Songcheng Performance(SZ:300144) Chang Jiang Shang Bao·2025-06-19 10:34Core Viewpoint - Song City Performing Arts (300144.SZ) has been penalized by the Zhejiang Securities Regulatory Commission due to accounting errors influenced by its associate, Huafang Group [2][3]. Group 1: Accounting Errors and Penalties - On June 18, 2024, Song City announced it received a warning letter from the Zhejiang Securities Regulatory Commission regarding significant accounting errors [2]. - The errors involved a reduction of 57.404 million yuan in both total profit and net profit for 2022, representing 414.75% and 594.37% of the profits before correction, respectively [2]. - The commission found that the company's chairman, president, CFO, and board secretary were primarily responsible for the violations, leading to the issuance of warning letters to both the company and the individuals involved [2]. Group 2: Impact of Huafang Group - The accounting errors were attributed to the passive influence of Huafang Group, in which Song City holds a 35.35% stake [3]. - Huafang Group faced police investigations affecting its ability to provide audited financial results for 2022, which in turn impacted Song City's financial reporting [3]. - By March 15, 2024, Huafang Group disclosed an audited report that included an additional 155 million yuan in expected losses and approximately 19.91 million yuan in investment fair value losses [3]. Group 3: Financial Performance - In 2024, Song City reported significant recovery with revenues of 2.417 billion yuan, a year-on-year increase of 25.49%, and a net profit of 1.049 billion yuan, marking a 1054.18% increase [3]. - However, in the first quarter of 2025, the company experienced a slight revenue increase of 0.26% to 561 million yuan, while net profit decreased by 2.18% to 246 million yuan, indicating a situation of revenue growth without profit growth [4]. - Increased advertising expenditures in response to market competition and changing consumer behavior contributed to the rise in sales expenses, which reached 39.78 million yuan, a 49.86% increase year-on-year [4].