Zheng Quan Shi Bao·2025-12-26 12:24Core Viewpoint - The China Securities Regulatory Commission (CSRC) has initiated serious administrative penalties against Changjiang Pharmaceutical Holdings Co., Ltd. (*ST Changyao) for significant financial fraud, including inflated revenue and profits over three consecutive years [1][3]. Group 1: Financial Misconduct - *ST Changyao has been found to have inflated revenue and profits for the years 2021, 2022, and 2023, violating securities laws and regulations [3][4]. - The company reported inflated operating revenues of CNY 215.32 million, CNY 283.74 million, and CNY 233.63 million for the years 2021, 2022, and 2023, respectively, which accounted for 9.12%, 17.57%, and 19.51% of the disclosed operating revenue for those years [4]. - The inflated total profits were CNY 56.40 million, CNY 63.38 million, and CNY 43.71 million for the same years, representing 35.62%, 88.23%, and 6.42% of the disclosed total profits [4]. Group 2: Regulatory Actions - The CSRC plans to impose a fine of CNY 10 million on *ST Changyao and a total of CNY 31 million in fines on 14 responsible individuals, including a lifetime ban from the securities market for the former general manager, Luo Ming [3][4]. - The Shenzhen Stock Exchange will initiate delisting procedures due to the company's serious violations, which may lead to mandatory delisting [3][4]. - The CSRC is also investigating the practices of intermediary institutions involved, with potential legal consequences for any violations found [3]. Group 3: Financial Status and Risks - As of the end of 2024, *ST Changyao reported a net asset value of -CNY 433 million, which further declined to -CNY 643 million by the end of the third quarter of 2025 [6]. - If the audited net assets for the end of 2025 remain negative, the company will face mandatory delisting due to financial reasons [6]. - The company is also at risk of not meeting restructuring conditions, adding to its financial instability [6].