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Under public condemnation, holding a public apology, and changing the semi-annual report, what happened to the company?
On September 21, Qinshang announced that it had been informed on September 20, 2017, by the Shenzhen Stock Exchange regarding a "Decision on the Public Condemnation of Dongguan Qinshang Optoelectronics Co., Ltd. and Related Parties" (referred to as the "disposition"). The company has now officially disclosed the details of this decision.
According to the findings, Dongguan Qinshang Optoelectronics Co., Ltd. and its related parties were found to have committed several violations. Specifically, the company made multiple disclosures about its 2016 performance, which significantly deviated from the final audited results.
On October 27, 2016, the company released its third-quarter report for 2016, estimating a net profit of between RMB 47 million and RMB 54 million. Then, on February 28, 2017, it issued a performance report stating that the estimated net profit for 2016 was RMB 47.87 million. However, on April 14, 2017, the company revised its estimate, reducing the net profit to RMB -396 million. Finally, when the 2016 annual report was published on April 22, 2017, the actual audited net profit was reported as -RMB 4.227 billion.
The discrepancies between the initial forecasts and the final audited figures were substantial. The difference between the original forecast and the final result reached -RMB 474 million, which accounted for 111% of the absolute audited net profit in 2015. Similarly, the gap between the performance report and the actual net profit was -RMB 475 million, also equivalent to 111% of the 2015 figure.
As a result, the company’s actions were deemed to have violated several provisions of the Shenzhen Stock Exchange Listing Rules (2014 Revision), specifically Articles 2.1, 11.3.3, and 11.3.7. Additionally, Chen Yonghong, the Chairman and General Manager, and Deng Junhong, the Chief Financial Officer, were found to have failed in their duties of integrity and diligence, violating Articles 2.2 and 3.1.5 of the same rules. They were held primarily responsible for these violations.
On the same day, Qinshang also announced that it would hold a public apology session as required by the SME Board Guidelines for the Standardized Operation of Listed Companies. The event was scheduled to take place online via Panorama Network Co., Ltd. from 15:00 to 17:00 on September 26, 2017. Investors could join the session through the "Panorama Roadshow World" platform. The participants included Mr. Chen Yonghong, Mr. Deng Junhong, and Mr. Qi Xinhua, an independent director.
In addition, according to Gaogong LED observation, Qinshang also released its 2017 semi-annual update report on September 21. During the first half of 2017, the company achieved operating revenue of RMB 865 million, representing a 93.94% increase compared to the same period in 2016. Net profit attributable to shareholders, after deducting non-recurring gains and losses, reached RMB 78.14 million, up 146.69% year-over-year.