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LegiEX.com solves doubts, guards against surprise trading by listed companies

At the end of the year, surprise trading of listed companies has become a hot topic again, so what exactly is "sudden trading"?

The so-called surprise transaction focuses on "surprise", which mainly refers to the fact that some listed companies at the end of the year have unsatisfactory business performance and even losses. They temporarily construct transactions that lack relevant background and commercial substance to realize the turnaround of book profits Profit or to achieve the desired standard.

To put it simply, it is to use "surprise" operations to whitewash real financial data to achieve the purpose of protecting the shell or avoiding being processed by "ST".

Typical surprise transactions, such as "selling property". According to the provisions of accounting standards, the sale of real estate or the use of real estate to pay off debt, the resulting profit and loss can be confirmed. At present, domestic housing prices are basically not low. Therefore, there are often listed companies that sell properties at the end of the year to turn losses into profit.

This approach has become a “fixed routine” for some listed companies whose main business is stagnant and loses profitability at the end of the year. In October this year, Baobian Electric stated that in order to effectively revitalize the stock assets and recover the funds, the company plans to sell the 8 commercial houses it holds in the Green Mandu Community of Baoding City.

Having said so much, how can we be alert to the whitewashing of financial statements by "surprise transactions"?

Whether the transaction at the end of the year is regarded as a "surprise transaction", the core is to pay attention to the fairness of the transaction, the fairness of pricing, and whether there is a situation of improper delivery of benefits.

Among them, we must pay attention to both the actual value of the asset and the main motive of the transaction, and we must also be alert to unrelated potential related transactions.

At the end of the year, "surprise transactions" glossed over the real financial data of listed companies, masked the risks and crises in the production and operation of listed companies, circumvented the institutional arrangements for capital markets to disclose risks to investors, such as risk warnings, and distorted the market's normal valuation system , Hindering the timely market clearance of listed companies that have lost their ability to operate. Therefore, it is necessary to attach great importance to the negative impact and market harm of surprise transactions at the end of the year.

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