Zhengping Road & Bridge (SH:603843) Xin Lang Zheng Quan·2025-07-04 09:24Core Viewpoint - The recent disclosures from *ST Zhengping reveal significant governance issues, including misuse of funds, undisclosed guarantees, and internal control failures, raising concerns about the company's financial health and operational integrity [2][3][4]. Group 1: Financial Mismanagement - The company’s subsidiary, Guizhou Water Conservancy, has been used as a "cash machine," with non-operational fund occupation amounting to 13.21 million yuan, primarily for repaying high-interest private loans and daily expenses [2]. - A guarantee of 35 million yuan was provided by a controlling shareholder for an affiliated company without any formal approval process, highlighting a lack of corporate governance [2]. - The company has delayed the repayment of 190 million yuan raised for a project, citing various issues, which raises liquidity concerns [2]. Group 2: Audit and Legal Issues - The audit firm, Dahua CPA, issued a qualified opinion due to significant discrepancies in revenue and costs, with 2024 revenue reported at 1.362 billion yuan (down 28.53% year-on-year) and costs at 1.434 billion yuan (down 23.47% year-on-year), indicating potential revenue recognition fraud [3]. - The company faces a growing number of lawsuits, with 208 cases involving a total of 139 million yuan, yet it has not accounted for any expected liabilities, raising questions about the completeness of its financial obligations [3]. Group 3: Internal Control Failures - Despite claims of establishing an internal control team and revising policies, frequent turnover in key positions and unauthorized guarantees by the controlling shareholder indicate a lack of effective governance [4]. - The company’s stock has been marked as "*ST" due to ongoing concerns about internal controls and the uncertainty of continued operations, with overdue funds and unrecouped amounts further exacerbating the situation [4].