Zhangzidao ‘will strengthen analysis, disclosures’
Shenzhen-listed Zhangzidao Group Co, an aquatic products company, said Thursday that it will improve analysis of its inventories and improve its information disclosures.
The announcement came after a filing the company sent to the Shenzhen Stock Exchange on Tuesday said that it experienced a full-year loss in 2017 due to the poor quality of its scallop products and challenges from foreign markets.
“We found abnormal inventory levels of Yesso scallops farmed in the sea, so we plan to make an impairment provision for some scallop inventories from last year, which may lead to a fullyear loss in 2017,” the company said in the filing.
It estimated a loss of 530 million yuan ($84 million) to 720 million yuan for 2017 and suspended trading of its shares on Wednesday, with trading to resume no later than Monday.
Suspicions began to emerge after the company surveyed its ocean products on December 6 and 7, 2017, and stated it had found no impairment risk to the scallops, Beijing Business Today reported Thursday.
In addition, the company reported a profit of 90 million yuan to 110 million yuan in the first three quarters of 2017, according to its financial report.
The issue has drawn scrutiny from the securities regulators, with the Dalian Securities Regulatory Bureau planning to conduct an on-site inspection of the company, the Securities Times reported on Thursday, citing sources.
It is not the first time that Zhangzidao has encountered such an issue. In November 2014, the company declared in a filing to the Shenzhen Stock Exchange that a cold water current, which is a rare natural phenomenon, swept into the northern Yellow Sea from June to August 2014 and wiped out the company’s scallop stocks.
The company reported a loss of 860.8 million yuan in the third quarter of 2014, a sharp turnaround from its net profit of 47.96 million yuan in the first half of 2014.
The China Securities Regulatory Commission investigated the matter at that time, and said in December it found no irregularities, according to a statement on the commission’s website.