Wuhan Fangu False Statement Claim Case Re Hearing Time Interval Of Compensation Caused Controversy

Wuhan Fangu Electronic Technology Co., Ltd. (002194. SZ, "Wuhan Fangu") false statement claim case was reopened in Wuhan intermediate people's Court on July 10. So far, the trial of Wuhan Fangu claim case has lasted for more than two years.

The earliest claim case can be traced back to four years ago. From April to June 2016, Wuhan Fangu undercounted the collection of self-made semi-finished products. As a result, the company's 2016 semi annual report consolidated statements and the third quarter consolidated statements were falsely reported business profits. Later, it was suspected of illegal information disclosure and was investigated by the CSRC in accordance with the law.

On September 12, 2017, Wuhan Fangu received the investigation notice from China Securities Regulatory Commission, and on February 6, 2018, the company and relevant parties received the advance notice of administrative penalty issued by Hubei regulatory bureau of China Securities Regulatory Commission

In March 2018, China Securities Regulatory Commission (CSRC) issued a decision on administrative penalty against Wuhan Fangu's misrepresentation. According to the punishment documents at that time, due to the inexperience of the financial personnel, Wuhan Fangu undercounted the collection of self-made semi-finished products. The consolidated statements of Wuhan Fangu's 2016 semi annual report falsely increased the operating profit by 15.59 million yuan and the inventory by 15.59 million yuan, accounting for 51.17% of the current disclosed operating profit. In addition, Wuhan Fangu reported a false increase in operating profit of 38.11 million yuan and inventory of 53.7 million yuan in the third quarter of 2016, accounting for 115.09% of the current disclosed operating profit.

According to the securities law and the provisions of the Supreme People's Court on the trial of civil compensation cases caused by false statements in the securities market, listed companies should bear civil liability for damages to investors' rights and interests caused by false statements.

The whole story of the claim

Wuhan Fangu is a leading enterprise in China's electronic industry. Its business scope is relatively wide, including communication, electronics, computer software development, research and development, technical services; communication equipment manufacturing, line installation, network information security, network application platform software and hardware research and development, wholesale and retail, etc., of which electronic information technology has the most competitive advantage, and its company is mobile communication day Independent supplier of RF devices.

Previously, both the plaintiff and the defendant had disputes on the implementation date and the correction date.

Wuhan Fangu advocates that the implementation date should be the release of the 2016 semi annual report on August 27, while the investors advocate that the implementation date should be the release of the 2016 semi annual performance express on July 30, 2016. In addition, according to the law, only the stocks held before the correction date can be included in the claim scope, so the correction date has become the focus of dispute. Retrospectively, there are two times for Wuhan Fangu to correct. The first is March 25, 2017, on which Wuhan Fangu released the 2016 annual performance express amendment announcement. Secondly, on April 26, 2017, Wuhan Fangu released the amendment notice of the semi annual and third quarter report of 2016, officially correcting the false information. Finally, considering that the stock price began to fall sharply after the first correction day, which damaged the interests of investors, the Court adopted the investor's claim.

According to the first instance judgment of the court, investors who bought Wuhan vanguard between July 30, 2016 and March 24, 2017 and still hold at least one share at the closing of March 24, 2017 can be compensated. After that, Fangu appealed to Wuhan High Court and upheld the original judgment in Wuhan.

Previously, Wuhan Fangu talked about the claim for false statement in the 2018 annual report, saying that "the people's court is likely to believe that there is no systematic risk of the securities market between the implementation date of this case and the benchmark date, and it is likely to judge the company to compensate all the investment losses claimed by the plaintiff. But the outcome of the case will not have a significant impact on the company. ".

However, in the end, the court did not fully support the investor's claim. According to the different buying time and price of investors, the court decided that the company should compensate the investors according to the proportion of 60% - 100%. The court held that Wuhan Fangu's share price had begun to rise continuously before the false statement, and was obviously stronger than the market. If the purchase price of the investor is higher than 16.28 yuan / share, the price difference between the purchase price and 16.28 yuan / share shall be borne by the investor.

It can pay normally

According to the annual report of Wuhan Fangu in 2019, the company's operating revenue was 1.713 billion yuan, with a year-on-year increase of 43.37%; the net profit attributable to the shareholders of the listed company was 260 million yuan, with a year-on-year increase of 37.88%; the net profit attributable to the shareholders of the listed company after deducting non recurring profit and loss was 249 million yuan, with a year-on-year increase of 455.61%.

According to the report of the first quarter of this year, the company's operating revenue in the first quarter was 293 million yuan, 382 million yuan in the same period of last year, a year-on-year decrease of 23.30%; the net profit attributable to shareholders of listed companies was 33.385 million yuan, 29.0457 million yuan in the same period of last year, with a year-on-year increase of 14.92%; the net cash flow from operating activities was 157 million yuan, with a year-on-year increase of 115.03%.

This also means that Wuhan Fangu has the ability to compensate for the demands of the above investors.

According to the data, Wuhan Fangu's main business is to engage in the R & D, production, sales and service of RF devices and RF subsystems. Its main products are filters, diplexers and RF subsystems, which are used in 2G, 3G, 4G, 5g and other communication networks. The company's main customers are downstream mobile communication equipment integrators in the communication industry, such as Huawei, Ericsson and Nokia.

As the global 5g construction peak is coming, China's 5g industrial chain may benefit as a whole. According to the relevant forecast, the GDP indirectly driven by 5g will reach 3.6 trillion yuan in 2030. According to the calculation of the correlation among industries, in 2020, the GDP growth indirectly driven by 5g will exceed 419 billion yuan; in 2025, the indirect GDP will reach 2.1 trillion yuan; in 2030, the GDP indirectly driven by 5g will increase to 3.6 trillion yuan. In ten years, the compound annual growth rate of GDP indirectly driven by 5g will reach 24%. In 2020, China may become the world's largest 5g market. Under this background, Wuhan Fangu, as the leading enterprise of filter production, will carry out further development exploration in 5g environment.

Wuhan Fangu said that the filter is the company's main product, as an application module of communication data link signal filtering, it is widely used in 5g base station. The main customers of Huawei and Ericsson are mobile operators in the world. The company's 5g filter sales accounted for about 30% in the first quarter of this year, and the production capacity of 5g products in the second quarter of this year increased compared with the fourth quarter of last year.

At present, the company has sufficient 5g orders and high capacity utilization rate, and 5g capacity expansion is also being promoted as planned. Some types of 5g miniaturized filters and ceramic dielectric filters have been mass produced, and some models of 5g filters are still in the process of certification. The first phase of 5g ceramic dielectric filter production planning project has been completed, and the special workshop and production line have been transformed and put into use. In the future, the company will continue to promote 5g ceramic dielectric filter production planning phase II project according to the market demand, and accelerate the capacity construction of 5g.