Shenyang Chemical's Stock Plunges 14% in Three Days: China's Securities Regulatory Commission Launches Investigation, Chlor-Alkali Giant Embroiled in Disclosure Scandal!

On August 12, 2024, Shenyang Chemical Co., LTD. (stock code: 000698.SZ) fell by the daily limit at the opening, and its share price closed at 2.74 yuan per share at noon. The company issued an announcement after the market on August 9, announcing that it had received a notice of filing from the China Securities Regulatory Commission, and that the China Securities Regulatory Commission had decided to file an investigation into the company due to suspected violations of information disclosure. At present, investors' rights collection activities have been started, and the specific rights protection methods are detailed at the end of the announcement.

After Zhongtai Chemical (stock code: 002092) was investigated by the China Securities Regulatory Commission in March 2024, Shenyang Chemical became another giant in China's chlor-alkali chemical industry to be investigated. Affected by this news, at the close of trading on August 13, 2024, Shenyang Chemical's stock price closed at 2.63 yuan per share, falling for three consecutive trading days, with a cumulative decline of 14.05% and a cumulative turnover rate of 4.99%.

Shenyang Chemical emphasized in the announcement that the company's current production and operation activities are normal. During the investigation period, the Company will fully cooperate with the relevant investigation work of the China Securities Regulatory Commission, strictly abide by relevant laws and regulations, and fulfill the obligation of information disclosure in a timely manner.

Shenyang Chemical is mainly engaged in the production and sales of chlor-alkali, petroleum, polyether polyols and other chemical products, and its actual control is the State-owned Assets Supervision and Administration Commission of the State Council. According to the company's half-year performance forecast released in July, Shenyang Chemical expects that the net profit loss attributable to the shareholders of the parent company in the first half of 2024 will be between 240 million yuan and 340 million yuan, and the loss range may decrease by 1.68% to increase by 39.28% compared with the same period last year. The net profit loss after deducting non-recurring gains and losses was between 70 million yuan and 90 million yuan, and the loss margin decreased by 71.18% to 62.94% year-on-year.

Regarding the reasons for the change in performance, Shenyang Chemical explained that at the end of June, a subsidiary was formally entered into bankruptcy proceedings by the court, and the company therefore lost control of the subsidiary and no longer included it in the scope of the consolidated statements, which will affect the company's non-recurring profit and loss amount between 150 million and 250 million yuan. In addition, the parent company of Shenyang Chemical increased product sales, increased revenue and reduced unit costs year-on-year, resulting in an increase in net profit in the first half of 2024 compared to the same period last year.

Public information shows that Shenyang Chemical was established in 1996, located in Shenyang, Liaoning Province, mainly produces and sells chlor-alkali, petroleum, polyether polyols and other chemical products. The company's main production equipment includes 200,000 tons/year PVC paste resin, 200,000 tons/year caustic soda; 500,000 tons/year catalytic thermal cracking to produce ethylene (CPP), 130,000 tons/year acrylic and ester, 300,000 tons/year polyether polyols, etc.

According to the company's semi-annual performance forecast released in July, Shenyang Chemical expects that the net profit loss attributable to the shareholders of the parent company in the first half of 2024 will be between 240 million yuan and 340 million yuan, and the loss range may decrease by 1.68% to increase by 39.28% compared with the same period last year. The net profit loss after deducting non-recurring gains and losses was between 70 million yuan and 90 million yuan, and the loss margin decreased by 71.18% to 62.94% year-on-year.

It is worth noting that Shenyang Chemical had previously delayed the disclosure of its 2023 annual report, adjusting the disclosure time originally scheduled for April 3, 2024 to April 27, 2024. In the extension announcement, Shenyang Chemical said: "In view of the progress of the current preparation work, the company in line with the principle of prudence and the attitude of responsibility to the majority of investors, in order to ensure the integrity and accuracy of information disclosure", so the application for extension. Earlier, in July and June 2023, Shenyang Chemical also issued the "Announcement on the Correction and Retroactive Adjustment of Prior Accounting Errors" and the "Supplementary Announcement on the correction and Retroactive Adjustment of Prior Accounting Errors" to correct the data in the disclosed periodic report, for reasons related to inventory and cost accounting, long-term asset impairment and other issues.