(Yicai) Nov. 30 -- Simei Media’s shares fell for the third straight day after regulators in China launched an investigation into the advertising agency on suspicion it breached information disclosure laws. Earlier this week the firm told investors it was running the online grocery business of Douyin, the Chinese version of TikTok.

Simei Media’s stock [SHE: 002712] finished 7.3 percent down at CNY6.20 (87 US cents) in Shenzhen today, extending its plunge to 25 percent from a close of CNY8.26 on Nov. 27.

The China Securities Regulatory Commission has begun an investigation of Simei Media for suspected violation of information disclosure laws, the company said yesterday. The Zhejiang branch of the securities watchdog has sent warning letters to the Hangzhou-based firm and the secretary of its board.

Simei Media responded to questions on the stock exchange’s investor relations platform on Nov. 27, saying that it is now managing Douyin Supermarket. Its share price surged by the 10 percent daily trading limit that day, closing at CNY8.26, a level not reached since June.

After the market closed on Nov. 27, Simei Media clarified that it only operates one of Douyin Supermarket's official livestream e-commerce studios. Douyin’s e-commerce unit also clarified on its social media accounts later the same day that its supermarket business is self-operated.

Simei Media’s shares subsequently fell by their 10 percent daily trading limit for two days in a row.

The firm also replied yesterday to the Shenzhen Stock Exchange’s inquiry about its income from running live e-commerce broadcasts, saying it is an expense for now and no revenue has been earned. But the business is expected to bring in a monthly income equal to as much as 0.3 percent of its total revenue last year, the firm added.

Simei Media had revenue of CNY4.2 billion (USD589 million) last year, down 6 percent from 2021, according to its earnings report, and it sank into the red by CNY400 million (USD56.3 million) after a CNY59.3 million (USD8.4 million) profit the year before.

Editor: Emmi Laine