*ST Changdrug Delisting: 1.4 Billion Acquisition Time Bomb, Revenue Inflated by Over 700 Million for Three Consecutive Years

On March 12, Changjiang Medicine Holdings Co., Ltd. (referred to as “Changyao Holdings,” stock abbreviation “*ST Changyao”) announced that the Shenzhen Stock Exchange (SZSE) decided to delist the company’s stock. The SZSE has decided to terminate the company’s stock trading. Due to three consecutive years of financial fraud from 2021 to 2023, which crossed the red line for mandatory delisting for major violations, Changyao Holdings has become another company in the A-share market to be “cleared out” due to systemic financial misconduct.

Three Years of Financial Fraud

The trigger for this delisting was Changyao Holdings’ systemic financial fraud over three years, directly meeting the criteria for mandatory delisting for major violations on the A-share market.

According to the delisting decision document from the SZSE and the administrative penalty decision from the China Securities Regulatory Commission (CSRC), the financial fraud by Changyao Holdings originated from a large cross-border acquisition in 2020.

In November 2020, Changyao Holdings paid 1.414 billion yuan in cash to acquire a 52.75% stake in Hubei Changjiang Xing Pharmaceutical Co., Ltd. (“Changjiang Xing”). In December of the same year, Changjiang Xing was officially included in Changyao Holdings’ consolidated financial statements. The original actual controller of Changjiang Xing, Luo, and others, made performance commitments regarding net profit and other indicators for 2020-2022. After the acquisition, Luo continued to serve as chairman and general manager of Changjiang Xing, fully responsible for its operations.

From 2021 to 2023, subsidiaries of Changjiang Xing—Changjiang Yuan and XinFeng Pharmaceutical—faked inbound and outbound warehouse receipts, confirming revenue without actual sales transactions, resulting in inflated revenue of 215 million yuan, 284 million yuan, and 234 million yuan respectively, accounting for 9.12%, 17.57%, and 19.51% of the disclosed annual revenue for those years; and inflated total profits of 56.4 million yuan, 63.38 million yuan, and 43.7 million yuan, representing 35.62%, 88.23%, and 6.42% of the disclosed profits for those periods.

Additionally, due to the failure to reasonably recognize losses on the 2022 project at Changjiang Weichuang Traditional Chinese Medicine City Trading Center, Changyao Holdings’ 2022 annual report falsely increased profits by 4.55 million yuan, accounting for 6.34% of the disclosed profits.

This fraudulent behavior directly triggered the delisting red line. On January 23, 2026, the CSRC imposed administrative penalties on Changyao Holdings, ordering corrections, issuing warnings, and fining 10 million yuan. Fourteen responsible individuals were fined a total of 31 million yuan, and Luo was permanently banned from securities markets. The SZSE then initiated delisting procedures, and on March 12, officially decided to terminate the listing. Changyao Holdings’ stock will resume trading on March 20, 2026, and enter a delisting restructuring period of fifteen trading days, with the last trading date expected to be April 10, 2026.

Continuous Losses and “Troubles”

Formerly known as Kangyue Technology, Changyao Holdings entered the pharmaceutical sector in 2022 by acquiring a 52.75% stake in Changjiang Xing for 1.414 billion yuan. Its current main businesses are traditional Chinese medicine decoctions and pharmaceutical wholesale. However, switching sectors has not improved its performance.

In the past three years, revenue was 1.615 billion yuan in 2022, 1.198 billion yuan in 2023, and sharply dropped to 112 million yuan in 2024. Net profit figures for 2022-2024 were -76.39 million yuan, -632 million yuan, and -569 million yuan respectively. The China CPA firm, Asia Pacific Certified Public Accountants LLP, issued an unqualified opinion audit report with a paragraph on “material uncertainty related to going concern” for 2023 and 2024. In the first three quarters of 2025, Changyao Holdings achieved revenue of 105 million yuan, a 4.4% increase year-over-year; net profit attributable to shareholders was -210 million yuan.

Beyond poor performance, Changyao Holdings is plagued with “troubles.” As of October 20, 2025, it and its subsidiaries faced 140 lawsuits and arbitrations totaling 1.878 billion yuan, representing 434% of its latest audited net assets attributable to shareholders. The company faces severe liquidity issues, with many debts overdue and lawsuits ongoing. Bank accounts have been frozen—109 accounts, or 67.7% of all accounts opened—many assets seized. It also has large interest-bearing liabilities of 1.106 billion yuan, with overdue interest debt of 390 million yuan, and repayment collections below expectations, severely impacting its financing channels and capacity. Its debt repayment ability has declined, and as interest-bearing debts mature, more overdue debts may occur. Its subsidiary, Changjiang Xing, also owes 120 million yuan in unpaid taxes.

In response to the worsening operational and debt crisis, Changyao Holdings attempted restructuring but ultimately failed. The company announced that during the delisting restructuring period, its stock will trade on the Shenzhen Stock Exchange’s risk warning board, with no price limit on the first day, and a daily limit of 20% afterward. After delisting, the stock will be transferred to the National Equities Exchange and Quotations (NEEQ) for trading.

The reporter is Zhang Zhaohui.

Proofreader: Zhao Lin