AutoBeta(AutoBeta.net)02/25 Report--

On February 24th, ST Dawn issued three announcements in succession, the types of which were criticism of the stock notice of the Shanghai Stock Exchange, public condemnation of the shares of the Shanghai Stock Exchange and stock regulatory concerns of the Shanghai Stock Exchange. The contents of the announcement show that the Shanghai Stock Exchange (hereinafter referred to as ST dawning), controlling shareholder Huatai Automobile Group Co., Ltd. (hereinafter referred to as Huatai Automobile), actual controller Zhang Xiugen and ST Shuguang Chairman Gong Da, etc., have a number of violations, and take disciplinary actions against those responsible, which are recorded in the integrity files of listed companies, and require rectification of relevant violations.

According to the announcement, ST Dawn, Huatai Automobile and Zhang Xiugen, the actual controller, disclosed that there were a number of violations in the performance of their duties, including failure to disclose the withdrawal of asset evaluation reports in time, failure to disclose other risk warnings of stocks in accordance with regulations, failure to disclose major matters in which the actual controller was taken compulsory measures in a timely manner, and the company's failure to disclose performance warning in a timely manner. The special committee of the company's board of directors is not in place; the disclosure of information related to the company's transactions is not timely and incomplete.

In view of the above violations, the Shanghai Stock Exchange has determined that ST Dawn did not disclose timely matters in which the asset evaluation report of the subject matter of related party transactions was withdrawn, failed to disclose the progress of the settlement of the issues involved in stages as required, failed to disclose semi-annual performance notice within the statutory time limit, and failed to perform its duties by the special committee of the board of directors, The untimely and incomplete disclosure of transaction-related information violates the relevant regulations such as the rules on Stock listing on the Shanghai Stock Exchange and the guidelines on self-discipline Supervision of listed companies on the Shanghai Stock Exchange No. 1-standardizing Operation.

However, within the prescribed time limit, ST dawning, controlling shareholders and relevant responsible persons all raised objections and applied for a hearing. Among them, in response to the "failure to disclose the withdrawal of the asset evaluation report in a timely manner" pointed out by the Shanghai Stock Exchange, ST dawning and Gong Da (then chairman of ST dawning "acting Secretary of the Board") proposed that the "proposed revocation" email sent by the center evaluation company did not have the effect of directly withdrawing the report, and could not be determined that the evaluation report had been withdrawn. In response to the "major matter that the actual controller was not disclosed in a timely manner that compulsory measures were taken by the actual controller" pointed out by the Shanghai Stock Exchange, Zhang Hongliang (then a director of ST dawning) and Huatai Motor proposed that they had not received the notification documents from the relevant departments and could not know the situation immediately. After receiving the regulatory requirements, the relatives of the actual controller have been informed of the situation and informed the company to make disclosure. Due to the shortage of time, the comprehensiveness of the verification information cannot be guaranteed. Zhang Xiugen, as a party, said that after being taken criminal compulsory measures, he could not get in touch with the outside world in time and could not disclose information at the first time.

According to previous announcements, ST dawning disclosed that it had lost contact with Mr. Zhang Xiugen, the controller, on September 13, 2022, when the Shanghai Stock Exchange promptly issued a regulatory work letter to ST dawning, requiring the company to give a specific explanation on the relevant situation, including the reasons for the disappearance of the controller. That night, ST dawning said that since mid-August 2022, ST dawning was unable to contact Mr. Zhang Xiugen, the actual controller of the company, but communicated normally with Huatai Automobile Group Co., Ltd., the controlling shareholder.

In response to the regulatory work letter of the Shanghai Stock Exchange, ST dawning confirmed that Zhang Xiugen was detained by the Tianjin Binhai New area Public Security Bureau on July 5, 2022 on suspicion of "illegally transferring and reselling land use rights." On August 10, 2022, it was approved for arrest because of the above-mentioned transfer of land use rights. On November 9, 2022, Zhang Xiugen was released on bail pending trial.

Coincidentally, while Zhang Xiugen was approved to be arrested, the share price of ST dawning rose into a "demon stock", rising from 3.50 yuan on August 10th to 9.49 yuan on September 28th, and the market value of ST dawning rose more than 1.7 times in one and a half months. Not only that, in the 13 trading days from November 1 to November 17, 2022, ST Dawn again won 11 limit boards, a cumulative increase of 64.47 per cent.

The Disciplinary Commission of the Shanghai Stock Exchange said that after examination, it was found that Zhang Xiugen, the actual controller, was detained on July 5, 2022, and from then on to the date of disclosure of the announcement on September 20, 2022, the company is in a period of stock price changes. Zhang Hongliang, the controlling shareholder and director of the company, did not take effective measures to verify under the circumstances of many letters sent by the Shanghai Stock Exchange, the content of the initial reply was not in line with the actual situation, and the reply of the relevant work letter was incomplete and inaccurate, and the circumstances were serious. According to the relevant provisions of the Criminal procedure Law, the suspect has the right to entrust a defender to notify the family of the detainee from the date of taking compulsory measures to within 24 hours after the detention. Zhang Xiugen failed to inform the company in time of his compulsory measures, resulting in information disclosure overdue for more than two months, which has obviously exceeded the reasonable scope of objective influence. The relevant responsible persons put forward that the objection reasons such as unable to get in touch with the outside world, did not receive the documents of the relevant departments, and time constraints could not guarantee the authenticity of the information could not be established.

In addition, the announcement also showed that in response to the "failure to disclose the performance notice in a timely manner", ST dawning said that the relevant financial staff did not return to work until July 4, 2022 and began to replenish the establishment month by month, and the Chief Financial Officer did not take office until July 6. The relevant irregularities in the matter of "inadequate performance of the special committee of the board of directors and untimely and incomplete disclosure of relevant transaction information" have been identified by the Liaoning Regulatory Administration of the China Securities Regulatory Commission.

In view of the above violations, the Shanghai Stock Exchange decided, in accordance with relevant regulations, to publicly condemn ST dawning, Huatai Automobile, Zhang Xiugen, Gong Da and Zhang Hongliang, and to criticize disciplinary actions against Hu Yong, then chairman of ST dawning, and Xiao Jianning, then secretary of the board of directors of ST. For the above disciplinary actions, the Shanghai Stock Exchange will notify the China Securities Regulatory Commission and the local financial supervision bureau of Liaoning Province, and record them in the integrity files of listed companies.

Data show that Liaoning Shuguang Automobile Group Co., Ltd. was established on December 11, 1995, with two famous brand products: "Huanghai Automobile" and "Shuguang Automobile Bridge". Huatai Automobile Group Co., Ltd. was established on December 18, 2000. It is an independent brand car company with new energy vehicles, traditional cars and auto parts as its main business. The founder is Zhang Xiugen, who holds a 99% stake in Huatai Automobile. Huatai Automobile holds 19.77% of the shares. Zhang Xiugen is not only the controller of Huatai Automobile, but also the controller of dawning shares.

Founder Zhang Xiugen bought Shandong Rongcheng Automobile Plant from FAW Group in 2000, then changed its name to Rongcheng Huatai Automobile Co., Ltd., and then began to enter the automobile industry and open up its own car-building road. Although Huatai Automobile has a good qualification to build cars, as the earliest car company in China to launch SUV models, it was once known as "the father of domestic SUV", but Huatai Automobile's road to development is not smooth. From 2015 to 2016, Huatai sold 71200 and 73000 cars, respectively, and by 2017, sales rose 81.64% to 132600, according to the data. The surge in sales has given Huatai confidence. At that year's auto show, Huatai set an ambitious goal of selling 200000 vehicles in 2018 and more than 500000 in 2020, and announced the launch of nearly 30 new cars in the next three years.

However, Huatai's sales figures have been exposed as doubtful. In January 2018, Huatai reported sales of 1316 vehicles, but it sold 21000 vehicles in December 2017, a huge difference. In addition, dawning Group transferred 5.28% of Liaoning dawning shares to Huatai Motor in 2017. Due to many problems in Huatai Automobile at that time, Huatai Motor did not complete the acquisition of dawning shares until September 27, 2018. However, the acquisition did not bring good performance to Huatai Automobile's development. On the contrary, it was exposed that it was facing bankruptcy, arrears of wages, departure of R & D personnel, suspension of production base and other negative news.

Huatai car sales in 2018 were 120700, down 9.0% from a year earlier, a far cry from the target of 200000. At the same time, the profits of dawning shares were also routed one after another. The net profits of dawning shares from 2017 to 2021 were 316 million yuan,-128 million yuan, 47 million yuan, 55 million yuan and-459 million yuan respectively. As the problems of automobile production, marketing and operation are plagued by funds, the news of arrears of employees' wages and the payment of distribution suppliers appear one after another in the public view.

On September 5, 2022, ST Dawn announced that through JD.com 's auction and the execution of the order by the Intermediate people's Court of Jinzhou City, Liaoning Province, the company's controlling shareholder Huatai Motor holding 97.895 million of the company's unlimited tradable shares will be auctioned to pay off debts, but Huatai Motor has an objection to the equity auction. According to JD.com 's auction platform, the auction was suspended on October 10, 2022. JD.com 's auction showed that the reasons for the suspension included the suspension of stock trading, objections raised by the person subject to execution and interested parties, and could not be disposed of temporarily.

At present, there are many "difficult problems" waiting for the dawn of ST to be solved. According to the latest announcement, in view of the above violations, the SSE requires ST dawning and its directors, supervisors and senior managers to take effective measures to rectify the relevant violations, and within one month after receiving this decision, submit to the SSE a rectification report signed and confirmed by all the board of directors and senior staff.

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