The former real estate giant Zhongnan Construction still failed to escape the fate of delisting.

On April 26, ST Zhongnan, which had already been "capped," continued to hit the limit-down, closing at 0.72 yuan per share. It is reported that the stock has been trading below 1 yuan for 15 consecutive trading days, meaning even if ST Zhongnan hits the limit-up for the next five trading days, it still won't recover above the 1 yuan threshold.

According to stock listing rules, if a company's stock closes below 1 yuan for 20 consecutive trading days, the exchange will terminate its listing.

In other words, ST Zhongnan has already "locked in" delisting in advance.

Due to industry downturns, delistings in the real estate sector are not uncommon. Statistics show that in 2023, 12 A-share real estate companies were delisted, including Yango Group, Blu-ray Development, Zhongtian Financial, Jiakai City, Sundy Land, Tahoe Group, and Myhome Real Estate.

Regarding the potential face-value delisting, ST Zhongnan and its actual controller, Chairman Chen Jinshi, made efforts. On April 20, media reports indicated that the Nantong Haimen District government facilitated talks between Zhongnan Construction's controlling shareholder, Zhongnan Urban Construction, and PAG Group and Jiangsu Asset Management to discuss debt resolution and equity transactions.

After the news broke, Zhongnan Construction confirmed its authenticity to the media.

The news drove Zhongnan Construction to a limit-up on April 22. Unfortunately, the company later released a disastrous earnings report during the disclosure window, dealing another heavy blow.

The financial report showed that in 2023, the company's total revenue was 68.488 billion yuan, up 16.01% year-on-year, but net losses reached 5.292 billion yuan, down 42.37% year-on-year.

Along with the earnings report, the company also announced a "Special Treatment (ST)" designation and a trading halt. After a one-day suspension, Zhongnan Construction was "capped," and its stock abbreviation changed to "ST Zhongnan."

After resuming trading, ST Zhongnan's stock price hit consecutive limit-downs.

This also means the company's "shell protection" plan has completely failed.

The Billion-Dollar Giant That Started With 5,000 Yuan

The times create heroes, and the times create era-defining enterprises.

When it comes to Zhongnan Group, its helmsman Chen Jinshi is an unavoidable key figure. Public records show that Chen Jinshi was born in October 1962 in Nantong, Jiangsu.

In 1988, the 26-year-old Chen Jinshi led 28 people with 5,000 yuan in pooled funds to Dongying, Shandong, subcontracting labor projects under the Pingxiang Township Fifth Brigade's qualification, starting a difficult entrepreneurial journey.

Choosing real estate during the early stages of economic boom proved Chen Jinshi's foresight.

By 1991, Chen Jinshi had established himself in the market and gained industry recognition. He spent a decade in contracting, accumulating considerable wealth.

1998 was a pivotal year for Chen Jinshi and Zhongnan Group. Realizing the future potential of real estate, Chen shifted from contracting to property development after much deliberation.

Chen later recalled, "Many in the company disagreed, fearing the risks, but after my persistent persuasion, they agreed to invest 10 million yuan into the real estate market."

History proved his decision correct.

In 2009, Zhongnan Group listed on the Shenzhen Stock Exchange, launching an expansion cycle. With capital support, Zhongnan Construction flourished.

In 2015, Chen Jinshi decided to focus the group's real estate business on first- and second-tier cities, upgrading products to mid-to-high-end. Under the strategy of "One Zhongnan, Dual Main Businesses, Triple Drive, Four-Commerce Linkage, Six Sectors, Seven Synergies," Zhongnan Construction expanded to 26 provinces, over 160 cities, and overseas markets like Australia and Algeria. It ranked 78th among China's Top 500 Enterprises, 11th among China's Top 500 Private Enterprises, 16th among Chinese real estate firms, and 8th among China's Top 500 Construction Companies.

In 2020, Zhongnan Construction and Chen Jinshi peaked. The company's contract sales exceeded 200 billion yuan, reaching 223.8 billion yuan, entering the "200 Billion Club." Chen Jinshi ranked 338th on the 2020 Hurun Rich List with a net worth of 14 billion yuan.

Zhongnan Construction Awaits a "White Knight"

After 2021, as the industry declined, Zhongnan Construction's performance suffered. In 2021, despite revenue growth, net profits plummeted, with annual losses reaching 3.382 billion yuan.

The massive losses were the first domino to fall.

In 2022, Zhongnan Construction faced a "double kill" in revenue and profits, with net losses hitting 9.183 billion yuan.

Two years of losses didn't lighten the burden. In 2023, revenue rebounded, but losses persisted. The financial report showed total revenue of 68.488 billion yuan, up 16.01% year-on-year, but net losses were 5.292 billion yuan, down 42.37% year-on-year.

Notably, as Zhongnan Construction's non-GAAP net losses for the past three fiscal years were negative, and its latest audit report raised concerns about its ability to continue as a going concern, the company was designated with "Special Treatment" (ST), colloquially known as being "capped."

To preserve its "shell," Zhongnan Construction and Chen Jinshi made efforts, including negotiating with PAG Group to resolve debt issues.

In response to the Shenzhen Stock Exchange's inquiry, ST Zhongnan stated: "The company consulted its controlling shareholder, Zhongnan Urban Construction Investment Co., which confirmed that on April 20, 2024, under the Haimen District government's coordination, it discussed potential collaborations with PAG and Jiangsu Asset Management on debt restructuring, equity swaps, and strategic investments."

ST Zhongnan added that discussions were preliminary, with no concrete plans or timelines, and the impact remained highly uncertain.

According to its 2023 annual report, Zhongnan Construction's total assets were approximately 226.9 billion yuan, with total liabilities of 206.8 billion yuan, resulting in a debt-to-asset ratio exceeding 91%.

Tianyancha data shows Zhongnan Construction is now a "dishonest 被执行人" (defaulter), with numerous enforcement cases, high-consumption restrictions, and frozen equity involving over 3 billion yuan.

Meanwhile, Chen Jinshi is also a 被执行人 (enforcement target) and subject to high-consumption restrictions, with 涉案金额 (involved amounts) around 1.39 billion yuan.

Kan Jian Finance believes that as the industry recovers and policy support strengthens, companies' risk-resolving capabilities are improving. Zhongnan Construction will likely find its "white knight."