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.
Fortune Ng Fung Food Hebei Co LtdAuditor questions revenue authenticity and related-party transactions, raising governance and fraud risks.