The company behind the *ST Shenkon A (000016.SZ) ticker is facing a new wave of legal challenges from investors, following a previous dispute with Alibaba, as its failed IPO bets with subsidiaries continue to pile up losses. The company, formerly known as Shenkon A, is now grappling with a financial crisis after a series of high-risk investment deals backfired.
In July 2026, the company disclosed that it had been hit with lawsuits from four investors, collectively seeking 637 million yuan. These claims stem from a 2021 investment agreement tied to the IPO of its former subsidiary, Chongqing Yifang Technology Co., Ltd. (Yifang). The company had signed a framework agreement with 11 investors, promising that if Yifang failed to go public by the end of June 2025 or December 2025, the company would be obligated to buy back their shares. The buyback price included the original investment amount plus annual returns of 6% or 8% (simple interest), minus any dividends already paid.
*ST Shenkon A initially held a 96% stake in Yifang, established in 2015. In 2018, Alibaba (China) Network Technology Co., Ltd. invested in the company. By 2021, the company planned to sell a 70% stake in Yifang, valuing it at 3.961 billion yuan, an 1146% premium over its net asset value of 317.8 million yuan. The sale was completed in December 2021, with a consortium of 17 buyers, including Shenzhen Qiaoyi Digital Technology Co., Ltd., a subsidiary of the company's controlling shareholder, paying 2.8 billion yuan for the stake. This reduced *ST Shenkon A's stake in Yifang to 25.78%.
The deal included special provisions, such as guarantees for advertising revenue and anti-dilution rights. One clause required Yifang to generate at least 100 million yuan in annual advertising revenue for Bilibili Technology from 2022 to 2024, with the company liable for any shortfall. These terms were not disclosed until April 2026 and have since resulted in a cumulative loss of 1.326 billion yuan for *ST Shenkon A, with 1.017 billion yuan impacting 2025 results alone.
This is not the company's first failed IPO bet. In a previous case, the company sold its stake in Anhui Kaikai Visual World E-Commerce Co., Ltd. (Kaikai) to Alibaba, with a similar IPO guarantee. When Kaikai missed its IPO deadline, Alibaba sued in 2024, and the company paid the buyback and interest in 2025. Both transactions lacked proper internal approval and were not disclosed in a timely manner, leading to significant accounting errors and corrections.
The company's financial troubles are deepening. Its 2025 annual report showed a net loss of 12.238 billion yuan, with negative equity of 5.86 billion yuan and a debt-to-asset ratio of 126.22%. The auditor issued a qualified opinion with a going-concern emphasis, while the internal control report flagged the undisclosed investor agreements. As a result of negative net assets, the stock was slapped with a delisting risk warning in April 2026, changing its ticker to *ST Shenkon A. The company is now forecasting a net loss of 130 million to 180 million yuan for the first half of 2026, though this represents a 53% to 66% improvement year-over-year, as it struggles with high costs in its consumer electronics business and a nascent semiconductor unit that has yet to achieve scale or profitability.
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