Shenzhen Zhonghao Group has become the third company to be delisted from a mainland exchange, according to the China Securities Regulatory Commission.
The Shenzhen Stock Exchange last month said it would not give the company a second grace period after independent auditors discovered the company had reported an interim net loss.
'Because the Shenzhen Stock Exchange did not grant [the company] . . . a grace period, the company should be delisted in accordance [with] the law,' commission spokesman Zhou Xuan said.
Since the commission revised its regulations in February, Shanghai Narcissus Electric Appliance and Guangdong Kingman Group in Shenzhen have been delisted.
'So far . . . too few Chinese companies have been delisted. Many of them have been loss-making for a long time. Keeping them on the board can only make them the target for price manipulation,' said Shawn Xu Xiaonian, managing director of China International Capital's research department.
Shenzhen Zhonghao had been losing money for four consecutive years, earning it a 'particular transfer' designation. It staved off delisting earlier this year after being given a grace period from the exchange to restructure.
'[However] most of the restructuring turned out to be just made-up stories to lure investors,' Mr Xu said.
Shenzhen Zhonghao had announced an interim net profit of 1.12 million yuan (about HK$1.04 million) for this year's first half.
However, independent auditors and the commission discovered the firm had actually suffered a net loss.