ORIENTAL YUHONG(SZ:002271) Guan Cha Zhe Wang·2025-12-29 10:38Core Viewpoint - The company Oriental Yuhong has fallen victim to a telecom fraud incident involving approximately $1.7183 million (about 12.118 million RMB) through its U.S. subsidiary OYH Construction Materials LLC, raising concerns about its internal control systems and impacting its financial performance [1][2]. Financial Impact - In the first half of the year, Oriental Yuhong reported revenue of 13.569 billion RMB and a net profit attributable to shareholders of 564 million RMB, with the fraud amount representing about 2.15% of the total net profit [2]. - The fraud incident exacerbated an already significant decline in net profit, which had decreased by 40.16% during the same period [2]. Company Response - Following the fraud detection, OYH Construction Materials LLC reported the incident to local law enforcement and the FBI, and the company has established a special task force to investigate and manage the situation [1]. - The company stated that this incident is an isolated occurrence and will not have a significant adverse effect on its normal operations [1]. Brand and Market Development - The OYH brand, which is part of Oriental Yuhong's global strategy, was launched shortly after the fraud incident, indicating the company's commitment to its international expansion despite the setback [2][3]. - Oriental Yuhong has been expanding its overseas presence since 2008, with investments in Southeast Asia, the Middle East, and North America, and has seen growth in revenue from international markets [3]. Industry Context - The incident highlights the increasing risks faced by Chinese companies operating abroad, as evidenced by similar criminal activities targeting other firms, such as JD.com's warehouse theft in Paris [4]. - The rise in such incidents underscores the need for enhanced internal control and security measures for Chinese enterprises expanding into international markets [4].