*ST Huarong Responds to Regulatory Inquiry; Highlights New Business Critical for Avoiding Delisting and Associated Transaction Risks

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*ST Huarong (Stock Code: 600421) issued a notice on March 19th, responding to the regulatory work letter from the Shanghai Stock Exchange regarding the company’s 2025 performance forecast. The company highlighted several key risks in the announcement, including the impact of new business on avoiding delisting, the fairness of related-party transactions, and that audit work is still ongoing.

The announcement shows that the company’s 2025 financial report audit is still in progress. The financial data related to operating income, net profit, and other figures mentioned in the response are preliminary estimates; final accurate data will be based on the official annual report.

The company’s new information technology and engineering business generated revenue of 32.66 million yuan in 2025. This business comes from a subcontracted project under the “AI Government Affairs Intelligent System Integration Contract” signed with Sugon Government Technology Co., Ltd. The company mainly responsible for this project includes equipment procurement and management, construction plan design and optimization, hardware deployment and testing, among others. To implement this project, the company purchased servers, storage systems, security systems, network equipment, and related software from multiple upstream suppliers. Among them, Sugon Government Technology Co., Ltd. and Zhengzhou Sugon Cloud Technology Co., Ltd. are affiliated with Sugon (Code: 603019), and China KeKong Information Industry Co., Ltd. was a shareholder of Sugon (no longer holds shares after the 2019 transfer). Business dealings with these entities are conducted based on market principles.

This project brought a gross profit of 8.78 million yuan to the company. The company specifically points out that if this new business is not included in the main business, leading to operating income below 300 million yuan after deduction and a net loss, the company’s stock may face delisting. Since the end of 2024, the company has spent over 2 million yuan on related personnel, travel, market expansion, and other costs to support this project, with direct labor, travel expenses, and other direct costs totaling 395,900 yuan.

The announcement also discloses that in 2025, the company’s subsidiary Zhejiang Zhuangchen Construction Technology Co., Ltd. engaged in daily related-party transactions with enterprises controlled by the company’s actual controller, totaling approximately 43.03 million yuan (unaudited). These transactions include sales and processing fees for molds, truss bars, floor decks, technical services, as well as leasing of factory equipment and water and electricity procurement. The company notes that if there are unfair pricing issues in these transactions, it could impact the disclosed 2025 performance forecast.

The company previously disclosed a “2025 Annual Performance Pre-earnings Announcement” on January 29, 2026, but emphasized that the financial data was only preliminary estimates and unaudited. The company once again reminds investors that if the final annual report shows operating income below 300 million yuan and a net loss, it will trigger a delisting risk related to financial criteria. Investors should rely on information published by the company on designated disclosure media such as Securities Times, China Securities Journal, and the Shanghai Stock Exchange website, and invest rationally with caution.

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Editor: Xiao Lang Kuai Bao