In a critical period as it pushes for a Hong Kong listing, Leo Group Co.,Ltd. (002131) has been thrust into the spotlight due to a significant discrepancy between its earnings forecast and its audited annual report figures.
On July 3, 2026, the Shenzhen Stock Exchange issued a public reprimand against Leo Group, its Chairman and General Manager Wang Xiangrong, and its CFO Yang Hao. The penalty has been recorded in the securities and futures market integrity file.
Earnings Forecast Slashed by Over 80%
The issue began in early 2026. On January 31, 2026, Leo Group disclosed its annual performance forecast, projecting a net profit attributable to shareholders of between 190 million yuan and 250 million yuan for the full year 2025, which provided considerable confidence to the market.
However, a dramatic reversal occurred less than three months later. On April 24, 2026, the company released a revised performance forecast, drastically slashing its full-year net profit expectation to a range of 30 million yuan to 45 million yuan, a downward revision exceeding 80%.
The audited annual report for 2025, disclosed five days later, ultimately showed a net profit of only 33.7444 million yuan, a difference of nearly 200 million yuan from the initial forecast. This substantial gap directly triggered regulatory scrutiny.
The Shenzhen Stock Exchange's disciplinary decision stated that the significant variance between Leo Group's performance forecast and the audited net profit in the annual report violated relevant provisions of the Stock Listing Rules.
Compensation Claims from Affected Investors
The earnings revision directly placed pressure on the company's stock price, causing losses for many investors who purchased shares following the initial forecast. According to the Securities Law and related judicial interpretations, information disclosure obligors who engage in false records or misleading statements, resulting in investor losses, bear civil liability for compensation.
Legal teams have reportedly received thousands of investor claims for compensation since the issue emerged and are preparing litigation materials for filing.
Currently, investors who purchased shares between January 31, 2026, and April 23, 2026, and sold or still held them at a loss after April 24, 2026, are eligible to register claims.
For Leo Group, while the regulatory penalty has been issued, the more severe tests ahead will be rebuilding investor trust and handling subsequent compensation lawsuits.
Failed Shell Company Bet Triggers Earnings Reversal
As for why Leo Group suddenly made such a large correction, an examination points to a failed high-stakes gamble by the company.
According to public information, in 2025, the company spent 153 million yuan to acquire a 9.88% stake in the then-delisted ST Chuangxing. Leo Group's actual controller, Wang Xiangrong, became the de facto controller of ST Chuangxing, aiming to control its rare earth resources.
However, *ST Chuangxing was ultimately delisted due to financial issues. Leo Group provisioned for a 145 million yuan impairment on this equity investment, nearly wiping out its annual profit.
The company subsequently revised its earnings, leading to losses for tens of thousands of investors. The company explained that the revision was based on a prudent judgment of long-term equity investments during the annual audit process, an adjustment made in light of changes in the audit opinion for ST Chuangxing.
It is noteworthy that the number of the company's shareholder accounts surged rapidly from 540,000 at the end of 2025 to 978,400 by the end of the first quarter of 2026, leaving a large number of investors who bought at higher prices trapped.
For affected investors, actively seeking recourse through legal channels may be an effective way to recover some losses. However, it is still necessary to carefully verify the claim eligibility criteria, as only trades within the specified period qualify for participation.
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