XCEC(SH:600777) Mei Ri Jing Ji Xin Wen·2025-10-15 15:18Core Viewpoint - The company *ST Xinchao (New Tide Energy) is undergoing significant changes in its auditing arrangements, having recently appointed Zhongshun Zhonghuan as its new auditor after a tumultuous relationship with previous firms, which has implications for its financial reporting and compliance status [1][2][8]. Group 1: Auditing Changes - *ST Xinchao has appointed Zhongshun Zhonghuan as its auditing firm for the 2025 fiscal year, marking the second change in auditors within the year [1]. - The company previously terminated its relationship with Lixin Accounting Firm after it issued an "unable to express opinion" audit report for the 2024 financial statements [3][4]. - Prior to Lixin, *ST Xinchao had engaged Zhongrui Cheng Accounting Firm, which resigned due to the complexity of the audit work exceeding initial expectations [1][3]. Group 2: Legal Disputes - The conflict with Lixin escalated to legal action, with *ST Xinchao suing for the return of 3.5 million yuan in audit fees, claiming negligence in the audit process [5][6]. - The lawsuit includes demands for Lixin to retract its audit reports and issue new ones, alongside compensation for legal fees [5]. Group 3: Financial and Operational Context - The company is facing significant challenges, including a risk of delisting, as indicated by its recent "ST" designation due to the audit issues [4][9]. - The recent resolution of three lawsuits in the U.S. related to its oil and gas assets may alleviate some operational pressures, but internal governance and achieving a standard audit opinion remain critical for the company's future [9]. Group 4: New Auditor's Profile - Zhongshun Zhonghuan, established in 1987, has a strong background in auditing, with 21.72 billion yuan in total revenue for 2024, including 5.84 billion yuan from securities-related services [8]. - The firm has experience in the mining sector, which is relevant to *ST Xinchao's operations, having audited six other companies in the same industry [8]. - However, Zhongshun Zhonghuan has faced administrative penalties in the past three years, raising concerns about its reliability [8].