The spring of 2026 has been turbulent for Huachuang Securities. The brokerage firm issued a research report on Topchoice Medical Corporation (600763.SH) when the dental service leader's stock price was at a high level, upgrading its rating from "recommend" to "strongly recommend." Twenty-two days later, Topchoice Medical announced a related-party acquisition with a premium exceeding 10 times, and on the same day, the Shanghai Stock Exchange issued an inquiry. From the report's release to the closing on April 9, the stock fell by over 17%. Concurrently, risks from Huachuang Securities' bond distribution and asset management businesses, accumulated years ago, are gradually materializing, with multiple lawsuits continuing to drain company resources.
When optimistic recommendations at peak prices coincide with defaults in distributed bonds and asset management products, coupled with declining revenues in proprietary trading, investment banking, and asset management, Huachuang Securities finds itself under intense market scrutiny.
On the evening of March 2, 2026, Huachuang Securities released an in-depth research report on Topchoice Medical titled "Setting Sail Again: The Dental Service Leader's New Journey." The report upgraded Topchoice Medical's rating to "strongly recommend" with a target price of 67 yuan per share. At that time, Topchoice Medical's stock price was 50.65 yuan per share, implying an expected gain of approximately 32%. The report also significantly raised profit forecasts, estimating net profits attributable to shareholders of 527 million yuan, 670 million yuan, and 753 million yuan for 2025-2027, up 2.9%, 17.3%, and 22% from previous estimates, respectively.
The core logic presented was that Topchoice Medical had completed its transformation, shifting from a high-unit-price, high-margin consumer upgrade model to an efficient, scalable, and accessible quality medical paradigm, reshaping its growth curve through departmental reforms, grid-based marketing, and AI platform development.
However, the market did not respond optimistically, with Topchoice Medical's stock trending downward. A greater impact occurred on March 24 when Topchoice Medical announced plans to acquire 100% equity in four eyeglass and optometry companies controlled by its actual controller, Lu Jianming, for 600 million yuan in cash. The announcement showed that the core target, Hangzhou Cunjing Eyeglass, had a net asset value of 50.8779 million yuan but was valued at 703 million yuan under the income approach, a premium of 1,282.14%. Based on the 600 million yuan transaction price, the overall premium remained 1,066.3%. Among the other three targets, two were loss-making, and one had not yet commenced operations.
The seemingly ordinary transaction drew widespread market attention due to its related-party nature, the bundled acquisition of profitable and loss-making assets, and an evaluation premium exceeding 12 times. Shortly after, the Shanghai Stock Exchange issued a regulatory letter to Topchoice Medical, requesting explanations for the high-premium acquisition's rationale and whether it involved利益 transfer. Topchoice Medical responded on April 2, denying any利益 transfer.
Regarding the stock price, Topchoice Medical faced pressure starting late February. After reaching a high of 51.96 yuan per share on February 25, the stock continued to decline, closing at 41.82 yuan per share on April 9, down approximately 19.52% from the late-February peak, with a total market capitalization of 18.706 billion yuan.
Huachuang Securities issued the "strongly recommend" rating when the stock was near its peak but did not publish follow-up reports or additional risk warnings amid the stock's decline and the related acquisition event.
Beyond the research report controversy, risks accumulated in Huachuang Securities' bond distribution, underwriting, and asset management businesses are gradually emerging. Bonds distributed through Huachuang Securities' Jinhui Financial platform, including银杏 bonds, have defaulted. These bonds were filed and issued by the Guizhou Equity Financial Asset Exchange Center, with issuers including Zunyi Guotou, Meitan Zhonghe, and Panzhou Hongteng.
According to investor accounts cited by the self-media account "Naonao Evolution," sales representatives previously boasted about the products' state-owned enterprise backing and 100% repayment. However, investors faced extension agreements where interest reductions and extensions were processed regardless of opposition or abstention. Although a debt resolution team intervened to handle the defaults, some investors' funds remain unpaid.
Repayment progress varies among issuers. Zunyi Guotou's bonds, due in late January 2024, were not repaid on time; principal was repaid in June 2025, but interest remains outstanding. Meitan Zhonghe announced that principal and interest repayment would be adjusted to March 31, 2026, while Panzhou Hongteng expected to complete repayment before the Spring Festival but had not done so by end-March. On April 3, Panzhou Hongteng informed investors via text message that repayment would be processed by May 2026.
Beyond银杏 bonds, individual investors' purchased bonds have also defaulted. In 2023, Liu Baochuan (pseudonym) bought two convertible bonds, "Tucheng Honglv" B and C classes, through Huachuang Securities, but interest was not paid on the due date. In early June 2024, he sued the Guizhou equity exchange center company, Huachuang Securities, and its Duyun Guanghui Road branch in a Guizhou district court over bond trading disputes but encountered complex jurisdictional disputes. The court transferred the case to the Guiyang Mediation Center; he agreed to mediation, but the counterparty refused, leading to the case's return to court.
On July 16, 2025, a ruling stated the court lacked jurisdiction. After Liu appealed, the second instance upheld the ruling—only the court where the bond issuer is located has jurisdiction. The subsequent situation for this 73-year-old remains unknown.
Huachuang Securities is involved in multiple lawsuits spanning bond underwriting and asset management, with some cases leading to provision for contingent liabilities. One case involves a securities dispute with Guolian-Annuity Fund Management Co., Ltd., dating back to 2013.
Xiamen Shengdawei Apparel Co., Ltd., after failing to list, issued two private bonds, "13 Shengdawei 01" and "13 Shengdawei 02," raising 50 million yuan total, with Huachuang Securities as the lead underwriter and custodian. The first tranche of 25 million yuan was subscribed by China Asset Management, and the second by a Guolian-Annuity specific multi-client asset management plan. When the bonds matured in 2015, Shengdawei could not repay principal and interest, resulting in default.
Subsequently, Huachuang Securities, as the complainant, criminally prosecuted Shengdawei's then-legal representative, Zhang Aimin, for fraudulent bond issuance. In December 2016, the Guiyang Intermediate People's Court issued a first-instance verdict sentencing Zhang Aimin and others to imprisonment, later upheld by the Guizhou High People's Court. This case became the first nationwide where criminal responsibility was pursued for fraudulent private bond issuance.
However, criminal accountability did not resolve civil disputes. In April 2018, Guolian-Annuity Fund sued in Xiamen Intermediate Court, seeking 30.3622 million yuan in actual losses and demanding Huachuang Securities and Zhang Aimin bear joint liability. Huachuang Securities provisioned 31.1982 million yuan for this case.
Notably, Huachuang Securities itself was the complainant in the criminal case, having reported suspected illegal activities by Shengdawei and related individuals to public security authorities, promoting criminal accountability for fraudulent bond issuance. In February 2025, Huachuang Securities applied to the Supreme People's Court for a retrial, received acceptance notice in March, held an inquiry procedure in July, and the case remains under review.
Another case involves Nuanniu Asset Management Co., Ltd., which held defaulted "16 Ningyuan High" bonds. Nuanniu Asset sued the lead underwriter, trustee manager, issuer, and other intermediaries, seeking repayment of 29.5 million yuan principal, interest, overdue interest, and litigation fees. Huachuang Securities was a member of the underwriting group but had an actual underwriting amount of zero. In August 2023, the first-instance court ruled that Huachuang Securities, with zero underwriting, bore no responsibility. Nuanniu Asset appealed in September 2023. In December 2024, the Ningxia High People's Court revoked the first-instance judgment and remanded for retrial. The retrial's first instance opened in March 2025, with no verdict yet. As of first-half 2025, Huachuang Securities had not provisioned for this case.
A third major lawsuit involves Hefei Midea Refrigerator Co., Ltd. suing Nie Yong, Li Enze, Chongqing Bank Guiyang Branch, Huachuang Securities, and Lujiazui Trust over tort liability disputes. In March 2016, Hefei Midea commissioned Huachuang Securities to establish the "Huachuang Hengfeng No. 86定向 Asset Management Plan" with 300 million yuan in funds. As per the contract and Hefei Midea's instructions, Huachuang Securities signed a "Single Trust Management Contract" with Lujiazui International Trust Co., Ltd., investing the funds into Lujiazui Trust, which then lent the money to Guizhou Antai Renewable Resources Technology Co., Ltd. via a "Trust Loan Contract."
In May 2016, Hefei Midea demanded full loan repayment from Guizhou Antai. Except for 35 million yuan repaid, the remainder was not recovered. Subsequently, the 300 million yuan involved criminal fraud, with related criminal proceedings concluded. Huachuang Securities, as the asset management plan's manager, acted per the contract and client instructions. Hefei Midea claimed Huachuang Securities was at fault and sought joint liability for damages. The court ruled that Huachuang Securities bears 20% compensation liability for principal not recoverable through criminal execution, plus corresponding interest. Hefei Midea expects over 100 million yuan in unrecoverable losses. Huachuang Securities provisioned 27.1544 million yuan for this case.
In March 2024, Huachuang Securities applied to the Supreme People's Court for a retrial. In November 2024, the Supreme People's Court decided to retry the case, with no public updates since.
Across these three cases, Huachuang Securities has provisioned approximately 58.3526 million yuan in total contingent liabilities.
Beyond these legacy cases, Huachuang Securities faces new significant litigation. In August 2025, Huachuang Securities sued Guizhou Bailing's major shareholder, Jiang Wei, and concerted actors over relief plan and stock pledge disputes, involving 1.761 billion yuan. In December 2025, Guizhou Bailing's controlling shareholder countersued Huachuang Securities, demanding fulfillment of obligations to sell all 160 million relief shares held. This dispute, evolving from "relief assistance" to "court confrontation," further drains resources and exposes deficiencies in risk control and business due diligence.
Huachuang Securities, established in 2002, is Guizhou's sole regional brokerage, wholly owned by A-share listed company Huachuang Yunxin (699155.SH), with a current market cap of 13.746 billion yuan. Huachuang Yunxin primarily engages in securities finance and new data interconnection network construction and operation, with securities finance mainly conducted through Huachuang Securities. As of Q3 2025, Huachuang Yunxin's operating revenue was 2.063 billion yuan, down 5.75% year-on-year, while net profit was 64.1614 million yuan, up 171.29%. Despite improved A-sharket turnover in 2025, Huachuang Securities experienced a mixed performance.
According to Huachuang Yunxin disclosures, net brokerage commission income for the first three quarters of 2025 was 764 million yuan, up 31.67% year-on-year. However, proprietary trading, investment banking, and asset management revenues all declined by double digits. Investment banking and asset management revenues were 136 million yuan and 51 million yuan, down 20.93% and 35.44% year-on-year, respectively. Proprietary business revenue (including investment income, fair value change gains, and income from associates and joint ventures) was 925 million yuan, with investment income being the highest at 953 million yuan but down 21.17% year-on-year; other components recorded negative returns.
Huachuang Securities did not disclose Q3 2025 results. Based on H1 2025 performance, operating revenue was 1.193 billion yuan, down 16.34% year-on-year, while net profit attributable to shareholders was 191 million yuan, up 11.05%. Brokerage, investment banking, and asset management revenues declined to 437 million yuan, 103 million yuan, and 38.6277 million yuan, down 1.58%, 18.9%, and 39.8%, respectively. Investment income fell to 589 million yuan, shrinking 35.7% year-on-year.
Revenue from distributing financial products, once seen as key to wealth management transformation, dropped significantly to 38.9658 million yuan in H1 2025, down 58.4% year-on-year, nearly 60%.
Extending the timeline to 2024, Huachuang Securities' operating revenue was 2.849 billion yuan, down 7.6% from 3.084 billion yuan in 2023; net profit attributable to shareholders was 402 million yuan, down 36.29% from 631 million yuan in 2023.
In terms of revenue composition, proprietary investment business revenue fell 11% to 1.122 billion yuan in 2024, mainly due to declines in alternative investment income. However, this remained Huachuang Securities' largest revenue source, accounting for 39.37% of total revenue.
A rating report by United Ratings at end-June 2025 indicated that Huachuang Securities' proprietary investments in 2024 were primarily in bonds, rising to 73.42% of the portfolio; credit bonds constituted 90.34% of bond investments, with high concentration in城投 bonds (70%) and industrial bonds (24.78%).
Concentration is a double-edged sword. By end-2024, defaulted bonds in Huachuang Securities' portfolio involved 3 issuers and 7 bonds, with a fair value of 152 million yuan and investment principal of 498 million yuan. Although these defaulted bonds have been provisioned, the risk appetite and control capabilities reflected are concerning.
Amid operational challenges, Huachuang Securities also received regulatory penalties. In December 2025, the Fujian Regulatory Bureau issued a warning to Huachuang Securities' Zhangzhou Victory East Road securities branch. The branch head, Zhong Yicong, engaged in activities such as promising principal protection, offering economic compensation for losses, and providing improper benefits while distributing financial products, and provided securities investment advice without registering as a securities investment advisor with the Securities Association of China.
Lapses in compliance awareness and exposed management deficiencies further intensify Huachuang Securities' reputational pressure. With "old wounds unhealed and new injuries added," whether Huachuang Securities can truly "set sail again" likely requires a comprehensive overhaul of governance mechanisms and risk culture.
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