Performance suddenly "going viral"? Last year's Q4 estimated revenue approaches the total for 2024, as *ST Coconut Island faces regulatory precise inquiries in the critical year for "keeping the shell"

Why does the regulator question the authenticity of *ST Yedao’s significant revenue increase in the fourth quarter?

Reporter: Zhang Baolian Editor: Xiao Ruidong

In the A-share market, it is not uncommon for listed companies to strive for strong year-end performance, but if the data appears too “extreme,” it is likely to attract regulatory scrutiny.

On the evening of March 18, *ST Yedao, which is on the brink of delisting, announced that it had received a regulatory letter from the Shanghai Stock Exchange regarding the company’s performance forecast for 2025. According to its previously released performance forecast, the company expects to achieve revenue of between 172 million and 192 million yuan in the last quarter of 2025, a figure that not only accounts for a substantial portion of its annual revenue but is also close to the total revenue for the entire year of 2024.

In light of such unusual financial data, the regulatory authorities quickly raised questions, requiring *ST Yedao to conduct a quantitative analysis of the reasons and rationale for the significant revenue growth in the fourth quarter of 2025, and to focus on verifying whether there were instances of pushing inventory onto downstream distributors, extending the collection period to expand sales, and whether the related transactions had commercial substance.

Fourth quarter revenue nearing total revenue for 2024

According to disclosures, the regulator is primarily concerned with *ST Yedao’s key financial data that is projected to show significant growth in 2025.

On January 30, based on the company’s disclosed performance forecast for 2025, *ST Yedao expects to achieve annual revenue of 370 million yuan, with the operating revenue after deducting income unrelated to its main business and income lacking commercial substance being 350 million yuan, both of which represent a year-on-year growth of over 100% compared to the total revenue for 2024.

The company explained the reasons for the surge in sales revenue as a firm commitment to implementing a “dual flagship product” strategy, focusing on two core products: Haiwang Liquor and Lugu Liquor, concentrating superior resources on market layout and product upgrades, thereby driving a substantial year-on-year increase in sales revenue.

The regulatory letter requires the company to supplement disclosures regarding the basic situation of its top ten customers, transaction amounts, payment settlement policies, and collection situations, as well as to clarify whether there are instances of pushing inventory onto downstream distributors, extending the collection period to expand sales, and whether related transactions have commercial substance. In addition, *ST Yedao must also explain whether there were any product returns during the reporting period and thereafter, and, in conjunction with arrangements regarding the transfer of goods, settlement, and payment, demonstrate whether the revenue recognition policy complies with accounting standards.

Further analysis shows that the company’s astonishing growth mainly occurs in the fourth quarter of 2025—data indicates that it expects to achieve revenue of between 172 million and 192 million yuan in the fourth quarter, which accounts for about half of the total projected revenue for 2025, and is close to the total revenue for 2024.

The Shanghai Stock Exchange explicitly requires *ST Yedao to address a series of questions. This includes differentiating main products and supplementing disclosures on sales prices, sales quantities, gross profit margins, sales policies, revenue recognition bases, and changes in related policies, along with a quantitative analysis of the reasons and rationale for the significant year-on-year increase in operating revenue in the fourth quarter.

With delisting alarms, 2025 is a crucial “shell protection” year

For *ST Yedao, 2025 is a critically important “shell protection” year.

The company stated that according to relevant provisions of the Shanghai Stock Exchange’s Listing Rules, if the company’s audited total profit, net profit, or net profit after deducting non-recurring gains and losses for 2025 is negative and its operating revenue is below 300 million yuan, or if the net assets attributable to shareholders of the listed company are negative by the end of 2025, or if the audited financial report for 2025 is issued with a qualified opinion, unable to express an opinion, or a negative opinion, or if the internal control financial report for 2025 receives an audit report with an inability to express an opinion or a negative opinion, or if there are other conditions that cannot be revoked for delisting risk warnings, the company’s stock may be terminated from listing after disclosing the 2025 annual report.

In other words, if *ST Yedao’s operating revenue falls below 300 million yuan, it will trigger the financial delisting risk red line.

The auditing agency stated that it is currently uncertain whether *ST Yedao’s operating revenue after deducting income unrelated to its main business and income lacking commercial substance will exceed 300 million yuan for 2025. It is currently verifying the company’s terminal sales situation for 2025, the existence of any return situations, and the management of distributors regarding the qualified opinions issued in the 2024 audit. If sufficient audit evidence is not obtained, it may issue a non-unqualified opinion on the company’s 2025 financial statements and internal controls.

It is reported that in 2024, the company’s audited net profit attributable to the parent was -136 million yuan, with the operating revenue after deducting income unrelated to its main business and income lacking commercial substance being 172 million yuan, and due to the audit agency issuing a negative opinion on the “2024 Internal Control Audit Report,” along with the company having negative net profit for three consecutive accounting years (2022-2024) whether before or after deducting non-recurring gains and losses, and the audit report for the most recent accounting year indicating uncertainty regarding the company’s ability to continue as a going concern, the company’s stock was subject to delisting risk warnings and additional risk warnings on May 6, 2025.

Everyday Economic News