Core Viewpoint - The company Ren Zhi Hang (300311.SZ) has been found guilty of financial fraud, resulting in a total of 1.12 billion yuan in inflated revenue and 732.85 million yuan in inflated profits from 2020 to mid-2022, leading to administrative penalties and stock warnings [1][6][7]. Financial Misconduct - Ren Zhi Hang's subsidiary, Beijing Yahon Century Technology Development Co., Ltd., signed contracts lacking commercial substance to inflate financial figures [1][2]. - The inflated revenue figures for the years 2020 to mid-2022 were 36.95 million yuan, 48.44 million yuan, and 26.93 million yuan, representing 4.21%, 6.97%, and 10.81% of reported amounts respectively [3]. - The inflated profit figures for the same period were 19.41 million yuan, 37.32 million yuan, and 16.56 million yuan, accounting for 85.93%, 70.03%, and 30.79% of reported amounts respectively [3]. Penalties and Consequences - The China Securities Regulatory Commission (CSRC) has proposed a fine of 5 million yuan for the company and a total of 12 million yuan for four responsible individuals [1][4][5]. - The company's stock will be subject to additional risk warnings, changing its name to "ST Ren Zhi Hang" starting June 24, 2025 [1][6]. Financial Performance - Ren Zhi Hang has reported a cumulative net loss of approximately 633 million yuan over seven consecutive years from 2018 to 2024, excluding non-recurring losses [7]. - Beijing Yahon's revenue figures from 2020 to 2024 were 335 million yuan, 386 million yuan, 386 million yuan, 313 million yuan, and 235 million yuan, with net profits showing significant losses in recent years [7]. - Despite the financial difficulties, the company has managed to reduce losses by 98% in 2024 through improved management and cost control [8].

Core Viewpoint - Renzi Hang has been penalized for financial fraud, leading to a warning and fines for the company and its executives, with its stock set to be marked as ST due to false financial disclosures [2][5][11]. Financial Misconduct - The company was found to have inflated revenue and profit figures from 2020 to mid-2022, with inflated revenues of 36.95 million, 48.44 million, and 26.93 million, representing 4.21%, 6.97%, and 10.81% of reported amounts respectively [6]. - The inflated profit totals were 19.41 million, 37.32 million, and 16.56 million, constituting 85.93%, 70.03%, and 30.79% of the reported figures [6]. - The company’s annual reports for 2020, 2021, and the first half of 2022 contained false records [6]. Regulatory Actions - The China Securities Regulatory Commission (CSRC) issued a notice of administrative punishment, indicating violations of the Securities Law [5][8]. - The company and four executives received fines ranging from 100,000 to 5 million yuan, with the company itself facing a 5 million yuan penalty [10]. Company Background - Renzi Hang, established in May 2000, is a leading provider of cybersecurity solutions in China, covering various sectors including network security and industrial internet security [13]. - The company has faced continuous losses, with net profits declining for seven consecutive years since 2019, and a reported net loss of 37.33 million yuan in the first quarter of 2025 [14]. Stock Market Impact - Following the penalties, Renzi Hang's stock will be marked as ST, indicating increased risk, and will undergo a name change to "ST Renzi Hang" starting June 24, 2025 [12].