Shanghai Yaoji Technology Co.,Ltd. (002605.SZ), often referred to as the "first playing card stock," became a focal point in the capital market in late April 2026 after releasing a series of announcements. The most concerning for investors was a correction announcement for prior period accounting errors covering financial reports from 2020 to 2023, which cumulatively reduced its operating revenue by a significant 2.1 billion yuan.
Although the company characterized this move as a correction of accounting methods, the persistent decline in operating revenue, coupled with a stock price drop of over 27% within the year, has placed this traditional playing card manufacturer transitioning into digital entertainment under intense scrutiny from both regulators and the market.
On April 29, 2026, Yaoji Technology released two key announcements disclosing the results of a comprehensive self-inspection. According to a sponsor's inspection report from China Securities Co., Ltd., the company recently conducted a self-review under regulatory guidance. It decided to "maintain the gross method accounting for business models where it acts as the principal and switch to the net method accounting for models where it acts as an agent," leading to adjustments in the financial reports for 2020 to 2023.
This adjustment directly resulted in a substantial "deflation" of operating revenue for the past four fiscal years: combined revenue for 2020-2023 was reduced by approximately 2.1 billion yuan.
Specifically, 2020 revenue was adjusted down from 2.562 billion yuan to 2.350 billion yuan, a reduction of 212 million yuan. 2021 revenue was revised from 3.807 billion yuan to 3.225 billion yuan, a cut of 582 million yuan. 2022 revenue saw the largest proportional decrease, down 19.37% from 3.915 billion yuan to 3.157 billion yuan, a reduction of 758 million yuan. 2023 revenue was adjusted from 4.307 billion yuan to 3.758 billion yuan, a decrease of 549 million yuan.
The core issue behind this accounting correction stems from a divergence in the recognition rules for its internet marketing business—specifically, whether to use the gross method or the net method. The gross method records total transaction value as revenue, whereas the net method only recognizes the spread or commission. Amid an industry-wide trend of stricter regulation, the company re-evaluated the substance of each agency transaction, switching those where it did not qualify as the principal to the net method, thereby reducing an element of "inflated" revenue.
If the Shenzhen Stock Exchange determines that the error correction announcement contains significant omissions or involves deeper issues such as internal control deficiencies, and consequently decides to initiate a formal investigation, the company would face a severe compliance crisis. For any listed company, a formal investigation typically imposes comprehensive constraints on stock liquidity, refinancing capabilities, and even the exercise of rights by controlling shareholders. Furthermore, the substantial revenue revisions over four consecutive years could potentially trigger collective investor action seeking accountability for past information disclosure shortcomings.
It is noteworthy that as early as 2020, the company's controlling shareholder was disciplined by regulators for failing to timely report and halt trading when their shareholding changes cumulatively reached 5% during a share reduction. This precedent indicates that Yaoji Technology is not unfamiliar with regulatory scrutiny concerning corporate governance and information disclosure.
Even after the accounting adjustments, the underlying operational performance for 2025 remains concerning. Data disclosed by the company on April 30 showed that total operating revenue for 2025 was 2.689 billion yuan, a year-on-year decrease of 17.80%. Net profit attributable to shareholders was 467 million yuan, down 13.34% year-on-year, while net profit after deducting non-recurring items was 430 million yuan, a decrease of 14.92%. Net cash flow from operating activities was 495 million yuan, down 16.72% year-on-year, providing a clear cash flow signal of deteriorating core business performance.
Breaking down by business segment, all three core divisions faced challenges. The playing cards business generated revenue of 923 million yuan, accounting for 34.32% of total revenue, but decreased by 14.69% year-on-year. The digital marketing business revenue was 879 million yuan, representing 32.70% of total revenue, but saw a significant contraction of 23.01% year-on-year, attributed to "continued pressure on downstream advertising demand." The gaming business, once a major hope for growth, reported revenue of 865 million yuan, constituting 32.18% of total revenue, a decline of 14.78% compared to the previous year.
More alarmingly, this trend of declining revenue and profit is not an isolated incident. The company's revenue had already decreased by 24.04% year-on-year in 2024, with net profit attributable to shareholders down 4.17%, making 2025 the second consecutive year of declining revenue and profit.
Concurrent with the annual report disclosure, on April 30, 2026, the company announced a plan to repurchase shares worth between 30 million and 50 million yuan, with a maximum repurchase price of 25.00 yuan per share, significantly higher than the current stock price of around 19.50 yuan. The company's stock price has fallen 16.31% year-to-date. While the intent of the buyback is to stabilize market confidence, these short-term supportive measures are unlikely to fully alleviate the systemic concerns raised by the annual report and the accounting revisions.
Caught in a triple squeeze of continued operational pressure, pending regulatory inquiries, and a significant stock price decline, Yaoji Technology stands at a critical juncture. Until regulatory compliance reviews are concluded and its core businesses show signs of bottoming out and stabilizing, the cloud of uncertainty hanging over the "first playing card stock" is unlikely to dissipate easily.
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