Shenyang Chemical (SZ:000698) Zhong Guo Jing Ying Bao·2025-10-10 11:57Core Viewpoint - Shenyang Chemical (000698.SZ) has been placed under special risk warning and its stock name changed to "ST Shenhua" due to financial fraud issues, resulting in a 5% daily price fluctuation limit [1] Financial Fraud Penalty - Shenyang Chemical's financial fraud spanned four years, with the company disclosing corrections to financial data from 2018 to 2021 due to accounting errors [2] - The company attributed these errors to inadequate inventory management, lack of training, and insufficient supervision, leading to discrepancies in financial records [2] Regulatory Investigation - On August 9, 2024, Shenyang Chemical received a notice of investigation from the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure [3] - The investigation revealed that from 2018 to 2021, the company manipulated financial data through its subsidiary, resulting in a cumulative profit inflation of 438 million yuan [3] - Specific profit manipulations included inflating profits by 130 million yuan, 204 million yuan, and 104 million yuan in 2018, 2019, and 2020 respectively, while reducing profits by 148 million yuan in 2021 [3] Regulatory Actions - The company was fined 7 million yuan, with significant penalties imposed on several executives, including an 8-year market ban for the former chairman [3] - Despite the violations, the company does not face mandatory delisting and can apply to lift the risk warning after 12 months of compliant operations [4] Performance Recovery - Following the financial turmoil, Shenyang Chemical reported a recovery in performance, achieving revenue of 2.569 billion yuan and a net profit of 62.42 million yuan in the first half of the year, marking a year-on-year revenue increase of 8.09% and a profit turnaround from a loss of 285 million yuan [5][6] - The recovery is attributed to improved management practices and the successful trial production of a new 240,000-ton/year polyether polyol project, which has become a new profit growth point [5][6]