Thirteen A-share companies were delisted in the first half of the year, including both the "immortal bird" and the "first stock to transfer boards."

Summary of Key Points

In the first half of this year, a total of 13 companies were delisted from the A-share market, a number that is roughly the same as in the same period last year. However, these cases are more representative: among them were both "undead birds" (companies that have been listed for over 30 years, such as Delisted Rock) and enterprises that once carried the halo of being the "first to transition boards" (such as Delisted Guandian). The main reasons for delisting included failing to meet performance standards and significant financial fraud, with insufficient market value being a secondary factor. Regulatory authorities have sent a clear signal that all companies that should be delisted will be delisted, shattering the myths around "shell resources" and the illusion of safety in board transitions, while also warning investors to avoid speculating on delisted stocks.

I. Overview of Delistings in the First Half of the Year: Both Established Companies and Newcomers Were Affected, with Diverse Reasons

The 13 delisted companies came from various sectors, including the Main Board, Growth Enterprise Market (GEM), Science and Technology Innovation Board (STAR Market), and Beijing Stock Exchange (BSSE). The Main Board accounted for the largest proportion (8 companies in total from the Shanghai and Shenzhen Main Boards). The reasons for delisting can be categorized into five types:

• Performance and Internal Control Failures: Companies like Delisted Rock (with a 30-year history) and Delisted Guohua not only suffered consecutive losses but also received a "negative opinion on internal control" from auditing firms (in simple terms, the company's internal management was chaotic, and its finances were not accurate).
• Insufficient Market Value: Stocks such as *ST Jinglun* and *ST Aoview* had consistently low prices, resulting in their total market values falling below the listing requirements (for example, their market value was below 300 million yuan for 20 consecutive days).
• Internal Control/Auditing Violations: Delisted Panda faced delisting due to ineffective internal management and auditing issues that crossed critical thresholds.
• Voluntary Delistings: Debang Co., Ltd. voluntarily delisted after being acquired by JD Logistics.
• Serious Legal Offenses: Companies like Guangdao Deli and Changyao Deli were forced to delist due to financial fraud.

It is noteworthy that three companies had been listed for over 30 years (with Delisted Rock being listed in 1993), challenging the notion that established companies would never be delisted.

II. Case Studies: Even "Undead Birds" and "Board Transition Stars" Fell

• Delisted Rock: The 30-Year "Undead Bird" Finally Met Its End

This company had been in the A-share market for over 30 years, changing control holders multiple times and names (from its initial name "Shanghai Petrochemical" to later "Rock Co., Ltd."), but it never achieved satisfactory performance. It ultimately became the first company delisted due to poor performance.

• Delisted Guandian: The First to Transition Boards Couldn't Escape

As one of the first companies to list on the BSSE, it transitioned to the STAR Market in 2022 and was considered a benchmark for such transitions. However, it was delisted just two years later due to financial fraud, shattering the myth that transitioning boards meant safety.

III. Financial Fraud as a Major Problem: Huge Amounts Involved, Severe Penalties

Many delisted companies attempted to sustain their existence through fraud, only to suffer significant losses:

• Guangdao Deli: Over 7 years, the company inflated its profits by 1.4 billion yuan using textbook-level fraudulent methods, such as creating fake contracts, invoices, and bank statements. It even intercepted audit inquiries, altering them with counterfeit seals before sending them back to the auditors. The company was fined 40.5 million yuan, and its controlling shareholder was banned from entering the securities market for life.
• Dongtong Deli: Fined a record amount of 229 million yuan for four consecutive years of revenue inflation.
• Changyao Deli: Inflated profits by 733 million yuan over three years, resulting in a fine of 10 million yuan for the company and a total fine of 32 million yuan for 14 responsible individuals.

These cases demonstrate that fraud not only leads to delisting but can also result in the complete collapse of the company and its executives.

IV. Regulatory Stance: Clear Policy on Delistings

Professor Tian Lihui from Nankai University made the following points:

• The delisting system is becoming stricter: Whether it's established companies or those transitioning boards, any violations will lead to delisting, and "shell resources" are no longer valuable.
• Delistings may accelerate in the second half of the year: With the full implementation of the registration-based IPO system, problematic companies will be cleared more quickly.
• Investors should avoid delisted stocks: Some delisted stocks may see sharp price increases before delisting (as some investors bet on potential restructurings), but these often end in losses. Professor Tian advises investors to avoid poor-performing companies and focus on their actual financial performance, rather than becoming "rescue buyers" for failing firms.

Conclusion

This year's delistings show that the A-share market is becoming cleaner: companies that cannot perform are being removed, and those that commit violations are punished. For ordinary investors, it's time to stop believing in the myths of "undead birds" or successful board transitions. When selecting stocks, one should focus on fundamental factors and avoid delisted companies that appear cheap but are actually full of problems.

(End of translation)