"Dress Up" Report Sprint Battle, The Emergence Of Listed Companies "Claim Subsidy Tide"

There are only 5 trading days left in 2020. The A company's defensive performance has entered the sprint stage.

On the night of December 23rd, more than ten listed companies such as *ST Kai, LAN Si, Ma De medical, Shenzhen Tianma A, Yisheng pharmaceuticals and so on, announced that the company received payments from government subsidies or reimbursement.

However, many of the government supported "lucky men" have received large subsidies / subsidies, even exceeding the profits of the first three quarters.

This series of announcements has attracted the attention of investors in the two tier market.

In December 24th, a lot of "government subsidies" stocks rose sharply, of which *ST Kai Kai and *ST de Hao were on the market, while medical care, Yisheng pharmaceutical and Shenzhen Tianma A rose by more than 2%.

"Government subsidies are generally local governments in order to support the development of local industries, to provide some help to the financial status and cash flow of enterprises, reduce the burden on enterprises and help enterprises develop better, such as new energy vehicles, which are in line with the national strategic direction of emerging industries, and enterprises will rely heavily on government subsidies to make bigger and more innovative enterprises." A partner of a private equity firm in Southern China was interviewed.

It further points out: "but by the end of the year, some enterprises are in a predicament of their own development, and their own lack of hematopoietic capacity, but relying on subsidies to protect their shells, is not conducive to the purification of the market environment."

More than 100 billion government subsidy funds

It is not uncommon for A share listed companies to receive government subsidy support. Wind data show that since the first three quarters of this year, the number of listed companies receiving government subsidies has reached 3555, with a total value of more than 105 billion 548 million yuan.

The highest amount was Sinopec, and the government subsidy amounted to 3 billion 152 million yuan in the first three quarters of 2019. Meanwhile, Guangzhou Automobile Group, SAIC Group, BOE A and BYD also received government subsidies of 2 billion 34 million yuan, 1 billion 930 million yuan, 1 billion 433 million yuan and 1 billion 42 million yuan respectively.

However, the enterprises themselves are not poor in management ability, and at the same time, with the help of government departments, they have achieved sound development.

In the A share market, there is another type of "group", which regards government subsidies as a tool to "renew life". Wind data show that in the first three quarters of 2019, the total number of listed companies with government subsidies exceeding the company's net profit in the same period amounted to 505, of which 404 enterprises had negative net profits.

At present, the war of "subsidy continues" has entered the white hot stage. *ST, who has been losing money and lawsuits for two consecutive years, has become the "forward" of the campaign.

On the evening of 24, *ST announced that the company received a subsidy of 557 million yuan from the Hefei Municipal Finance Bureau for the transfer and payment of new energy vehicles in December 20, 2019.

It is worth mentioning that in the first three quarters of 2019, *ST's net profit was 147 million yuan, less than 1/3 of the subsidy funds, and over six of these profits had become non recurring gains and losses. The net profit of the first three quarters of the company was only 43 million 590 thousand and 300 yuan.

The same story is also staged on *ST de Howe. In 2017, 2018 and the first three quarters of 2019, *ST's losses were as high as 966 million yuan, 4 billion 53 million yuan and 182 million yuan. If 2019 fails to turn around the losses, *ST de ho will face a situation of suspension of listing.

On the evening of 24, *ST de Hao announced that its subsidiary Zhuhai de Hao Electric had received 20 million 754 thousand yuan from the social insurance fund management center of Zhuhai.

However, this part of the capital is only a drop in the bucket for *ST, a serious loss. In the four quarter, *ST is still pushing forward the sale of subsidiary equity and the sale of LED's domestic lighting business.

Shell revival

The above case is only the tip of the iceberg at the end of the year.

Up to now, the number of stocks that have been implemented by the delisting risk warning is as high as 138. In addition, the total number of enterprises that lost two consecutive years in 2017 and 2018 totaled 83, including 53 in 2017, 2018 and the first three quarters of 2019.

In addition to the huge government subsidies, the A stock companies close to the crisis have entered the year-end rush period, and listed companies are selling their houses, selling land, selling shares of their subsidiaries, and so on.

Not long ago, the listed companies such as ang Li education, *ST tour and new brand joined the "sales force". *ST Yun voted to sell the "crops" and the land assets to the cloud investment agriculture and forestry. ST beauty and *ST de Hao continued to push the "sell son" shell protection operation.

However, since the beginning of this year, the regulatory authorities have also increased supervision over some listed companies that are not functioning well and have obvious shell protection suspects. Most of the enterprises in these enterprises have received letters of concern or enquiries from the exchange.

"In recent years, the SFC has strengthened supervision over the profit adjustment behavior of the listed companies at the end of the year. Every year, at the end of the year, the level of inquiry will be increased. In recent years, the number of listed companies delisting has increased significantly, and it also indicates that regulation is playing a role. An intermediary agency close to regulators pointed out.

Regulators are also improving the system of "keeping the shell" regularly appearing on the market.

Sun Nianrui, deputy director of the CSRC listing department, said that in the reform of the CGC's delisting system, a combination of financial class delisting indicators was set up to strive to eliminate "zombie enterprises" and "shell companies" accurately, which means that the listed companies that are about to withdraw from the market will be pieced together by selling their houses, selling land and subsidized by other means, trying to turn the losses through the "inflated profits" to "protect the shell" in the CBD market, which will have a strong reference for the gem and other main board market delisting system reform.