Breaking: Humanwell Healthcare to Face ST Designation

Deep News12-12

Humanwell Healthcare (Group) Co., Ltd. (600079) is set to be labeled with an ST designation due to false financial records in its annual reports.

On December 12, the company announced receiving a prior notice of administrative penalties from the Hubei branch of the China Securities Regulatory Commission (CSRC). The notice revealed that the disclosed financial indicators in its annual reports contained false records, triggering the imposition of an "Other Risk Warning" (ST). Trading of the company’s shares will be suspended for one day starting December 15, after which its A-share abbreviation will change to "ST Humanwell."

The investigation confirmed four major violations in information disclosure: 1. Failure to promptly disclose non-operational fund misappropriations totaling ¥12.785 billion from 2020 to March 2022, including ¥2.502 billion (17.58% of net assets) in 2020. 2. Omission of ¥2.502 billion in fund misappropriations (19.26% of net assets) in its 2020 annual report and undisclosed related-party transactions worth ¥1.645 billion in its 2022 report. 3. Overstatement of net profits by ¥143 million (2020), ¥72 million (2021), and ¥91 million (first half of 2022). 4. Concealment of affiliate relationships by controlling shareholder Wuhan DDMC Culture Co., Ltd. ("DDMC Group").

Penalties include fines of ¥8.5 million for Humanwell, ¥9 million for DDMC Group, and ¥3.9 million each for former chairman Li Jie and de facto controller Ai Luming. Nine other executives face fines ranging from ¥500,000 to ¥3.4 million, totaling ¥36.7 million. Ai Luming, deemed central to the violations, faces a seven-year market ban for severe misconduct.

Notably, the penalties primarily address legacy issues from the DDMC era. In July, control shifted to China Merchants Life Sciences, ending DDMC’s 32-year majority ownership. Management reshuffles followed, including Li Jie’s resignation as chairman in January 2025.

Despite declining profits (from ¥2.484 billion in 2022 to ¥1.33 billion in 2024), Humanwell has intensified innovation efforts. In 2025, it reported Q1–Q3 revenue of ¥17.883 billion (down 6.58% YoY) but net profit growth of 6.22% to ¥1.689 billion, with R&D exceeding ¥1 billion. On November 29, its novel biologic HWS117 injection entered clinical trials, marking its 10th new drug approval this year.

As of December 12, Humanwell’s shares closed at ¥18.15, with a market cap of ¥29.62 billion.

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