The “Fertilizer King of China” Wanlianbu was punished!
On the evening of May 20, *ST JINZING (002470.SZ) released an announcement showing that the company had falsely increased revenue and profit by fictitious trading business, failed to disclose related parties and related transactions as required, and some assets and liabilities accounts were falsely recorded and other illegal facts. 23.07 billion yuan of inflated revenue, 21.08 billion yuan of inflated costs, and 1.99 billion yuan of total inflated profit during 2015-2018. 1.99 billion yuan.
The company’s founder and chairman, Wan Lianbu, was placed on a lifetime market ban.
*ST Jinzheng was also ordered to rectify the situation and fined 1.5 million yuan; eight executives, including Wan Lianbu, were fined a total of 6.05 million yuan.
The company’s huge amount of fraud
The chairman of the board was banned from the market for life
In 1998, Wan Lianbu started his business from scratch in a few simple sheds in Linshu County, Shandong Province. In just 10 years, he built Jinzhengda from a small workshop fertilizer enterprise to the world’s largest slow-release fertilizer production base. Wan Lianbu is known as the “Fertilizer King of China”.
The company has ranked first in China in compound fertilizer production and sales for nine consecutive years.
Image from the official website of Jinzhengda Group
In 2010, the company was listed on the Shenzhen Stock Exchange. Statistics show that after the listing, Jinzhengda has achieved “7 consecutive increases” in revenue, with revenue of 5.479 billion yuan and net profit of 314 million yuan at the beginning of the listing in 2010. In 2017, the company’s revenue reached a peak of 19.833 billion yuan in the past 10 years, with a net profit of 715 million yuan.
Wan Lianbu has been awarded as “China’s Outstanding Private Entrepreneur”, “China’s Top Ten Innovative People in Agricultural Industry”, “Outstanding Entrepreneur of Shandong Province”, “Linyi City and Shandong Province Labor Union” and “Outstanding Entrepreneur of Shandong Province”. “Linyi City and Shandong Province Model Worker” and other titles.
Photo source of Wan Lianbu: Jinzhengda official website
On July 1, 2020, the company was starred as the company’s 2019 annual report was issued an audit report with an unavailable opinion by the accounting firm – *ST Jinzheng; in September 2020, Jinzhengda received the “Notice of Investigation” from the China Securities Regulatory Commission (CSRC), which decided to investigate the company for alleged information disclosure irregularities. The company opened a case for investigation.
As identified by the CSRC, the main facts of the alleged violations by Jinzhengda are.
From 2015 to the first half of 2018, Jinzhengda and some of its subsidiaries within the scope of consolidated statements carried out fictitious trading business with no physical flow through fictitious contracts with its suppliers, customers and other external units, with an accumulated inflated revenue of RMB 23.07 billion, inflated costs of RMB 21.08 billion and inflated total profit of RMB 1.99 billion.
At the same time, Jinzhengda failed to disclose related parties and related transactions as required: inaccurate disclosure of non-operating capital transactions with Noblefon (China) Agriculture Co. The amount of about 750 million yuan of related transactions with Fulang (China) Biotechnology Co. and Notel (China) Chemical Co. were not disclosed.
In financial bookkeeping, Jinzhengda falsely reduced notes payable by $928 million and $1,028 million in 2018 and 2019; falsely increased inventory by $3,197 million, falsely increased profit by $142 million and falsely increased liabilities by $14 million in 2019.
Based on the above illegal facts, the SFC ordered Jinzhengda to make corrections, gave a warning and imposed a fine of 1.5 million yuan; gave a warning to Chairman Wan Lianbu and imposed a fine of 2.4 million yuan; gave a warning to seven executives, including Li Zhiguo, and imposed a total fine of 4.65 million yuan.
Wan Lianbu was banned from the market for life. Li Guiguo, the former financial officer, was subject to a 10-year market entry ban, and Tang Yong, the current financial officer, was subject to a 5-year market entry ban.
The beneficial owner’s equity was judicially auctioned
At the end of April this year, *ST Jinzheng released its 2020 annual report, saying that the net profit attributable to the owners of the parent company in 2020 was a loss of 3.366 billion yuan, compared with a net loss of 683 million yuan in the same period of the previous year, an expansion of losses; operating income of 9.355 billion yuan, a decrease of 17.28%.
This financial report, issued with a non-standard qualified opinion by the accounting firm, and its internal control report for 2020, was directly issued with an adverse opinion.
On the secondary market, *ST JINZheng’s share price has repeatedly hit record lows. As of press time, Jinzheng fell to 1.53 yuan, with the latest market value of 5.03 billion yuan, plunging nearly 90% from the 2015 high, evaporating 26.5 billion yuan in market value.
And the shares held by the actual controller Wan Lianbu, was also subject to judicial auction. on May 7, the company announced that the user name Yang Xiaolong through the bidding number V4996 on May 7, 2021 in Shenzhen Intermediate People’s Court in Guangdong Province on the Ali auction platform to carry out the “*ST Jinzheng (stock code: 002470) 148 million shares of stock ” project in the public bidding, won with the highest response price. The subject’s network auction sale price: ¥210 million. The average price of the transaction was ¥1.43 per share, representing a discount of approximately 7% to the current market price.
After the auction, the number of shares held by Wanlianbu will be changed to 236,100, from 11.69% to 7.18% of the total number of shares of the company.
The exchange issued a letter of concern on April 26 on *ST JINZING “about related party to capital offsets and related transactions” for additional clarification, the company’s response is also delayed again and again, May 7, May 13, May 20, three times decided to postpone the response.
And on May 11, ST Jinzheng submitted an application to the exchange for the revocation of the company’s stock delisting risk warning. The company said that after the disclosure of the 2020 annual report, the company meets the conditions to apply to the Shenzhen Stock Exchange for the revocation of the delisting risk warning for stock trading, as the internal control report for 2020 was issued with a negative opinion, the company’s stock abbreviation will then be changed from “ST JINZheng” to “ST JINZING “.
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