Jiemin Pharmaceuticals (10.82-2.26%, diagnosis) in December 16 last year after the flash crash continuous drop, the share price has fallen 75%. Not only a large number of individual investors lost their money, even listed companies were also forced to “step on the mines”.
On the evening of January 10, the listed company in the shares (9.51-19.87%, diagnosis shares) disclosed 2020 annual performance forecast, by the company’s internal calculations, the company’s 2020 net profit attributable to shareholders of the listed company for 90 million yuan – 115 million yuan, down 52.71% – 62.99% over the same period last year.
The performance of the significant change is an important reason, is the company’s purchase of 200 million private wealth management suffered a burst. 1 month net value plunged 97.18%, a loss of 158.7 million, these private wealth management products previously was heavy position in Jimin Pharmaceuticals.
Jiemin Pharmaceuticals flash crash, private equity plunged 97% in 1 month
The market is generally considered to be a “banker’s stock” in the near future. From mid-2018, the company’s share price had soared 6 times in two years.
Along with the share price, there was a constant stream of questions.
In April 2019, another investor’s account was stolen by someone who bought a full position in Jimin Pharmaceuticals at a high level. As most of the damaged stockholders use Flush (126.53-1.82%,診股), the incident also caused Flush stock to plunge. Subsequently, Flush publicly responded that the account theft incident is mainly due to the lack of awareness of security precautions of some investors, in the speculation of the WeChat group was cheated or various other reasons, leaked the trading account number and password, resulting in theft of the purchase of stolen sales occurred.
Later, Jimin Pharmaceuticals also said in response to media interviews, there are indeed “black mouth” through the WeChat group, qq group and live broadcast to shareholder stock recommendations, etc., to lure retail investors to take over Jimin Pharmaceuticals at high levels.
Under a constant stream of negative news, in June 2020, Jiemin Pharmaceuticals shares had a flash crash, from the highest of 57 yuan to 33 yuan or so, then the company’s share price stabilized and no volume of long-term horizontal trading.
On December 6, 2020, the company’s share price suddenly released a flash crash again, after 10 consecutive trading days down and continued to release the volume of negative decline, as of January 8 this year, the share price of only about 10 yuan. In less than a month’s time, the drop of more than 75%.
Because of the rapid decline, the killing force, many people in the market will be called the second Renton Holdings (9.54-4.12%, the diagnosis of shares).
Jiemin pharmaceutical “flash crash”, not only a large number of individual investors were “cut leeks”, in the shares were also forced to “step on the mine”.
According to the progress announcement of the use of idle own funds entrusted with financial management disclosed by Zhonglai, the company has carried out idle own funds entrusted with financial management (subscription to private equity funds) in four instalments from November 2019 to January 2020, subscribing to Tenglong 1 private equity investment fund, Tenglong 4 private equity investment fund of Tenglong 30 million yuan, 50 million yuan, and Tenglong 4 private equity investment fund of Qianhai, Shenzhen. Ltd. to subscribe to Fangji Zhengfan 1 private equity investment fund, Zhengfan Shunfeng 2 private equity investment fund 60 million yuan, 60 million yuan, a total subscription of 200 million yuan.
In the evening of January 4, Zhonglai shares obtained the latest period of the fund net asset value report as of December 31, 2020, showing that the net value of the above-mentioned private equity funds had a huge loss, the main reason for which was the long position in Jimin Pharmaceutical.
In the announcement, Zhonglai introduced that the share price of Jimin Pharmaceuticals, in which the above products were longed, dropped 67.65% within 12 trading days since December 16, 2020, and other stocks also suffered losses, and the above fund products used leverage tools in the investment process, which caused a significant drop in the net value of the fund, with a loss of 97.18% in that month.
According to the changes in the net value of private equity products announced by Zhonglai, the loss was 158.7 million yuan in 1 month in December 2020. While the net profit of Zhonglai shares for the whole year of 2019 is only 243 million yuan, this loss makes the profit of most of 2019 come to naught.
The listed company was rejected for continuous redemptions, saying that the private equity manager had multiple violations
In the announcement, Zhonglai shares complained that the manager of the private placement products had repeatedly refused to redeem the products by the company and there were violations of the contractual contents.
In the announcement, Zhonglai shares listed in detail even repeated requests for redemptions that were not allowed.
On April 23, 2020, the first formal application for redemption of all fund shares held was submitted to the fund manager by email and in writing, and the redemption progress was confirmed with the manager several times on April 27, April 30, May 6, May 8 and May 13, but the manager did not execute the redemption operation on the ground that “the redemption amount of the company is large and concentrated selling in a short period of time will lead to market volatility, which will cause losses to the company and other investors”.
On July 10, 2020, Zhengfan No. 1 Fund, Tenglong No. 1 Fund and Tenglong No. 4 Fund all reached the warning line or stop-loss line as of June 30, 2020, and the Company sent formal redemption requests to the Manager by email, etc., and then reminded the Manager by phone and voice by WeChat, etc. The Company sent the original redemption request by courier and the Fund Manager signed for it on July 13 and July 15, respectively.
On July 20, 2020, the Company sent a contact person to the contact address designated by ICP Asset and Qianhai Zhengfan for on-site communication to request redemption.
On August 26, 2020, the Company received a redemption amount of RMB19,835,200 from Zhengfan Shunfeng No. 2 private equity investment fund, corresponding to subscription amount of RMB18,400,000 and profit of RMB1,435,200.
On November 7, 2020, the Company submitted the redemption request for all the remaining shares held by the Company to the fund manager by mail again, and also sent the original by express mail, which was signed for by the fund manager on November 9, 2020.
On 12 November 2020, the Company again sent a contact person to Shenzhen for on-site communication, but the Fund Manager eventually failed to implement the redemption as requested by the Company on the ground that the net value was in the rebound stage or would be withdrawn in an orderly manner.
In addition to the inability to redeem, the fund products have also been operating in a highly leveraged state for a long time. According to the fund contracts of the four products, the ratio of the total value of the fund assets to the net asset value of the fund shall not exceed 200%.
However, according to the fund asset valuation table at the end of each month: all four products in which the company invested rapidly built up their positions within one month of the product’s inception and used leverage tools to reposition Jimin Pharmaceuticals, resulting in the ratio of the total value of fund assets to the fund’s net asset value all approaching or exceeding the contractual limit of 200% in that month.
In addition, three products, Zhengfan No. 1 Fund, Zhengfan No. 2 Fund and Tenglong No. 1 Fund, all of which had exceeded 200% of that ratio, failed to adjust their positions within 10 business days as contractually agreed.
Meanwhile, according to the fund contracts of the four products, the fund share net value of 0.85 is the warning line and 0.80 is the stop loss line, which is equal to or lower than the above net value, which triggers the warning notice and position closing notice. As for Zhengfan No. 1 Fund, Tenglong No. 1 Fund and Tenglong No. 4 Fund, the net value of fund shares has repeatedly fallen below the closeout line, but the manager has not been found to have performed the closeout operation or initiated an alert to the Company.
In addition, the company did not find that the fund custodian Shenwan Hongyuan (5.16-1.90%, stock) (06806) or Guotai Junan (17.50-1.02%, stock) (02611) had taken actions such as supervising prompting, disclosing and reporting when the above risks appeared, nor did it find that the custodian had taken measures to restrict the trading authority of the manager.
Ltd. and the fund custodian, as well as Li Pingping and Li Xiang, who are the difference fillers, will file a lawsuit or arbitration against the fund manager, Hong Sheng Asset Management (Shenzhen) Co.
At the same time, the company will recognize the loss of the principal of the fund products in full according to the enterprise accounting standards and the current situation of the financial products.
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