*ST Spring, life-or-death for maintaining the shell

What key points in the audit process will determine the result of *ST Chuntian’s shell protection?

The “shell protection” plan for the first cordyceps stock, *ST Chuntian, has reached a critical moment.

The focus of the shell protection still revolves around two core requirements: First, the operating income exceeding 300 million yuan after deducting non-recurring items must be eliminated; second, 100 million yuan of investment must be recovered before the audit report period to avoid a non-standard audit opinion from the annual auditing accountant.

Recently, the company stated in its reply to the Shanghai Stock Exchange regulatory letter that the audit has not yet concluded and the investment has not been recovered, but it detailed the progress of the audit.

Due to uncertainties surrounding the shell protection, the company used very cautious wording in its announcement, but still expressed a strong willingness to protect the shell.

Four consecutive limit-ups

On March 19, *ST Chuntian (600381.SH) opened with a limit-up and remained locked throughout the day. Since March 16, the company’s stock price has experienced four consecutive trading days of limit-ups.

Such limit-ups are quite strange given the lack of any fundamental support.

According to public information, the company’s net profit attributable to the parent company is expected to be a loss of nearly 200 million yuan in 2024, and a projected loss of 44 million to 59.5 million yuan in 2025, with a non-recurring net profit loss of 56.4 million to 71.9 million yuan.

Starting from April 2025, the company will be subjected to delisting risk warnings. If the audited financial data for 2025 does not meet the conditions for lifting the delisting risk warning as stipulated in the “Stock Listing Rules,” the stock may be terminated from listing by the Shanghai Stock Exchange.

According to the announcement, the specific statement issued by the annual audit accountant indicates that it is currently not possible to determine whether the company’s forecast for 2025, regarding operating income after deduction exceeding 300 million yuan, will eliminate the financial delisting indicators.

Industry insiders believe that the market remains highly attentive to a company with delisting risks primarily because *ST Chuntian is the only cordyceps stock in the capital market, and it involves both high-end liquor and health sectors, creating a speculation on its shell protection expectations.

Suspense of shell protection

To avoid delisting, *ST Chuntian faces two challenges: one is the confirmation of operating income, and the other is the recovery of a large advance payment.

According to the 2025 performance forecast, the company expects to achieve annual operating income of approximately 343 million to 371 million yuan, with the deducted operating income being 338 million to 367 million yuan, thus crossing the 300 million yuan financial delisting red line.

However, with the audit work underway, it is possible that some operating income may not be recognized or may be deducted. This mainly exists in the two major businesses of cordyceps and liquor.

According to the company’s reply to the Shanghai Stock Exchange regulatory letter, in 2025, its cordyceps operating income is estimated at approximately 189 million yuan, with accounts receivable balance of 34.9369 million yuan, of which the fourth quarter’s operating income is approximately 104 million yuan, accounting for 55.02% of the annual cordyceps operating income.

Notably, 12 new customers were added in the fourth quarter, generating operating income accounting for 19.86% of the annual cordyceps operating income, and the December 2025 operating income was 23.1016 million yuan. It is possible that the annual audit accountant may, during the subsequent audit process, combine the audit results to comprehensively judge and deduct some income.

Additionally, the customers Qinhai Huizhen Tang Trading and Qinhai Zhenyi Tang Trading, among the top ten suppliers for the company’s cordyceps business, all operate in the Xining Jiuying Cordyceps Wholesale Market. Last year, the sales income to Huizhen Tang Trading and Zhenyi Tang Trading were 39.7312 million yuan and 15.7265 million yuan, respectively, and it is also possible that some cordyceps income may not be recognized or may be deducted.

In the liquor business segment, the company has not fully verified the cash flow situation with the top ten customer suppliers, nor whether the related funds have transactions with the controlling shareholder, actual controllers, and their related parties. It is possible that some liquor income may not be recognized or may be deducted.

More importantly, whether an investment of 100 million yuan can be recovered is crucial for the shell protection.

In November 2020, *ST Chuntian’s wholly-owned subsidiary, Henglang Investment, prepaid 100 million yuan to secure the core technology of Yibin Tinghua Brewing. The two parties agreed that after the expiration in November 2025, Henglang Investment could require Yibin Tinghua and its shareholders to repurchase the investment and pay an annualized return of 8%.

Last November, this investment matured. After negotiation, Henglang Investment lowered the investment return rate to an annualized 2.5%, and Yibin Tinghua is supposed to repay the entire principal and adjusted investment return to Henglang Investment by June 30, 2026.

As of March 18, the aforementioned prepaid investment has not been received. If no substantial progress is made on this amount before the issuance of the company’s 2025 annual audit report, it may lead to the annual audit accountant issuing an opinion that cannot be expressed, resulting in the termination of the company’s stock listing.

Tinghua liquor rebounding

Although whether *ST Chuntian can complete its shell protection remains uncertain, there are indeed signs of a rebound in its liquor segment.

In March 2024, Tinghua liquor was named by CCTV’s 3.15 Gala, leading to product delisting and a sudden halt in brand marketing. Historically, when named by a national media platform, brands often suffer decline or even collapse, but Tinghua liquor is an exception.

In 2025, the company’s liquor segment (mainly products like Tinghua liquor and Duhua liquor) is expected to achieve operating income of about 122 million yuan, an increase of 75.9925 million yuan year-on-year, with a growth rate of 163.74%. The fourth quarter alone contributed 34.7283 million yuan, a surge of 349.71%.

In response to this counter-cyclical growth, the Shanghai Stock Exchange also has questions. The company explained that the liquor segment’s performance soared in the fourth quarter last year mainly due to abnormally low data from the same period the previous year.

Due to the exposure by CCTV 3.15, *ST Chuntian’s liquor business was suspended for a time, resuming normal operations only in November of that year. To make up for the previous gap, some products were shipped in bulk in December, and since the 2025 Spring Festival was in January with a shorter terminal sales time, terminal inventory became high.

Based on the principle of caution, the company adjusted the potentially questionable liquor business income for the fourth quarter of 2024 down by 68.1076 million yuan, resulting in a revised book income of -13.9073 million yuan.

Before the adjustment, the actual shipping amount for the fourth quarter of 2024 was 54.2003 million yuan. By this measure, the confirmed income for the fourth quarter of 2025 decreased year-on-year, consistent with the overall trend in the industry.

Thus, the significant year-on-year growth in liquor business income in 2025 is mainly a statistical base effect rather than a substantial leap in operational performance. Although the revenue scale of the liquor segment has improved compared to 46.4112 million yuan in 2024, the company states that this reflects a phase of business recovery due to the resumption of brand marketing and gradual restoration of channel confidence, leading to increased willingness of distributors to place orders. However, from the perspective of external observers, Tinghua liquor has yet to reach a normalized level of operational recovery.