Cross-border mergers and acquisitions lay a "time bomb": *ST Changyao inflated revenue by 733 million over three years and was ultimately forced to delist.

A capital operation that began with cross-industry transformation ultimately ended in financial fraud, debt entanglement, and delisting. Changjiang Pharmaceutical Holdings Co., Ltd. (hereinafter referred to as “*ST Changyao”) was forced to delist by the Shenzhen Stock Exchange for violating major financial regulations, becoming another typical case in the A-share market.

01 From Internal Combustion Engines to Pharmaceuticals: Behind a “Glamorous Turn”

*ST Changyao’s predecessor was Kangyue Technology, established in Shandong in 2001, initially focusing on the field of internal combustion engine components. With its technological accumulation in mechanical manufacturing, the company was listed on the Shenzhen Stock Exchange’s Growth Enterprise Market in August 2014, with an issue price of 9.84 yuan, becoming a representative enterprise in the internal combustion engine components sector.

In the early days of its listing, the company’s main business grew steadily, covering multiple manufacturing industrial clusters in China, with products also exported overseas, reaching a high point in its development. However, as competition in the mechanical manufacturing industry intensified, the company began to seek cross-industry transformation.

In November 2020, *ST Changyao acquired 52.75% of Hubei Changjiang Star Pharmaceutical Co., Ltd. for 1.414 billion yuan in cash, officially entering the pharmaceutical field. In 2022, the company completely divested its internal combustion engine business and was renamed Changjiang Pharmaceutical Holdings Co., Ltd., fully laying out its strategy in the health industry. Currently, the company’s main business includes the production and sale of traditional Chinese medicine pieces, pharmaceutical wholesale, and photovoltaic equipment manufacturing, forming a dual main business pattern of “Pharmaceuticals + Photovoltaics.”

This cross-industry merger appeared to be a layout for emerging sectors but actually buried the seeds for financial fraud.

02 Over 700 Million in Inflated Revenue Over Three Years, Financial Fraud Shocking

According to the Securities Regulatory Commission’s “Administrative Penalty Decision,” from 2021 to 2023, *ST Changyao confirmed revenue through its subsidiaries Changjiang Star’s Changjiang Yuan and New Peak Pharmaceutical by creating false warehouse receipts, delivery notes, etc., without any real sales activities, resulting in significant false records in three consecutive annual reports.

Specifically:

In 2021, the inflated operating income was 215 million yuan, accounting for 9.12% of the disclosed revenue for that period;

In 2022, the inflated operating income was 284 million yuan, accounting for 17.57%;

In 2023, the inflated operating income was 234 million yuan, accounting for 19.51%.

The total inflated operating income over the three years exceeded 733 million yuan, reaching the major violation delisting threshold of the Growth Enterprise Market.

It is worth noting that the financial fraud was not an isolated violation but a concentrated manifestation of the company’s operational loss of control. After the acquisition, the original actual controller of Changjiang Star still dominated the management, risking everything to meet performance commitments, ultimately dragging the listed company into the abyss.

03 Comprehensive Deterioration of Operational Fundamentals, Debt Crisis Combined with Litigation Predicament

Aside from financial fraud, *ST Changyao’s operational fundamentals had long been riddled with holes.

Profitability continued to weaken. From 2022 to 2024, the company’s net profit excluding non-recurring items was -76.3948 million yuan, -632 million yuan, and -569 million yuan, respectively. In 2024, operating revenue plummeted from 1.615 billion yuan in 2022 to 112 million yuan, a cliff-like decline. In the first three quarters of 2025, the company still failed to turn a profit, with a net loss of 210 million yuan.

Debt and litigation pressures loomed large. As of the latest disclosure, the company and its subsidiaries were involved in 140 lawsuits and arbitrations, with a total amount in dispute of 1.878 billion yuan, exceeding 400% of the absolute value of net assets. 109 bank accounts were frozen, accounting for 67.7% of the total number of accounts opened. The company had 1.106 billion yuan in large interest-bearing debts, with 390 million yuan overdue, and its subsidiaries owed 120 million yuan in taxes.

The cash flow was extremely tight, financing channels were completely blocked, and the ability to repay debts had significantly declined. Previous attempts to resolve the crisis through reorganization also ended in failure.

Conclusion: Financial Fraud Ultimately Cannot Escape Legal Consequences, Compliant Operations Are Fundamental

The delisting of *ST Changyao is a typical case in the collapse of a capital chain involving “cross-industry mergers burying mines—financial fraud exploding—operational deterioration leading to delisting.” Its warning significance lies in the fact that merger expansion cannot come at the expense of compliance, and performance commitments cannot become excuses for fraud.

As the registration system reform deepens and the delisting mechanism improves, the A-share market’s “zero tolerance” attitude towards financial fraud is increasingly clear. For companies, only by adhering to compliance bottom lines and focusing on core business operations can they navigate the capital market steadily and sustainably. The fate of *ST Changyao is the most profound testament to this bottom line.

This article is generated in conjunction with AI tools.