Core Viewpoint - The credit rating of Dongfang Shifang Driving School Co., Ltd. has been downgraded from B to CCC, with a negative outlook due to significant financial challenges and operational issues [1][7]. Financial Performance - The company reported a decline in main business income in 2024, attributed to factors such as consumer downgrade and insufficient student enrollment, resulting in a revenue decrease of 375 million yuan compared to 2023 [1]. - The company recognized asset impairment losses and credit impairment losses on its subsidiaries due to underperformance [1]. Audit Findings - The audit report from Beijing Dehao International Accounting Firm raised concerns about the recoverability of receivables from related parties, including: - 302.49 million yuan receivable from Beijing Qianzhong Fantasy Technology Co., Ltd. with a bad debt provision of 30.25 million yuan, related to the purchase of 3,179 VR simulators [2]. - 49.86 million yuan receivable from Beijing Tonglong Automobile Sales Co., Ltd. with a bad debt provision of 15.73 million yuan, related to incomplete delivery of AI training systems [3]. - 35 million yuan receivable from the controlling shareholder, with a bad debt provision of 3.5 million yuan, related to non-operational fund occupation [4]. Internal Control Issues - The internal control audit report indicated significant deficiencies in managing and recovering funds from related parties, with unresolved issues regarding the delivery of VR simulators and AI systems [4][5]. Regulatory Actions - The company received a corrective order from the China Securities Regulatory Commission, requiring the recovery of 387 million yuan in occupied funds within six months, failing which trading suspension and potential delisting could occur [6]. - As of June 19, 2025, no funds had been recovered, leading to a trading suspension effective June 20, 2025 [6]. Credit Rating Status - The company maintains a credit rating of CCC, with a negative outlook, reflecting ongoing financial distress and operational challenges [7].