Core Viewpoint - The actual controller of Hongxiang Co., Ltd., Yang Cheng, has been placed under residential surveillance due to involvement in information disclosure violations, while the company continues to cooperate with the police investigation [1][3][6]. Group 1: Company Background - Hongxiang Co., Ltd. was listed on February 17, 2015, and its main business includes the research, production, sales, and service of electrical equipment, with key products being electrical testing and equipment, as well as traction power supply equipment for railways and urban transit [9]. Group 2: Recent Developments - On July 30, 2023, Hongxiang Co., Ltd. announced that Yang Cheng was placed under residential surveillance effective from July 29, 2025, due to suspected violations of the law [3][4]. - Following the announcement, the company's stock price dropped nearly 5% on July 31, 2023, marking the third instance of a listed company's actual controller being placed under residential surveillance in the A-share market since June [4][15]. Group 3: Legal Issues - The information disclosure violations trace back to the first half of 2024, with the Shenzhen Stock Exchange publicly reprimanding Hongxiang Co., Ltd. and related parties for significant violations, including financial statement fraud and fraudulent issuance [11][12]. - From 2017 to 2022, Hongxiang Co., Ltd. and its subsidiaries engaged in long-term financial statement fraud, inflating revenue and profits through fictitious sales and asset overstatements. For instance, in 2017, the company inflated revenue by approximately 105 million yuan, accounting for 14.10% of the disclosed amount [13]. - Yang Cheng received a lifetime market ban and was removed from all positions within the company following the penalties imposed by the regulatory authorities [14].

Core Viewpoint - The actual controller of Hongxiang Co., Ltd. has been placed under residential surveillance due to suspected illegal activities related to information disclosure, which has led to a significant drop in the company's stock price [3][4][5]. Company Summary - Hongxiang Co., Ltd. (300427.SZ) announced that its actual controller, Yang Cheng, is under residential surveillance effective from July 29, 2025, due to suspected violations of laws [3][4]. - Yang Cheng currently holds no position in the company, and daily operations are managed by the executive team, indicating that this situation will not affect the company's regular business activities [4][9]. - As of July 29, Yang Cheng has 20 million shares of Hongxiang pledged, accounting for 73.96% of his holdings and 3.93% of the company's total share capital [5][6]. Shareholding and Financial Violations - The controlling shareholder, Yang Baotian, and his associates have a total of 38.32 million shares pledged, representing 40.71% of their holdings and 7.54% of the company's total share capital [6]. - The company has faced significant penalties for financial misconduct, including falsifying financial reports and fraudulent issuance of stocks, with Yang Cheng receiving a lifetime market ban [7][8][9]. - From 2017 to 2022, Hongxiang Co., Ltd. inflated its revenue and profits through various fraudulent activities, with specific figures indicating substantial discrepancies in reported earnings [8]. Market Reaction - Following the announcement of Yang Cheng's residential surveillance, Hongxiang's stock price fell by over 7%, bringing its total market capitalization to approximately 3.2 billion yuan [10].