HULUWA(SH:605199) Tai Mei Ti A P P·2025-04-29 12:59Core Viewpoint - The company HuLuWa has announced a significant financial loss for 2024, leading to a stock suspension and a change in its trading status to ST HuLuWa, indicating financial distress [2][3][5]. Financial Performance - In 2024, HuLuWa reported a revenue of 1.414 billion yuan, a year-on-year decrease of 21.26%, and a net loss attributable to shareholders of 274 million yuan, compared to a net profit of 11 million yuan in the previous year [2][3]. - For Q1 2025, the company experienced a revenue decline of 28.42% to 337 million yuan, with a net profit of 24 million yuan [2]. Audit and Compliance Issues - The auditing firm, Lixin, issued a qualified audit report and a negative internal control audit report due to significant deficiencies in the company's financial reporting and internal controls [2][6][7]. - HuLuWa's previous auditor, Ernst & Young, did not object to the change in auditing firms, which resulted in a cost reduction for the company [4]. Management Changes - The new general manager, Zhang Mingrui, resigned shortly after taking office, raising concerns about leadership stability [2][5][7]. - The founder, Liu Jingping, also resigned from the general manager position prior to Zhang's appointment [2]. Regulatory Actions - The company received an administrative regulatory decision from the Hainan Securities Regulatory Bureau for inaccurate financial disclosures in its 2023 annual report [5][6]. - HuLuWa's failure to timely disclose its expected losses led to further scrutiny and regulatory measures [6][7]. Financing Challenges - HuLuWa has faced difficulties in fundraising, with two previous fundraising attempts failing, leading the company to seek financing through leasing arrangements [3][10]. - The company reported negative cash flow from operating activities of -149 million yuan for 2024 and -99 million yuan for Q1 2025, indicating liquidity issues [10]. Related Transactions - Serious issues were identified regarding related party transactions, including financial support provided to clients through personal accounts of controlling shareholders [7][9]. - The company engaged in questionable procurement practices, with significant payments made to a related party for research and development projects [7][8].