Xin holds approximately 0.146 billion shares of ST Bai Li, with around 0.117 billion shares pledged, accounting for 79.83% of its total shareholding; around 0.146 billion shares have been frozen, accounting for 100% of its total shareholding.

Combining the above information, it is not difficult to see that the equity of the controlling shareholder of ST Bai Li has now become a 'hot potato.'

Apart from the controlling shareholder's equity being deeply entangled in high pledges and entering the dilemma of being auctioned, there may still be many following 'thunderstorm points' for the company. In August of this year, ST Bai Li received materials such as the 'Civil Complaint' sent by the Hunan Provincial Trade Promotion Association Mediation Center mediator, in which 15 individual investors including Wang *xing filed a civil lawsuit against the company and related personnel, totaling approximately 1.35 million yuan in litigation amount.

The facts and reasons stated in the 'Civil Complaint' include: On July 11, 2023, the Shanghai Stock Exchange issued a decision to warn hunan baili engineering sci&tech Co., Ltd. and relevant responsible persons; On April 30, 2024, baili technology released the '2023 Annual Report', and Deloitte Touche Tohmatsu Certified Public Accountants LLP issued a 'Audit Report' with a qualified opinion and a 'Internal Control Audit Report' with a negative opinion, etc.