On January 26, 2026, ST Xinhua Jin (SH600735, price 6.84 yuan, market cap 2.9 billion yuan) issued a stock trading risk advisory announcement. The company's stock price had hit the upper limit for four consecutive trading days from January 21 to January 26, accumulating a gain of 21.71%.
However, behind the abnormal stock price movement, the company's fundamental operations have not undergone any significant changes, yet it faces multiple substantial risks. For instance, Xinhua Jin Group Co., Ltd. and its related parties have non-operationally misappropriated 406 million yuan in funds from ST Xinhua Jin; furthermore, ST Xinhua Jin is projected to report a net loss ranging from 95 million yuan to 142 million yuan for the year 2025.
ST Xinhua Jin explicitly stated in its announcement that its stock price hit the upper limit for four consecutive trading days from January 21 to January 26, 2026, with a cumulative gain of 21.71%, a short-term increase significantly higher than the rises in both the sector index and the Shanghai Composite Index over the same period. However, with no major changes in the company's fundamentals, the situation points to overheated market sentiment and irrational speculation, creating a risk of a rapid price decline at any moment.
Simultaneously, the announcement highlighted several core risks. The first is that ST Xinhua Jin faces the potential imposition of a delisting risk warning. As of the disclosure date of the 2025 semi-annual report, Xinhua Jin Group and its related parties had a non-operational fund misappropriation balance of 406 million yuan. If the company fails to recover the misappropriated funds within the six-month period required by the Qingdao Securities Regulatory Bureau's rectification order, its stock trading will be suspended; if the rectification is not completed within two months following the suspension, a delisting risk warning will be imposed; failure to complete the rectification within a further two months after that will result in the termination of the stock's listing.
The second risk is the possibility that the misappropriated funds may not be fully recovered. The company's controlling shareholder, Shandong Lujin Import and Export Group Co., Ltd., and its indirect controlling shareholder, Xinhua Jin Group, have already had their bankruptcy restructuring applications accepted by court rulings. According to the Enterprise Bankruptcy Law of the People's Republic of China, the aforementioned misappropriated funds are classified as ordinary claims, carrying the risk of a low recovery rate or even a failure to be fully repaid.
The third risk involves a potential decline in the company's performance. Based on preliminary calculations by the finance department, the company expects its 2025 net profit attributable to owners of the parent company to be between -142 million yuan and -95 million yuan, and its net profit after deducting non-recurring gains and losses to be between -163 million yuan and -109 million yuan. Additionally, the company's controlled subsidiary, Qingdao Haizheng Graphite Co., Ltd., has not met the operational conditions required for mine production due to factors such as not having obtained the mining area land use rights, a production safety license, and environmental impact assessment approval, rendering it unable to commence mining operations in the short term. Furthermore, the cumulative share pledge ratio of the company's controlling shareholder and its parties acting in concert has reached a high of 99.64%. Whether the bankruptcy restructuring of Lujin Group and Xinhua Jin Group will affect the company's control rights depends on the subsequent restructuring plan and the final court ruling, posing a risk of control right instability.
The fund misappropriation issue at ST Xinhua Jin is not a new disclosure. On August 25, 2025, the company received an "Administrative Supervision Measures Decision" from the Qingdao Securities Regulatory Bureau, which stated that as of the semi-annual report disclosure date, Xinhua Jin Group and its related parties had a non-operational fund misappropriation balance of 406 million yuan, and the regulator demanded repayment within six months. However, as of January 26, 2026, a specific resolution plan had still not been finalized. On January 20, 2026, the company announced that its controlling shareholder, Lujin Group, and its indirect controlling shareholder, Xinhua Jin Group, had had their bankruptcy restructuring applications accepted by rulings from the Shinan District People's Court of Qingdao City. The court determined that Lujin Group was "unable to repay its due debts and its assets are insufficient to cover all its debts," and that Xinhua Jin Group was "already unable to repay its due debts and clearly lacks the ability to repay." The company stated it would legally declare its claims during the bankruptcy proceedings, but the recovery rate for the misappropriated funds, treated as ordinary claims, remains uncertain.
Previously, Xinhua Jin Group had planned to repay the misappropriated funds by selling its equity in Shandong Jimo Huangjiu Chang Co., Ltd., but that transaction has since been terminated. Market analysis points out that the long-term misappropriation of funds by related parties not only impacts the company's cash flow but could also lead to regulatory penalties due to governance deficiencies.
Compounding the troubles, ST Xinhua Jin's 2025 performance forecast indicates an expected annual net loss between 95 million yuan and 142 million yuan, primarily attributed to impairment provisions made on assets and goodwill showing signs of devaluation, including goodwill impairment, inventory write-downs, and credit impairment losses. Data shows the company already incurred a loss of 134 million yuan in 2024, and while it reported a net profit of 16.44 million yuan for the first three quarters of 2025, this represented a year-on-year decrease of 60.93%. If the full-year 2025 results in a loss, the company will have reported negative net profits for two consecutive years.
Comments