After hitting its limit down last Friday, the concept stock for high-speed connection of Copper cables, Shenzhen Deren Electronic, opened at its limit down again on Monday. There was a quick rise during the trading session, currently down about 4%. Previously, as a popular stock for high-speed connection of Copper cables, Shenzhen Deren Electronic's stock price accumulated over a 27% increase from the beginning of this month until just before the announcement of the case.

In terms of news, Shenzhen Deren Electronic announced on the evening of December 26 that the company and one of its actual controllers, Qiu Jianmin, received a "Notice of Investigation" issued by the China Securities Regulatory Commission (CSRC). Due to suspected violations of information disclosure, the CSRC decided to launch an investigation into the company and Qiu Jianmin.

On December 30, 2023, Shenzhen Deren Electronic announced that the Shenzhen Securities Regulatory Bureau imposed corrective measures on the company. After investigation, it was found that from the semiannual report of 2020 to the semiannual report of 2022, the company's disclosed accounts receivable recovery situation did not match the actual results, leading to inaccuracies in the financial report data of the relevant years.

In response to the issues mentioned above, Shenzhen Deren Electronic stated that it has implemented rectification, corrected relevant items in the financial statements for the years 2020 and 2021, and disclosed the "Announcement of Correction of Prior Period Accounting Errors and Retrospective Adjustments" on April 30, 2024.

In terms of performance, from 2019 to 2023, the net income of Shenzhen Deren Electronic for the same period was -0.586 billion yuan, -0.253 billion yuan, -0.592 billion yuan, -0.256 billion yuan, and -0.203 billion yuan, respectively, resulting in losses for five consecutive years. In the first three quarters of 2024, Shenzhen Deren Electronic's revenue was 3.875 billion yuan, a year-on-year decrease of 23.07%; the net income attributable to the parent company was -0.126 billion yuan, and the net income excluding non-recurring items was -0.15 billion yuan, still in a state of loss.

In April this year, the CSRC issued the "Opinions on Strictly Implementing the Delisting System," which is referred to as the "strictest" new delisting regulations in history. The new regulations lowered the annual limit, amount, and proportion for delisting due to financial fraud, increasing the circumstances for delisting after multiple years of continuous fraud.

A reporter from the 21st Century Business Herald contacted the investor relations department of Shenzhen Deren Electronic. A relevant person stated that the regulatory body has not yet defined this matter for the company, and the subsequent impact on the company cannot be assessed and determined for the time being. Regarding whether the company will be delisted as a result, the person indicated that it completely depends on the regulatory definition of this issue, and while the possibility of delisting cannot be ruled out, it is rather extreme. It was mentioned that the likelihood of triggering delisting is higher if the regulator defines this matter as financial fraud, believing there are issues with the company's internal controls.

It depends on how the regulation determines.

Shenzhen Deren Electronic, as one of the earliest established companies in electronic connectors in China, mainly engages in the research, development, production, and sales of electronic connectors and precision components. The main products include home appliance connectors, computer connectors, Led & Optoelectronics connectors, communication connectors, FPC, auto connectors and wiring harnesses, New energy Fund vehicle onboard Charger Module (OBC), Vehicle Networking, etc.

In the wave of the explosive growth of high-speed connection concepts, Shenzhen Deren Electronic also stated that the high-speed connector business, as the company's core Business, is steadily increasing year by year, while possessing good profitability. In situations involving disclosure of daily operational contracts, the company will strictly fulfill information disclosure obligations in accordance with relevant regulatory requirements.