Core Viewpoint - The recent allegations of financial fraud against Huaxi Biological have led to a significant decline in its stock price and raised concerns about its internal governance and market position [2][3][4]. Company Overview - Huaxi Biological's stock price closed at 52.43 yuan per share, down 2.6%, with a total market capitalization of 25.254 billion yuan as of July 28 [2]. - The company's stock has been in a downward trend since reaching a peak of 314.99 yuan per share in July 2021, hovering around 50 yuan per share this year [2]. Allegations and Responses - A former employee, David Li, accused Huaxi Biological of serious financial fraud and bond issuance fraud in a social media post, which has stirred controversy in the medical aesthetics industry [2][3]. - Huaxi Biological issued a statement denying the allegations, claiming they are fabricated and maliciously distorted, and reported Li to the police for defamation [3]. Internal Governance Issues - This is not the first time Huaxi Biological has faced internal allegations; previous reports included claims of coercion and financial misconduct involving the company's chairman [6][7]. - The company has acknowledged past governance issues and is undergoing significant internal reforms, including restructuring and talent management changes [7][8]. Financial Performance - In 2024, Huaxi Biological reported a revenue of 5.371 billion yuan, a year-on-year decline of 11.61%, and a net profit of 174 million yuan, down 70.59% [9][10]. - The decline in revenue is largely attributed to a significant drop in the skin science innovation business, which saw a 31.62% decrease in revenue [10]. Market Environment - The medical aesthetics market is experiencing a shift from hyaluronic acid to collagen and regenerative products, posing additional challenges for Huaxi Biological [11]. - The company is facing intense competition and has established a "competitive intelligence department" to monitor and respond to market dynamics [8][9].