ST Yedao under CSRC investigation for suspected information disclosure violations

By Lanjing News (Reporter: Zhu Xinyue) | September 24

On the evening of September 21, Hainan Yedao (600238.SH) announced that it had received a "Case Filing Notice" from the China Securities Regulatory Commission (CSRC), confirming that the company is under investigation for suspected violations of information disclosure regulations. The announcement did not disclose the specific cause of the case, the progress of the investigation, or the period involved. The company stated it would cooperate with the investigation and fulfill its information disclosure obligations.

Market Reaction

The capital market responded swiftly:

• September 22: Shares closed at 4.30 yuan, down 8.12%
• September 23: Opened at 4.26 yuan, hit a low of 4.06 yuan, and closed at 4.08 yuan, falling another 5.12%. Total market capitalization shrank to 1.829 billion yuan.

Lanjing News sent interview questions to the company's publicly disclosed email and board office contacts regarding the case cause, scope of internal review, and subsequent disclosure arrangements. As of press time, no response had been received.

Prior Warning Signs

The investigation did not come without warning. On April 30, the Hainan Securities Regulatory Bureau issued an administrative regulatory warning letter to the company, citing two issues:

1. Revenue Recognition Violations (2020–2021): The company sold Hainan white liquor to Duqiu Industrial and Ganzhou Haixiang Liquor. Cargo transfer documents were incomplete, and revenue recognition was insufficiently supported. This involved accounting error corrections and improperly recognized revenue totaling 30.5025 million yuan.

1. Undisclosed Related-Party Transactions (2024–2025): The company engaged in related-party transactions with Hainan Yedao Yufan Food without fulfilling review procedures or making required disclosures. These were subsequently recognized and a rectification report was submitted in July.

Annual Report Scrutiny

The company's 2025 annual report showed:

• Revenue: 371 million yuan, up 111.87% year-on-year
• Revenue after deductions: 335 million yuan, crossing the 300 million yuan red line
• Status: On August 3, the company's delisting risk warning was lifted, and the stock ticker changed from "*ST Yedao" to "ST Yedao," though other risk warnings remain in place.

ZhongShenYaTai issued an unqualified audit opinion on the 2025 financial report, but the internal control audit included an emphasis of matter paragraph. The Shanghai Stock Exchange's annual report inquiry letter further questioned Q4 volume growth, related-party sales disclosures, and revenue recognition. The market is watching whether the investigation will extend to 2025 revenue disclosures, though the company has not confirmed.

Operational Performance

In the first half of 2026:

• Revenue: 173 million yuan, up 94% year-on-year
• Liquor business revenue: 143 million yuan, including:
• Deer Turtle Wine: 65.5053 million yuan
• Haiwang Wine: 62.4371 million yuan
• Net loss attributable to shareholders: 7.538 million yuan, narrowing from 15.765 million yuan in the same period last year
• Net operating cash flow: -22.72 million yuan, indicating continued cash flow pressure during the "shell protection" period

Governance Changes

• Former Board Secretary: Wang Zhiming resigned in June
• New Board Secretary: Dai Mei'ou was appointed on September 1, filling a nearly three-month vacancy
• Challenge: Less than a month into the role, Dai now faces the added responsibility of cooperating with the CSRC investigation, increasing compliance pressure during the investigation period.

Industry Analyst Commentary

Cai Xuefei, a liquor industry analyst, commented to Lanjing News:

"As a long-established regional state-owned enterprise, Yedao has a clear objective to maintain its listing status. In the first half of the year, both Deer Turtle Wine and Haiwang Wine drove revenue recovery as dual flagship products. However, growth has relied on channel restocking and regional distribution expansion. End-consumer bottle opening and payment collection quality still need verification."

He added that the investigation will amplify short-term financing and credit pressures, making channel partners, bank credit lines, and state-owned shareholder support more cautious.

"The key going forward is not quarterly growth rates, but whether the company can maintain operational stability during the investigation period, address internal control and related-party disclosure shortcomings, and avoid secondary information disclosure violations that could trigger additional regulatory risks. If penalties are imposed, the company's 'shell protection' window and refinancing plans will need reassessment. Management must use transparent communication to stabilize market expectations."

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