Shandong Hiking International Co.,Ltd. (ST新华锦, stock code: 600735) and its actual controller have been placed under investigation by the China Securities Regulatory Commission (CSRC), with trading of the company's shares suspended starting February 26.
On the evening of February 25, ST新华锦 announced that both the company and its actual controller, Zhang Jianhua, separately received formal investigation notices from the CSRC on February 25. The investigation relates to suspected violations of information disclosure regulations.
In a separate announcement the same evening, ST新华锦 stated that as of February 25, the expiration date of the rectification period ordered by regulators, the company had failed to recover 406 million yuan in non-operating funds occupied by its parent group, Xinhua Jin Group, and its affiliates. Consequently, the Shanghai Stock Exchange will suspend trading of the company's shares starting from the market open on February 26. The suspension period will not exceed two months.
Regarding these dual developments of investigation and trading halt, ST新华锦 indicated that its current business operations and activities remain normal. The company stated it will actively cooperate with the CSRC investigation and fulfill its information disclosure obligations.
The CSRC investigation brings the company's compliance risks into sharp focus. The specific details of the alleged information disclosure violations by ST新华锦 and Zhang Jianhua have yet to be disclosed publicly. However, there were prior indications of regulatory scrutiny.
On January 21, ST新华锦 received a regulatory inquiry letter from the Shanghai Stock Exchange concerning matters related to the bankruptcy restructuring of its controlling shareholder. The letter involved the listed company, its directors, senior management, the controlling shareholder, and the actual controller.
The previous day, January 20, ST新华锦 announced that it had been informed that the Shinan District Court of Qingdao City, Shandong Province, had accepted the bankruptcy restructuring applications for its controlling shareholder, Lujin Group, and its indirect controlling shareholder, Xinhua Jin Group.
ST新华锦 is a long-established listed company in Shandong province, having been listed on the Shanghai Stock Exchange as early as 1966. Its main businesses include the production, processing, and export of hair products and textile garments. The company has also expanded into graphite new materials and cross-border import e-commerce. It has a highly concentrated ownership structure; as of the end of the third quarter of 2025, Lujin Group held a 43.27% stake in the company.
In recent years, ST新华锦 has faced ongoing operational pressures and fallen into losses. For the year 2024, the company reported revenue of 1.637 billion yuan, a decrease of 30.97% year-on-year, and a net loss of 134 million yuan, ending a previous streak of consecutive profitable years.
According to its 2025 performance forecast, the company anticipates a net loss ranging from 95 million yuan to 142 million yuan for 2025. The company attributed the expected losses primarily to the prudent principle of conducting year-end impairment tests on relevant assets. Based on analysis and preliminary calculations, it plans to make provisions for impairment on certain assets and goodwill showing signs of impairment, including goodwill impairment, inventory write-downs, and credit impairment losses.
While the investigation represents a significant compliance blow, the mandatory trading suspension triggered by the failure to rectify the fund occupation issue directly threatens the company's listing status.
ST新华锦 confirmed in its announcement that as of the expiration date of the rectification order (February 25, 2026), zero yuan of the 406 million yuan in non-operating funds occupied by Xinhua Jin Group and its affiliates had been repaid. Following regulations, the Shanghai Stock Exchange imposed a trading halt on the company's stock effective February 26, lasting up to two months.
This substantial fund occupation has long been a major concern for ST新华锦. The company's 2025 interim report showed that the illegally occupied funds by Xinhua Jin Group and its affiliates amounted to 406 million yuan, accounting for 33% of the company's net assets at the time and equivalent to the sum of its net profits over several previous years.
On August 25, 2025, the Qingdao Securities Regulatory Bureau issued a rectification order against Shandong Hiking International Co.,Ltd., Xinhua Jin Group, and Zhang Jianhua, granting a six-month period for rectification. However, the company and Xinhua Jin Group failed to produce a viable repayment plan.
Previously, Xinhua Jin Group and Lujin Group attempted to repay the debt by selling assets of Shandong Jimo Huangjiu Co., Ltd. to Tsingtao Brewery, but the related transaction was ultimately terminated, causing the repayment plan to fail.
Xinhua Jin Group and Lujin Group were accepted for bankruptcy restructuring by the court on January 20, 2026. This means ST新华锦, as a creditor, must file its claims in the bankruptcy proceedings. The 406 million yuan in occupied funds, treated as ordinary claims, face the risk of a low recovery rate and potential non-full repayment.
According to the Shanghai Stock Exchange's listing rules, this trading suspension is a critical juncture for ST新华锦 regarding delisting risk. If the fund occupation issue is rectified within the two-month suspension period, the company can apply for the resumption of trading. If the issue remains unresolved after two months, the stock will be subject to a delisting risk warning (*ST) upon resumption of trading. If, after a further two months post-resumption, the problem is still not rectified, the exchange may terminate the company's listing according to regulations.
As of the market close on February 25, ST新华锦's share price was 6.73 yuan per share, with a total market capitalization of 2.886 billion yuan.
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