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ST SanSheng (002742) has received the final judgment in its case of securities market manipulation.

On the evening of September 3, the company disclosed that the Chongqing Municipal Higher People's Court recently made a final judgment on the aforementioned case, upholding the original judgment, which decided to execute a prison sentence of two years and six months, suspended for three years, and a fine of 1 million yuan.

In June 2021, ST SanSheng disclosed that the company's actual controller, Pan Xianwen, was criminally detained by the Chongqing Public Security Bureau on suspicion of manipulating the securities market. He was released on bail pending trial on June 30 of the same year and placed under residential surveillance on November 6, 2023.

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The criminal judgment received by the company from the First People's Court of Chongqing in January of this year showed that the defendant Pan Xianwen was convicted of the crime of manipulating the securities market (from August 17, 2018, to March 1, 2019, he conspired with others to use concentrated capital advantages to continuously trade stocks, and during this period, the securities accounts involved had the behavior of continuously buying and selling shares for more than 30% of the total trading volume of the company's stocks for 20 consecutive trading days, which constitutes the crime of manipulating the securities market), and was sentenced to two years in prison and a fine of 1 million yuan; he was also convicted of the crime of issuing stocks without authorization (as the person directly in charge of Chongqing BeiSheng Pharmaceutical Technology Co., Ltd., he issued stocks to more than 200 specific objects without the approval of the relevant state departments, and his behavior constituted the crime of issuing stocks without authorization), and was sentenced to one year in prison. The decision was to execute a prison sentence of two years and six months, suspended for three years, and a fine of 1 million yuan.

ST SanSheng was originally engaged in the comprehensive utilization of gypsum resources, commercial concrete, and additives, etc., mainly in the building materials and chemical industry. Later, it implemented a diversified development strategy, started the layout of the second industrial chain of pharmaceutical manufacturing through mergers and acquisitions, and formed a pharmaceutical manufacturing business based on intermediate raw materials and core preparations.

After the actual controller was taken compulsory measures, ST SanSheng's operating performance has been in continuous loss since 2021. In the first half of 2024, the company achieved a business income of 736 million yuan, a year-on-year decline of 30.94%; the net profit attributable to the parent company was a loss of 66.48 million yuan, a year-on-year increase of 31.83%.

Under this background, in recent years, the overall stock price of ST SanSheng has been fluctuating downward, and at the beginning of June this year, it once bottomed out to 1.24 yuan per share. However, in recent months, the company's stock price has shown a rebound from the bottom, and after experiencing several consecutive daily limit rises, it has reported 2.8 yuan per share as of the closing on September 3.

In addition to the decline in performance, in May of this year, ST SanSheng has received the "Administrative Supervision and Management Measures Decision" issued by the Chongqing Securities Regulatory Bureau of the China Securities Regulatory Commission. After investigation, it was found that Chongqing BeiSheng Pharmaceutical Technology Co., Ltd. (hereinafter referred to as "BeiSheng Pharmaceutical") and SSC CONSTRUCTION PLC (hereinafter referred to as "SSC Company") are companies controlled by the actual controller Pan Xianwen. The listed company, as a co-borrower of BeiSheng Pharmaceutical, borrowed from Chongqing Wansheng District Henghui Small Loan Co., Ltd., and guaranteed the loan of SSC Company, and the above matters were not approved by the board of directors and the shareholders' meeting.

The listed company, due to the confirmation of liabilities for co-borrowing with BeiSheng Pharmaceutical, fulfilled the guarantee responsibility for SSC Company to repay the debt, constituting the non-operational occupation of the listed company's funds by the controlling shareholders, actual controllers, and their related parties.

According to the 2023 annual report disclosed by ST SanSheng, as of the disclosure date of the 2023 annual report, the balance of non-operational occupation of the listed company's funds (including interest) by the controlling shareholders, actual controllers, and their related parties was 113 million yuan, accounting for 32.79% of the net assets of the listed company in the most recent audited period. In addition, the listed company's illegal guarantee balance was 13.6736 million yuan.The "Administrative Supervision Measure Decision" clearly states that if ST Sansheng fails to recover the occupied funds and interest of 113 million yuan within six months as required by the rectification measures, the Shenzhen Stock Exchange will suspend the trading of the company's shares. If the rectification is not completed within two months after the suspension, the Shenzhen Stock Exchange will implement a delisting risk warning for the company's stock trading. If the rectification is still not completed within the following two months, the Shenzhen Stock Exchange will decide to terminate the trading of the company's shares.

According to the latest progress disclosed by ST Sansheng on August 28, as of the announcement date, SSC has settled the loan in advance, and the bank has released the mortgage on the Sansheng Pharmaceutical factory buildings and machinery and equipment. The company has initiated the work of verifying the repayment procedures and related materials of SSC by local and domestic law firms. The actual controller and its related parties' non-operational occupation of the company's funds (including interest) is 105 million yuan, accounting for 30.33% of the company's most recent audited net assets.

In June 2023, ST Sansheng disclosed that it planned to apply to the competent People's Court for reorganization and pre-reorganization of the company on the grounds that the company could not repay the due debts on time and obviously lacked the ability to repay, but had reorganization value.

In the evening announcement on August 28, ST Sansheng also disclosed that the company's reorganization work is continuing to advance, and it is actively communicating with all stakeholders, intending to use the resources of the stakeholders to prioritize the resolution of regulatory issues.

Regarding the impact of the final judgment on the actual controller of the company, ST Sansheng also stated that Pan Xianwen is not currently serving as a director, supervisor, or senior executive of the company. The above judgment does not affect the normal business operations of the company, and the company's current business operations are normal.