A few days ago, Transsion Holdings (688036. SH) announced that Xiao Yonghui, the company's financial director, was taken into custody by the Supervision Committee of Zhen'an District, Dandong City and placed on file for investigation.

In this regard, industry observer Hong Shibin told the "China Times" reporter that for the company, after the financial person in charge is retained or filed, the company's business may be affected and some emergency adjustments need to be made to deal with it, and at the same time, the company may also face investigation and review by regulators or relevant departments, in addition, it may also cause investors to worry and uncertainty, resulting in a decline in the company's stock price.

On September 9, Transsion Holdings fell sharply at the opening, and the company's stock price fell by more than 8% intraday. At noon on September 9, the company quickly issued an announcement on the progress of directors and senior executives to increase their holdings, but as of the close of the afternoon of the same day, its share price still fell 4.99% to 77.05 yuan per share.

On related issues, the reporter tried to contact the company's board secretary office for an interview, but he said that "please refer to the company's announcement for relevant information".

The head of finance was placed in lien

According to the announcement, Transsion Holdings received the "Notice of Retention in Custody" and "Notice of Case Filing" issued by the Supervision Committee of Zhen'an District, Dandong City on September 6, and decided to take retention measures and investigate Xiao Yonghui, the company's financial director. At present, the company has made proper arrangements for its related work.

Although the company did not elaborate on the specific reasons for Xiao Yonghui's detention and investigation, the announcement mentioned the "Supervision Commission". It has been learned that the Supervision Commission is an anti-corruption work body that supervises all public employees exercising public power in accordance with the law and investigates violations and crimes committed while performing official duties.

According to Xiao Yonghui's resume, he has no experience in "public office". According to the 2023 annual report, Xiao Yonghui has worked at Jiangxi Qingjiang Chemical Plant and Ningbo Bird Co., Ltd., and he has been serving as the financial director of Transsion Holdings since January 2014.

At the same time, the reporter noted that the supervisory committee that issued the "Notice of Retention in Custody" and the "Notice of Case Filing" is located in Zhen'an District, Dandong City, Liaoning Province, and according to Xiao Yonghui's resume and Transsion Holdings' past layout, Dandong City, Liaoning Province has not been involved.

However, a senior lawyer, who did not want to be named, told the China Times: "Non-public employees may also be subject to retention in custody measures by the Supervision Commission, and the territorial jurisdiction of retention in custody measures may be determined according to the location of the public officials under investigation." According to paragraph 4 of article 46 of the "Regulations for the Implementation of the People's Republic of China Supervision Law", when investigating cases of suspected crimes abusing public office by public employees, the Supervision Organs may lawfully take jurisdiction over the non-public employees involved in the case who are suspected of offering bribes, introducing bribes, or joint crimes abusing public office. ”

According to public information, in 2023, Xiao Yonghui will receive a pre-tax salary of 3.8556 million yuan in Transsion Holdings, which is higher than most directors and deputy general managers. As of the first half of 2024, Xiao Yonghui has been granted 392,000 shares in Transsion.

In July this year, Transsion Holdings also issued an announcement that a number of managers, including Xiao Yonghui, planned to increase their holdings of the company's shares with their own or self-raised funds within 6 months from July 16, and are expected to increase their holdings by a total of 10.8 million yuan to 14 million yuan. Among them, Xiao Yonghui plans to increase his holdings by 2 million yuan to 3 million yuan. However, as of now, Xiao Yonghui's plan to increase his holdings has not been implemented.

Net cash flow from operating activities was negative in the first half of the year

Regarding the impact of the incident, Transsion Holdings stated in the announcement: "The company has a sound governance structure and internal control mechanism, and other directors, supervisors and senior management personnel have performed their duties normally, and this matter will not have a significant impact on the normal operation of the company." As of the disclosure date of this announcement, the company has not yet known the progress and conclusion of the investigation. The Company will continue to pay attention to the follow-up of the above matters and fulfill its information disclosure obligations in a timely manner. ”

However, Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, pointed out in an interview with a reporter from the China Times: "First of all, it may affect the company's stock price and market confidence; Second, temporary management adjustments may be required within the company to ensure the continuity of financial and operational efforts; In addition, if the findings are severe, it could negatively impact the company's reputation and business operations. ”

At the opening of trading on September 9, Transsion Holdings' share price fell sharply, falling by more than 8% intraday. In response to this market reaction, at noon on the same day, the company quickly issued an announcement on the progress of the increase in holdings of directors and executives.

According to the announcement, as of the close of noon on September 9, Mr. Zhang Qi, director and deputy general manager of the company, Ms. Yang Hong, director and deputy general manager, and Mr. Zeng Chun, secretary of the board of directors, increased their holdings of 87,537 shares of the company through centralized bidding transactions through the Shanghai Stock Exchange trading system, accounting for 0.00775% of the company's total share capital, with a total increase of 6.5402 million yuan, which has exceeded 50% of the lower limit of the proposed increase in the amount of the increase plan.

At the same time, the company said that the implementation of the shareholding increase plan has not yet been completed, and the subject of the shareholding increase will continue to increase its holdings of the company's shares during the implementation period of the shareholding increase plan in accordance with the relevant shareholding increase plan.

After the announcement of the increase in holdings, the share price of Transsion Holdings narrowed its decline on the same day, but it still continued its downward trend. As of the close of trading on September 9, Transsion Holdings' share price fell 4.99% to 77.05 yuan per share. As of the close of trading on September 10, Transsion Holdings' share price fell 0.40% to 76.74%.

In terms of operating performance, after experiencing a decline in performance in 2022, Transsion Holdings has achieved both revenue and profit growth in 2023 and the first half of this year. In 2023, the company will achieve revenue of 62.295 billion yuan, up 33.69% year-on-year, net profit of 5.537 billion yuan, up 122.93% year-on-year, and non-net profit of 5.134 billion yuan, up 131.61% year-on-year.

In the first half of 2024, Transsion Holdings achieved revenue of 34.558 billion yuan, a year-on-year increase of 38.07%, a net profit of 2.852 billion yuan, a year-on-year increase of 35.70%, and non-net profit of 2.428 billion yuan, a year-on-year increase of 36.82%.

However, the company's gross profit margin decreased from the same period last year, to 21.53%, compared to 23.54% in the same period last year, and at the same time, its net cash flow from operating activities was -1.392 billion yuan, compared with 6.959 billion yuan in the same period last year.

As for the current situation, Bai Wenxi said that investors can pay close attention to the company's follow-up announcements and official information to obtain the latest investigation progress and conclusions. At the same time, investors should consider their own risk tolerance and conduct appropriate risk management of their portfolios.