TSZY(SZ:002872) Xin Lang Zheng Quan·2025-09-19 09:17Core Viewpoint - ST Tian Sheng (002872.SZ) has been exposed for a two-year financial fraud scheme, inflating profits by 121 million yuan through hidden related-party transactions and off-the-books funding pools [1]. Group 1: Financial Fraud Mechanism - The core of ST Tian Sheng's fraud involved a "combination punch" strategy, where the company siphoned off large engineering funds through a related party, Chongqing Taihong Construction Co., Ltd., which was the main contractor for its IPO project [2]. - In 2017 alone, ST Tian Sheng paid over 113 million yuan to Taihong for engineering costs, while also inflating procurement costs through its wholly-owned subsidiary, Changsheng Pharmaceutical, resulting in a total profit reduction of over 100 million yuan over two years [2]. - The funds extracted were funneled into an off-the-books funding pool, which was used to pay sales expenses, artificially inflating profits by 92.2 million yuan and 28.8 million yuan in 2017 and 2018, respectively, accounting for 30.21% and 20.61% of total profits for those years [2]. Group 2: Concealment of Related Parties - The identities of key related parties were already disclosed in public information, yet ST Tian Sheng systematically concealed these connections, with undisclosed related-party transactions amounting to 481 million yuan and 48.6 million yuan in 2017 and 2018, respectively [3]. - Taihong was incorrectly labeled as a "non-related party" in the IPO legal opinion, despite being involved in a project worth over 1 billion yuan [3]. - Other related parties, such as Chongqing Wuxiang Decoration Engineering Co., Ltd., exhibited suspicious overlaps in contact information and financial transactions with ST Tian Sheng [3]. Group 3: Failures of Intermediaries - The auditing firm, Beijing Xinghua Certified Public Accountants, issued unqualified audit reports for ST Tian Sheng in 2017 and 2018, despite the evident financial discrepancies [4]. - The lead auditors celebrated ST Tian Sheng's IPO success, while another project they audited was also found to have significant financial fraud [4]. - Huaxi Securities, the IPO sponsor, falsely claimed that ST Tian Sheng maintained effective internal controls, despite evidence of large-scale fund misappropriation by the actual controller [4]. Group 4: Regulatory Consequences - The Chongqing Securities Regulatory Bureau plans to impose fines totaling 4.99 million yuan on ST Tian Sheng and 22 related individuals, with the actual controller facing a lifetime ban from the securities market [5]. - ST Tian Sheng acknowledged that these penalties would lead to additional risk warnings for its stock, significantly increasing the risk of delisting [5]. Group 5: Conclusion - The case of ST Tian Sheng highlights the typical pathways for financial fraud through related-party transactions and raises serious questions about the responsibilities of intermediaries in the capital market [6]. - The ongoing regulatory crackdown emphasizes the need for integrity in financial reporting and the role of intermediaries as gatekeepers in maintaining market trust [7].