Fortune Ng Fung Food Hebei Co Ltd

Lan鲸 News reported on August 27 that *ST Fucheng released its 2026 interim report. The company relies on a dual-engine model of food processing and funeral services, but due to rising costs and a legal case involving a subsidiary, the reporting period showed revenue growth without profit growth. During the reporting period, operating revenue was 569 million yuan, up 6.88% year-on-year; net profit attributable to the parent was 18.19 million yuan, down 48.87% year-on-year; non-GAAP net profit was 12.80 million yuan, down sharply by 66.28% year-on-year; net cash flow from operating activities was negative 23.80 million yuan, shifting from net inflow to net outflow. The decline in performance mainly stemmed from operating costs growing at 15.51%, far exceeding revenue growth, and the controlling subsidiary Hunan Shaoshan Tiandefudi Cemetery Co., Ltd. being involved in an illegal absorption of public deposits case, which led to losses at the subsidiary, asset freezes, and provisions for estimated liabilities. The company faces delisting risk; if it continues to trigger mandatory delisting conditions in 2026, its listing will be terminated.

*ST Fucheng has received a warning letter from the Hebei Securities Regulatory Bureau due to inaccurate disclosures in its 2025 annual report regarding the amounts of significant matters and the total number of shareholders. According to the company's earlier correction announcement, the cumulative payments received by Hehui Fund from Qianjiang Cemetery and Zhou Xiaoming were corrected from 237 million yuan to 274 million yuan, a difference of 37 million yuan. The total number of ordinary shareholders as of the end of the month prior to the annual report disclosure date was corrected from 27,850 to 28,847. This marks the third time in recent years that the company has been issued a warning letter by regulators for annual report information disclosure issues, with the most recent penalty in March this year for failing to fully disclose related parties and related transactions in its 2024 annual report. In addition, the company's 2025 annual report was issued a disclaimer of opinion audit report by its auditor, Shenzhen Hongyi Certified Public Accountants, which also issued an adverse opinion on internal controls. This led to the stock being placed under delisting risk warning and additional other risk warnings. In the process of responding to the Shanghai Stock Exchange's inquiry letter, further divergences between the company and the auditor surfaced on multiple major financial issues, including the authenticity of sales, inventory, and productive biological assets.

*ST Fucheng disclosed an announcement replying to the Shanghai Stock Exchange's regulatory work letter, providing explanations on sales authenticity and other matters. The exchange's inquiry letter pointed out that the company achieved sales revenue of 34.44 million yuan through intermediaries in 2025, and the annual auditor was unable to confirm the authenticity of the related sales, with some suppliers and customers overlapping. The company replied that live cattle sales were conducted through intermediary Wang Jie, with compliant sales procedures and genuine business. However, the annual auditor stated that during telephone interviews, the intermediary could not confirm specific sales details and was unable to provide contact information for end sales, and noted that the gross margin for this portion of sales was significantly higher than the company's full-year gross margin. In addition, the reply letter showed that Sanhe Huiyong Animal Husbandry Technology Co., Ltd. and Sanhe Ruilong Beef Cattle Breeding Co., Ltd. are both suppliers and customers. The company explained this as sales of culled cows and purchases of young bulls, with different transaction content. However, the annual auditor found that the reply letters from both companies were stamped with the seal of Sanhe Ruilong Beef Cattle Breeding Co., Ltd., and that the lease contracts contained unreasonable circumstances such as a significant increase in area and a notable decrease in unit rent, making it impossible to determine related-party relationships or the reasonableness of the transactions.

ST Fortaste replied to the Shanghai Stock Exchange’s annual report inquiry letter, stating that the 1,928 live cattle sold through intermediaries in 2025 and the 34.44 million yuan in revenue were all genuine transactions and have been collected. However, the annual auditor said it was unable to obtain sufficient appropriate audit evidence to confirm the authenticity and fairness of the revenue. The auditor pointed out that the sales involved six individual customers and three corporate customers. The gross margin on sales through intermediaries was 11.23 percent, significantly higher than the company’s full-year livestock gross margin of minus 1.23 percent, and the intermediary could not confirm specific sales details or provide end-customer contact information. In addition, the auditor found that while the company sold live cattle to Sanhe Ruilong Beef Cattle Breeding and Sanhe Maoyuan Livestock, it also purchased from Ruilong. Moreover, the transaction confirmation letters sent to both companies were returned with Ruilong’s company seal, making it impossible to determine whether Ruilong and Maoyuan operate independently or have related-party relationships with the company. An investigation by Blue Whale News found that Ruilong Beef Cattle and another counterparty, Sanhe Huiyong Livestock Technology, share the same phone number and email address on Tianyancha, but the person answering the phone denied the two are the same company. The auditor also noted that in 2025, Fortaste leased additional cattle shed space from Ruilong but the annual rent dropped from 1 million yuan to 240,000 yuan, making it impossible to assess the fairness of the lease price. There were also deficiencies in cattle ownership management, making it difficult to confirm the quantity and value of ending inventory. The company’s stock has been subject to delisting risk warning since May 6, with the ticker changed to ST Fortaste.