Zhejiang Tony Electronic Co.,Ltd. (603595) will be designated with an ST (Special Treatment) label due to false financial records in its annual reports. The company has been under investigation by regulatory authorities for violations related to information disclosure.
On October 29, the company received a prior notice of administrative penalties from the Zhejiang Securities Regulatory Bureau, confirming false entries in its annual financial indicators.
In accordance with regulations, the company’s shares will be suspended for one day on October 30, 2025, and resume trading on October 31 under the ST designation. The stock’s daily price fluctuation limit will be adjusted to 5%, and its ticker will change from "Tony Electronic" to "ST Tony."
The investigation traces back to April 25 of this year, when the China Securities Regulatory Commission (CSRC) initiated a probe into the company for suspected disclosure violations. After over six months, the investigation concluded, revealing two major violations: delayed disclosure of significant contract progress and false records in its 2022 annual report and 2023 interim report.
Specifically, in January 2023, a subsidiary of Tony Electronic signed a procurement contract with Guangdong Tianyu Semiconductor Co., Ltd., agreeing to deliver 135,000 units of 6-inch silicon carbide substrates from May to December 2023, totaling CNY 675 million—51.84% of the company’s audited annual revenue. However, by October 2023, only 6.74% of the contract had been fulfilled, indicating a clear failure to meet deadlines. The company delayed disclosing this material information until January 6, 2024.
Regarding financial misstatements, Tony Electronic improperly classified defective crystals as inventory instead of R&D expenses during the preparation of its 2022 annual and 2023 interim reports. Additionally, it failed to account for raw materials procured through related-party advances and inadequately provisioned for inventory depreciation. These actions inflated total profits by CNY 38.78 million in 2022 and CNY 72.28 million in the first half of 2023, representing 38.63% and 70.95% of disclosed figures, respectively.
As a result, the Zhejiang Securities Regulatory Bureau imposed a CNY 7 million fine on Tony Electronic, along with warnings and individual fines ranging from CNY 600,000 to CNY 3.5 million on responsible personnel.
The company stated it would take active measures to mitigate the adverse effects and seek removal of the ST designation once conditions permit. Notably, in April 2024, Tony Electronic corrected prior accounting errors and retrospectively adjusted related data.
Tony Electronic specializes in ultra-fine alloy wires, metal matrix composites, and other advanced materials, serving industries including consumer electronics, solar photovoltaics, healthcare, new energy vehicles, and semiconductors.
Currently, the company’s performance is recovering. For the first three quarters of 2024, revenue reached CNY 1.457 billion, up 1.5% year-on-year, while net losses narrowed significantly to CNY -14.61 million. The third quarter alone saw a net profit of CNY 26.61 million, with non-GAAP net profit at CNY 25.91 million, marking a turnaround from losses.
The improvement was attributed to three factors: increased revenue and margins in new energy business, reduced inventory depreciation losses, and lower financial expenses due to decreased interest-bearing debt.
