Multiple Measures Adopted to Protect “Shell” by Nanning Sugar

Nanning Sugar received ST from Shenzhen Stock Exchange Market after running in losses for two years in a row in 2017 and 2018. Its share trading shall be halted if the net profit is still negative in 2019. It should be noted that the company still lost 549 million yuan during the first three quarters of 2019. A listed company would reverse the negative situation via selling asset, restructuring or by relying on government subsidy if it cannot change the situation by its normal business operation, for the purpose of protecting its “shell”.
 
Nanning Sugar adopted both methods.
 
(1) Huge government subsidy. Recently the company informed that it had received a number of subsidies including 227 million yuan subsidy for leasing “two-high” cane farming zones from Nanning Financial Bureau, 2.0989 million yuan interest subsidy for storing sugar from the Financial Bureau of Naning Economic and Technological Development Zone, 50 million yuan interest subsidy for buying Binyang Daqiao Sugar Plant from Nanning Financial Bureau, and the combined sum is 279 million yuan. Before these, the company had received a total fo 9.8713 million yuan refund for social security job stabilization from the Social Insurance Fund of Nanning Social Insurance Bureau on 12^th and 13^th of December. To date Nanning Sugar has got nearly 290 million yuan various kinds of subsidy.
 
(2) Clearance sale of its deficit-running sub company. Nanning Sugar announced that it had recently sold 75% shares of its sub company Huangjiang Yuanfeng Sugar to Guangxi Xinze Huanfeng Investment’s partner company at the price of 1 yuan. It was unveiled that the two parties signed the transaction contract on 18^th December and the contract was submitted to the exchange market of property. For this transaction, Nanning Sugar and Guangxi Xinze agreed that the latter should repay one-off 492 million yuan financial aid to Nanning Sugar on behalf of Huanjiang Yuanfeng Sugar within ten days after signing the agreement.
 
If these measures are successful, Nanning Sugar should be able to fill up its deficit with the subsidies and the aid from selling asset, and thus to avoid being delisted. However the issue has attracted attention from the regulatory authority and the “shell” protecting future is uncertain.