After two months, the ZTE event finally landed.
The China Securities Journal reporter was informed that on June 7, ZTE Corporation had signed the settlement agreement of the US Department of Commerce. The agreement has yet to be approved by the U.S. government and, after satisfying certain conditions, it refuses to cancel.
But the price is also expensive:
$1 billion fine;
In addition, 400 million U.S. dollars will be prepared for safekeeping by third parties;
The U.S. Department of Commerce also requested ZTE to replace the board of directors and senior management within 30 days.
Reaching a settlement is good news for ZTE's 80,000 employees and 31 million shareholders. But at the same time, the sky-high fine will also have a negative impact on ZTE's short-term performance.
ZTE issued internal letter
On the evening of June 7th, ZTE issued an internal letter to all employees, hoping that employees would stick to their posts and not be affected by rumors. They should learn from their pains and stick to the compliance baseline.
The letter stated that the activation of this refusal order caused great losses to the company and the company paid a terrible price for it. The occurrence of this incident, based on the conclusions of the current internal and external investigations, shows that the direct cause is the small number of cadres and The employee's work negligence caused it, but its essence reflects the company's problems in compliance culture and management.
The internal letter pointed out that lessons should be learned and effectively accountable to prevent similar situations from occurring in the future. At the same time, we must strengthen the compliance culture, further strengthen internal control, improve the company’s compliance system, and always use compliance as a strategic foundation for business development. .
Once the refusal order is lifted, ZTE will quickly return to normal operations. Earlier media reports said that as long as the ban was lifted, ZTE would only need a few hours to resume operations.
Guojin Securities believes that after the lifting of the ZTE ban, it will also lift the market's concerns about the impact of the ZTE event on the 5G commercial process. The ZTE event is an opportunity. In the long run, the Chinese communications industry will accelerate the occupation of technological highlands and achieve localization in the future. .
On the morning of the 8th, the 5G concept stocks rose across the board. Xintian Technology and Kexin Technology both sealed daily limit. Guanghetong rose 8%. Tianfu Communication, Tai Chenguang, and other stocks have gained strength.
Peak circuit turn 53 days
The outbreak of the ZTE incident was very sudden.
On April 16, 2018, local time, the United States announced that ZTE’s export control measures will prohibit US companies from selling parts, merchandise, software and technology to ZTE for 7 years until March 13, 2025.
This is a follow-up to ZTE’s acceptance of a large U.S. fine.
On March 8, 2016, the U.S. Department of Commerce stated that ZTE was suspected of violating the U.S. export control policy against Iran and imposing an embargo on it. ZTE rectified and replaced its management through internal control, and finally the U.S. Department of Commerce on March 7, 2017. , The Ministry of Justice and the Ministry of Finance’s Overseas Assets Management Office’s sanctions investigation concluded that the company paid a fine of US$890 million.
In the April 16 embargo statement this year, U.S. Department of Commerce officials determined that ZTE made many false statements in 2016 and 2017: ZTE Corporation promised to expel the 4 senior executives involved and reduce bonuses or penalties. In other ways, 35 employees were punished. However, ZTE dismissed only 4 senior executives and did not penalize or reduce the bonus of 35 employees.
As one of the world’s leading integrated communication solution providers, ZTE has maintained a good cooperative relationship with many U.S. suppliers and provided support for nearly 130,000 high-tech jobs in the United States. Experts pointed out that ZTE and many U.S. companies With close cooperation, the U.S. government’s export control measures for ZTE will cause Qualcomm, Intel and other ZTE suppliers in the United States to suffer losses as well.
ZTE issued a statement on April 20, responding that the U.S. Department of Commerce’s sanctions were 'very unfair and unacceptable.' Zeng Yinmin, chairman of ZTE Corporation, said at the press conference that the U.S. Department of Commerce’s refusal to activate has caused the company to immediately enter a state of shock.
On May 6, ZTE submitted an application to suspend the execution of refusal orders to the US Department of Commerce’s Bureau of Industry and Security.
On May 13, Trump issued a statement in Twitter that it is providing a way for ZTE to quickly resume business.
On June 7, after 53 days of negotiation, the ZTE event finally reached a settlement.
Fund companies have lowered their valuation
As a company with a market value of 100 billion yuan, how ZTE’s stock price will be reflected in the resumption of trading will directly affect the interests of investors.
The data shows that as of the end of the first quarter of this year, the number of shareholders of ZTE reached 312,300.
However, on June 7, the Wells Fargo Fund announced that it once again lowered the valuation of the ZTE's stock held by its funds.
Among them, A shares of ZTE Corporation were valued at RMB 20.04, and Hong Kong shares of ZTE Corporation were valued at HK$16.38.
This time, the Wells Fargo Fund downgraded ZTE's valuation and involved 12 funds of the Wells Fargo Fund. Before the suspension, the closing price of the A shares of ZTE was 31.31 yuan. The valuation of the fund company was about 36% lower than the closing price before the suspension, which is equivalent to nearly four. A daily limit.
On April 19, the Wells Fargo Fund had also lowered the valuation of ZTE A-shares and Hong Kong stocks at the same time. The prices of the two companies were reduced to 25.05 yuan and 20.48 Hong Kong dollars, respectively, and the adjustment rate was 20%.
Before this, there have been at least 40 funds raised for ZTE, including Rongtong, China Post, Dacheng, and the South, and the downward adjustments were mostly between 2 and 4 low limit, and the valuations given by various fund companies The value is between 24.78 yuan and 25.05 yuan.
In addition, ZTE has also been adjusted out of the MSCI list. On May 30th, MSCI issued a temporary announcement, ZTE, Oriental Garden and other five companies will not be included in the MSCI China Index for the time being and will also be included in MSCI A shares. The Global Connect Index and the MSCI China A Share Market Index were removed and adjustments took effect from June 1.
However, the above-mentioned multiple funds also indicated that after ZTE’s shares resume trading and resume active trading characteristics, they will resume their valuation on the same day’s closing price.