November 8, 2019
Volume 7 Issue 4
Tianhe Trading Remains Suspended
Tianhe Chemicals Group’s trading privileges on the Hong Kong Stock Exchange will remain suspended until further notice, the company announced Wednesday, as it awaits a decision on a potential delisting.
The lubricant additives and specialty fluorochemicals producer has had its trading suspended since March 2015. Under new rules implemented in August 2018, the exchange can delist companies if trading of their stock has been suspended for 12 consecutive months. Companies already under suspension were given a grace period until July 31, 2019. Trading of Tianhe’s stock was suspended in 2015 for failure to file audited financial reports, a failure that stemmed partly from an allegation the previous year that it committed fraud in the lead-up to its 2014 initial public stock offering.
In May 2017, the Hong Kong exchange announced it had further suspended Tianhe’s rights to trade and imposed a set of conditions the company must meet before trading could resume. Those conditions included approval of resumption by Hong Kong’s Securities and Futures Commission, conducting a forensic investigation to address potential irregularities identified by auditors, publishing outstanding financial results and addressing any audit modifications, demonstrating adequate financial reporting procedures and internal control systems and informing the market of material information.
Tianhe filed paperwork in October 2016 with the Exchange, stating a forensic investigation conducted by the U.S.-based accounting firm Grant Thornton found no evidence of fraudulent accounting.
The exchange continued to extend Tianhe’s deadline for corrective action while the company worked on internal issues, the most recent extension ending on Oct. 31, 2019. Neither Tianhe nor the stock exchange would confirm if the company was delisted earlier this week.
Tianhe said it has “proactively taken steps to address the Commission’s concerns,” though it had no other updates. The company said it will work to establish and publish a timeline for further action.
In Wednesday’s update, Tianhe reported its lubricant additive division is still operating, but no details of its specialty fluorochemicals segment were given.
In an unaudited August filing, Tianhe said it suffered a 93 percent decline in net profit during the first six months of 2019 compared to the same period in 2018. The lubricant additive business recorded a decline in both revenue and gross profits, 54 percent and 57 percent, respectively, during the first half of 2019.