Core Viewpoint - *ST Yuancheng (603388.SH) faces potential delisting risk due to significant violations in financial reporting, including inflated revenue and profit figures from 2020 to 2022, as identified by the China Securities Regulatory Commission (CSRC) [1][4][7] Financial Violations - The company was found to have inflated operating costs by approximately 158.44 million CNY, inflated revenue by about 208.90 million CNY, and inflated total profit by around 50.46 million CNY from 2020 to 2022 [4] - Specific annual figures include: - 2020: Operating costs inflated by 115.08 million CNY, revenue inflated by 153.56 million CNY, and profit inflated by 38.48 million CNY, representing 22.75%, 21.48%, and 36.60% of the reported amounts respectively [4] - 2021: Operating costs inflated by 25.08 million CNY, revenue inflated by 36.17 million CNY, and profit inflated by 11.09 million CNY, representing 5.99%, 6.31%, and 19.32% of the reported amounts respectively [4] - 2022: Operating costs inflated by 18.28 million CNY, revenue inflated by 19.17 million CNY, and profit inflated by 0.89 million CNY, representing 7.22%, 5.86%, and 1.62% of the reported amounts respectively [4] Regulatory Actions - The CSRC issued a preliminary notice of administrative penalties, indicating that the company may face mandatory delisting due to these violations [1][2] - The company has not yet received a formal penalty decision but is cooperating with the CSRC [2] - The company’s stock has experienced consecutive trading halts, with declines of 4.85% and 5.10% on October 13 and 14, 2025, respectively [3] Management Accountability - Key executives, including the actual controller Zhu Changren, are implicated in the violations, with proposed penalties including fines and potential market bans [12] - Zhu Changren faces a proposed 10-year ban from the securities market due to the severity of the violations [12] - Other executives, including the former CFO and board members, are also facing penalties for failing to ensure accurate financial reporting [9][12] Fundraising and Financial Impact - The company raised approximately 284.55 million CNY through a non-public stock issuance in 2022, which is now under scrutiny due to the reported financial discrepancies [13] - The total amount raised through two fundraising efforts is approximately 587.05 million CNY [14]

Core Viewpoint - The company, Yuancheng Environment Co., Ltd., is facing administrative penalties from the China Securities Regulatory Commission (CSRC) due to false disclosures in its financial reports from 2020 to 2022, which may lead to significant legal and operational consequences, including potential delisting from the stock exchange [1][9][12]. Group 1: Administrative Penalties - The CSRC has issued a "Notice of Administrative Penalty" to Yuancheng Environment, indicating that the company and its actual controller, Zhu Changren, are suspected of fraudulent issuance and violations of information disclosure laws [1][8]. - The company is accused of inflating costs and revenues related to the Yuelongshan project, resulting in a cumulative inflation of operating costs by approximately 158.44 million yuan, operating income by about 208.90 million yuan, and total profit by around 50.46 million yuan from 2020 to 2022 [2][16]. - Specific annual figures include: - 2020: Operating costs inflated by 115.08 million yuan, income by 153.56 million yuan, and profit by 38.48 million yuan - 2021: Costs inflated by 25.08 million yuan, income by 36.17 million yuan, and profit by 11.09 million yuan - 2022: Costs inflated by 18.28 million yuan, income by 19.17 million yuan, and profit by 0.89 million yuan [2][16]. Group 2: Impact on Company Operations - The company failed to timely account for differences in the Huaiyin project, leading to an inflated 2022 annual report with an additional operating income of 14.16 million yuan and profit of 13.45 million yuan [3][17]. - The company is also accused of fabricating significant false content in its non-public stock issuance documents in 2022, which raised approximately 284.55 million yuan [4][18]. - The potential consequences of these violations include being subject to mandatory delisting due to significant legal infractions as per the Shanghai Stock Exchange rules [9][12][19]. Group 3: Legal and Financial Consequences - The proposed penalties include a warning and fines totaling approximately 37.45 million yuan for the company, with Zhu Changren facing fines of up to 28 million yuan [6][7]. - The company is required to correct its financial statements and may face a 10-year ban from the securities market for Zhu Changren due to the severity of the violations [8][19]. - The company has indicated its intention to cooperate with the CSRC and exercise its rights to appeal or request hearings regarding the penalties [9][14].