*ST Huifeng Chairman and Senior Management Receive Regulatory Warning Letters, Stock on Brink of Delisting

How does AI · Disclosure violations expose corporate governance flaws?

Previously, inaccurate disclosure of a 270 million yuan equity transfer led to regulatory actions. Jiangsu Hui Feng Biological Agriculture Co., Ltd. (*ST Hui Feng), a pesticide and fertilizer manufacturer, whose chairman is Zhong Hangen, former general manager Pei Bo Ping, former board secretary Wei Guang Quan, and former CFO Yang Jin Hua, recently received warning letters from the Jiangsu Regulatory Bureau of the China Securities Regulatory Commission (CSRC) and regulatory notices from the Shenzhen Stock Exchange.

Compared to penalties, the greater risk stems from the company’s poor performance, which poses a more significant threat. The company has issued multiple risk warning announcements, and its stock is on the verge of delisting.

270 Million Yuan Equity Transaction Disclosure Violation

According to *ST Hui Feng’s announcement, the company received a warning letter from the Jiangsu CSRC on March 18. The warning letter states that in July 2018, the company signed an agreement related to the transfer of a 49% stake in Shijiazhuang Ruikai Chemical Co., Ltd., with a transaction price of 270 million yuan. The company’s descriptions of the equity transfer price in its 2018-2020 annual reports were inaccurate, violating Article 2, Paragraph 1 of the “Administrative Measures for Information Disclosure by Listed Companies” (hereinafter “Disclosure Measures”). Chairman Zhong Hangen, former General Manager Pei Bo Ping, former Board Secretary Wei Guang Quan, and former CFO Yang Jin Hua failed to exercise due diligence and are primarily responsible for the company’s violations, violating Article 3 of the Disclosure Measures.

As a result, the Jiangsu CSRC decided to issue warning letters to *ST Hui Feng and the four individuals and record the violations in the securities and futures market integrity archive. The CSRC requires the company to take effective measures to strengthen internal controls and information disclosure management, and to strictly fulfill its disclosure obligations according to regulations.

Due to these disclosure violations, the Shenzhen Stock Exchange issued regulatory notices to the company and all senior management on the same day, urging them to learn from the incident, strictly comply with the Securities Law, Company Law, the Shenzhen Stock Exchange’s Listing Rules, and related regulations, and to perform information disclosure truthfully, accurately, completely, timely, and fairly to prevent similar events.

After receiving the warning letter, *ST Hui Feng responded that the company and relevant personnel attach great importance to the issues raised, will carefully reflect and learn lessons, further strengthen their understanding of relevant laws, regulations, and normative documents, improve compliance awareness, enhance corporate governance, strengthen information disclosure management, and prevent recurrence of such incidents.

Ongoing Losses and High Delisting Risk

The disclosure violations involve historical issues. Currently, *ST Hui Feng faces a more urgent challenge: the risk of delisting.

It is reported that *ST Hui Feng’s main businesses include ecological functional agriculture, petrochemical storage and supply chain, and project investment. Its main product is the “Neng Bai Wang” series of small-molecule functional fertilizers. The company has been experiencing losses for many years.

Due to a net profit attributable to shareholders of the listed company being negative for 2024 and operating income after deducting non-recurring gains and losses below 300 million yuan, its stock has been under delisting risk warning since April 23, 2025. If the company’s audited total profit, net profit, or net profit after deducting non-recurring gains and losses is negative, and its operating income after deductions is below 300 million yuan, the stock may be delisted.

*ST Hui Feng recently released a performance forecast, estimating a net loss of 170 million to 220 million yuan for 2025, representing an increase in loss of 9.61% to 41.85% compared to the previous year; the net profit excluding non-recurring gains and losses is expected to be a loss of 130 million to 170 million yuan, with operating income after deductions estimated at 360 million to 400 million yuan.

Regarding the net loss, *ST Hui Feng explained that it was mainly due to losses from fair value changes of financial assets held, impairment losses on fixed assets, provisions for investor litigation damages based on court judgments, and the company’s operational underperformance during its transformation phase.

Although the forecasted operating income after deductions exceeds the 300 million yuan threshold, *ST Hui Feng reminds that this figure is an initial estimate by the company’s finance department, not audited by an accounting firm. Whether the final audited operating income after deductions exceeds 300 million yuan remains uncertain. The final financial data will be based on the company’s official audited annual report for 2025. If the audited financial data for 2025 triggers the relevant delisting rules of the Shenzhen Stock Exchange, the company’s stock may face delisting after the 2025 annual report is disclosed.

The Beijing News reporter Liu Huan

Editor Li Yan

Proofreader Chen Di Yan