Core Viewpoint - Huaxi Energy Industrial Co., Ltd. has received an audit report for its 2024 internal control that expresses an inability to provide an opinion, leading to the implementation of "other risk warnings" on its stock starting April 30, 2025 [1][2]. Group 1: Audit Report and Risk Warnings - The internal control audit for 2024 was conducted by Sichuan Huaxin (Group) Accounting Firm, which issued a report with no opinion [2]. - According to the Shenzhen Stock Exchange regulations, if a company receives an audit report with no opinion or a negative opinion regarding its internal control, it will face risk warnings on its stock trading [2]. Group 2: Company Measures and Progress - The company's board has taken the audit report seriously and assigned personnel to address the identified deficiencies, aiming to apply for the removal of the ST designation as soon as possible [2][3]. - A rectification leadership group was established on May 15, 2025, with specific responsibilities and timelines outlined for addressing the issues [3]. - The company has already completed the standardization of discrepancies between payment accounts and recorded units, and has conducted self-checks on accounts receivable and work-in-progress internal controls [3].

Core Viewpoint - The company, Guizhou BaiLing Pharmaceutical Group Co., Ltd., has faced significant challenges in its financial performance for the year 2024, with a notable decrease in revenue and a mixed picture regarding profitability and cash flow [14][22]. Financial Performance - The company reported operating revenue of 3.825 billion yuan, a decrease of 10.26% year-on-year [14]. - The net profit attributable to shareholders was 33.62 million yuan, showing an increase compared to a net loss of 82.44 million yuan in the previous year, marking an 81.33% improvement [14][22]. - The net cash flow from operating activities was 9.02 million yuan, a significant decrease of 92.83% year-on-year [14]. Revenue Breakdown - The revenue composition for 2024 included: - Traditional Chinese medicine: 3.381 billion yuan, down 12.00% - Western medicine: 293.07 million yuan, down 0.68% - Chinese medicinal materials: 22.04 million yuan, up 30.24% - Medical services: 66.68 million yuan, up 13.21% - Others: 62.56 million yuan, up 25.57% [17]. Cost and Expense Analysis - The total operating costs were 1.603 billion yuan, down 15.88% year-on-year, primarily due to decreased sales volume [18]. - Sales expenses decreased by 19.77% to 1.854 billion yuan, reflecting cost-cutting measures [18]. - The gross profit margin improved to 58.09%, up 2.80% from the previous year, attributed to lower raw material prices [19]. Internal Control and Audit Opinions - The company received a qualified audit opinion for 2023 due to significant internal control deficiencies related to sales expense recognition [5][8]. - In 2024, the company implemented corrective measures and received a clean audit opinion with an emphasis on matters, indicating improvements in internal controls [10][11]. Customer and Supplier Concentration - The top five customers accounted for 39.13% of total sales, while the top five suppliers represented 46.05% of total purchases, indicating a high concentration risk [14][28]. Market Conditions - The pharmaceutical industry faced challenges due to decreased demand for cold and flu medications, as consumers had stocked up during previous health crises [17]. - The overall market for pharmaceutical products has seen price reductions, contributing to the revenue decline [17]. Quarterly Performance Fluctuations - The company experienced significant fluctuations in quarterly performance, with the first and fourth quarters showing higher revenues due to seasonal demand for cold and flu medications [25][26]. - The cash flow from operating activities was notably negative in the first and third quarters, primarily due to delayed receivables [27]. Conclusion - The company is navigating a challenging financial landscape with a focus on improving internal controls and addressing revenue declines through strategic adjustments in operations and cost management [14][22].

Core Viewpoint - Guizhou BaiLing (ST BaiLing) has completed internal control rectification and is applying to remove the risk warning label after a year of efforts, aiming for a turnaround in its financial performance [2][6]. Internal Control and Compliance - The company has made significant improvements in its internal control and compliance systems, establishing a compliance management department and enhancing training for staff to prevent future violations [5][6]. - An audit report confirmed that ST BaiLing maintained effective internal control over financial reporting in all significant aspects [6]. Financial Performance - In 2024, ST BaiLing reported revenue of 3.825 billion yuan, a decrease of 10.26% year-on-year, while net profit attributable to shareholders was 33.62 million yuan, an increase of 108.11% [7]. - Despite appearing to turn a profit, the company's net profit after excluding non-recurring items was -82.44 million yuan, indicating ongoing financial challenges [7]. Market Challenges - The company faced declining demand for its products due to a public health event in late 2023, which led to overstocking of certain medications, resulting in reduced sales in 2024 [7][8]. - In the first quarter of 2025, revenue dropped to 761 million yuan, a decline of 42.93% year-on-year, with a significant decrease in net profit [7][8]. Accounts Receivable and Risk Management - As of the end of the first quarter of 2025, ST BaiLing's accounts receivable reached 1.843 billion yuan, a 15.51% increase from the beginning of the year [8]. - The company is actively managing credit risks by conducting assessments of customers and monitoring receivables to mitigate potential bad debt risks [8].

Meeting Details - The sixth board meeting of Guizhou Bailing Pharmaceutical Group Co., Ltd. was convened by Chairman Jiang Wei on June 18, 2025 [2][3] - The meeting was held at the company's conference room with all 9 board members present, including independent directors participating via communication [3][4] Resolutions Passed - The board approved the proposal to apply for the removal of other risk warnings, with a unanimous vote of 9 in favor [6][9] - The board also approved a proposal for the company to provide a guarantee for its subsidiary, Anshun Dajiankang Pharmaceutical Industry Operation Co., Ltd., for a loan of 148 million yuan, with the company guaranteeing 81.4 million yuan [7][9] - A proposal to convene the second extraordinary general meeting of shareholders in 2025 was also approved unanimously [10][11] Guarantee Details - The subsidiary intends to apply for a loan of 148 million yuan from Guizhou Bank for a term of 2 years, with the company providing a guarantee based on its 55% ownership [15][21] - The total amount of guarantees provided by the company and its subsidiaries will reach 213.4 million yuan, accounting for 6.71% of the company's latest audited net assets [23] Risk Warning Removal - The company was previously under risk warning due to a negative internal control audit report for 2023, which has since been rectified [25][26] - The company has implemented various measures to improve internal controls and has received a qualified audit report for 2024, indicating compliance with the requirements for removing the risk warning [28][29] Upcoming Shareholder Meeting - The second extraordinary general meeting of shareholders is scheduled for July 4, 2025, with provisions for both on-site and online voting [31][32] - Shareholders must register by June 27, 2025, to participate in the meeting [35]