Jihua Group Corp Ltd

ST Jihua announced after market close on September 28 that its board of directors had approved a proposal to correct prior accounting errors and make retrospective adjustments, restating the consolidated financial statements for the years 2018 through 2021. The correction stems from an administrative penalty decision issued by the China Securities Regulatory Commission on July 29, 2026, which found that Jihua Group had inflated operating revenue in its annual reports for 2018, 2019, 2020, and 2021 by 5.098 billion yuan, 2.998 billion yuan, 551 million yuan, and 1.013 billion yuan respectively, representing 22.48 percent, 14.17 percent, 3.68 percent, and 6.54 percent of the operating revenue disclosed for each period. Over the same periods, operating costs were inflated by 5.079 billion yuan, 2.98 billion yuan, 551 million yuan, and 1.013 billion yuan respectively, while the 2020 annual report also understated total profit by 502 million yuan, equivalent to 60.26 percent of the total profit disclosed for that period. The company said the correction will not change the profit or loss nature of the previously disclosed annual financial statements, nor will it cause net assets at the end of 2018 through 2021 to become negative. Tianjian Certified Public Accountants issued a special audit report and assurance report on the same day, and the restated financial statements have been disclosed on the Shanghai Stock Exchange website. In the first half of 2026, the company achieved operating revenue of 2.411 billion yuan, down 24.84 percent year on year, and net profit attributable to shareholders of the listed company was negative 288 million yuan, compared with negative 79 million yuan in the same period last year.

ST Jihua released its 2026 interim report, with net profit attributable to the parent company at negative 288 million yuan, a loss expansion of 209 million yuan compared with the same period last year. The company's total operating revenue was 2.411 billion yuan, down 24.84 percent year-on-year. Net cash flow from operating activities was negative 624 million yuan, an increase of 272 million yuan compared with the same period last year, achieving growth for two consecutive years. The company's latest asset-liability ratio was 33.52 percent, down 9.26 percentage points from the same period last year. Gross margin was 10.20 percent, down 3.81 percentage points year-on-year. Return on equity was negative 2.42 percent, down 1.79 percentage points from the same period last year. Diluted earnings per share was negative 0.07 yuan, a decrease of 0.05 yuan compared with the same period last year.

ST Jihua disclosed its 2026 semi-annual report. In the first half, total operating revenue was 2.411 billion yuan, down 24.84% year on year. Net loss attributable to the parent was 288 million yuan, compared with a loss of 79.03 million yuan in the same period last year. Net loss after deducting non-recurring items was 328 million yuan, compared with a loss of 146 million yuan a year earlier. Net cash flow from operating activities was negative 624 million yuan, versus negative 897 million yuan in the prior-year period. Basic loss per share was 0.066 yuan, and the weighted average return on equity was negative 2.39%.

ST Jihua released its 2026 interim report, with net profit attributable to the parent company widening to a loss of 288 million yuan. Operating revenue was 2.41 billion yuan, down 24.8 percent year on year. Net profit attributable to the parent after deducting non-recurring items was a loss of 328 million yuan. Net operating cash flow was negative 624 million yuan, an improvement of 30.4 percent year on year. Second-quarter operating revenue was 1.06 billion yuan, down 32.5 percent year on year, and net profit attributable to the parent was a loss of 167 million yuan. The company said its operations were affected by the bidding rhythm of some traditional key customers and phased qualification factors, and it is actively rectifying the situation, focusing on its core business, and improving quality and efficiency.

ST Jihua has been fined RMB 7 million by the China Securities Regulatory Commission for illegal information disclosure. An investigation found that a wholly-owned subsidiary recognized land sale revenue across periods, leading to a reduction in total profit of RMB 502 million in the 2020 annual report, accounting for 60.26 percent of the disclosed total profit for that period. In addition, the company inflated operating revenue through financing trade and agency business, inflating revenue by RMB 5.098 billion and RMB 2.998 billion in 2018 and 2019 respectively, representing 22.48 percent and 14.17 percent of the disclosed operating revenue for those periods. In 2020 and 2021, revenue was inflated by RMB 551 million and RMB 1.013 billion respectively, accounting for 3.68 percent and 6.54 percent of the disclosed operating revenue for those periods. The company has been ordered to rectify the issues and given a warning. Responsible individuals including former chairmen Li Yiling and Yuan Haili have also been fined varying amounts. ST Jihua stated it will correct errors and make retrospective adjustments to its financial reports, and pledged to improve the quality of information disclosure.