*ST Xingnong Receives Notice of Administrative Penalty for Artificially Inflating 2023 Revenue by 60.72 Million Yuan; Company and Four Senior Executives to Face Combined Fines of 6.9 Million Yuan

SinoPac Securities (Rights Issue) (Stock Code: 603789) announced on March 18th that the company received an “Administrative Penalty Notice” from the Zhejiang Regulatory Bureau of the China Securities Regulatory Commission on March 17th. Due to false statements in the 2023 annual report, the company and four current senior executives face a total fine of 6.9 million yuan.

The announcement states that, according to Zhejiang CSRC, *ST Xingnong’s wholly owned subsidiary, Bazhou Xingguang Zhiyuan Smart Agriculture Technology Co., Ltd. (hereinafter “Xingguang Zhiyuan”), engaged in false cotton harvesting, consulting, and promotional services in 2023, resulting in an artificial increase of operating income by 60.7274 million yuan, accounting for 19.69% of the disclosed revenue for that period; and an inflated total profit of 5.2895 million yuan, representing 9.77% of the disclosed profit for that period. The company issued a “Notice on the Correction and Retroactive Adjustment of Previous Accounting Errors” on September 27, 2025, to retrospectively adjust for these issues.

Zhejiang CSRC believes that *ST Xingnong’s actions violated Article 78, Paragraph 2 of the Securities Law of the People’s Republic of China, constituting a violation as described in Article 197, Paragraph 2 of the Securities Law. The then Chairman He Dejun, the then Director and General Manager Zheng Bin, Xingguang Zhiyuan’s then General Manager Liu Tao, and the then Financial Officer Wu Haijuan, due to neglect or direct involvement, are identified as the responsible persons directly accountable for the company’s illegal activities.

According to Article 197, Paragraph 2 of the Securities Law, Zhejiang CSRC plans to impose the following penalties:

• Warning and a fine of 2.5 million yuan on Xingguang Nongji Co., Ltd.
• Warnings and fines of 1.2 million yuan each for He Dejun, Zheng Bin, and Liu Tao.
• A warning and a fine of 800,000 yuan for Wu Haijuan.

The involved parties have the right to make statements, defend themselves, and request a hearing. They must submit relevant receipts within five working days of receiving the notice; failure to do so will be deemed as waiving their rights.

Regarding the impact on the company, *ST Xingnong states that, according to Article 9.8.1 of the “Shanghai Stock Exchange Stock Listing Rules (Revised April 2025),” the company has encountered other risk warning situations but has not reached the level of mandatory delisting due to major illegal violations. As of the announcement date, the company’s operations and business activities are normal, and these issues will not significantly affect its production and operation. The company will continue to monitor the situation and fulfill its information disclosure obligations promptly.

The company also reminds investors that the final outcome of this administrative penalty will be based on the “Administrative Penalty Decision” issued by Zhejiang CSRC. Investors are advised to pay attention to subsequent announcements and be aware of investment risks.

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