Hunan-listed steel company Huali Steel mistakenly marked the unit of a subsidiary’s financial statement in the semi-annual report as “yuan” instead of “ten thousand yuan,” causing Hualing Xianggang’s total assets to only be displayed as 662.76 million yuan, and a net profit of 250 million yuan to be shown as 2.50 million yuan. This error was not corrected until about 20 days after the report was disclosed.
According to a report by the “Daily Economic News,” Huali Steel issued a correction announcement on the evening of September 11, stating that there was a unit labeling error on page 19 of the semi-annual report released on August 22. The table titled “Analysis of Major Holding and Joint Stock Companies” was originally marked as “Unit: Yuan,” but the correct unit should be “ten thousand yuan.”
The table involves four subsidiary companies: Hualing Xianggang, Hualing Lian Steel, Hualing Heng Steel, and the automotive plate company, covering data such as registered capital, total assets, operating income, and net profit.
Taking Hualing Xianggang as an example, the number in the total assets column is 6,627,578.16. The original table marked the unit as “yuan,” indicating that the total assets were only 662.76 million yuan; after correction to “ten thousand yuan,” this number corresponds to the actual amount of 662.76 billion yuan.
In the net profit column, the number is 24,958.30, which according to the original unit is only 2.50 million yuan, but the correct amount should be 2.50 billion yuan. Although the numbers in the table have not been changed, the amounts differ by a factor of ten thousand due to the incorrect unit labeling.
Hualing Lian Steel also encountered the same issue. Its total assets were originally shown as 529.95 million yuan, but after correction, it is 529.95 billion yuan; the loss amount also changed from 3.83 million yuan to 3.83 billion yuan.
On September 8, an investor questioned on an interactive platform that the financial data of subsidiary companies in the semi-annual report were “significantly abnormal in scale,” and further inquired why the company had repeated errors in the foundational figures in the semi-annual report after previously announcing a date error in the board meeting and promising to enhance auditing.
Huali Steel admitted on that day that there was a mistake in the table’s unit labeling, and mentioned that there were still shortcomings in the review process. However, the company did not issue a formal correction announcement until the evening of September 11, around 20 days after the original semi-annual report disclosure.
The semi-annual report also indicated that in the first half of this year, Huali Steel’s operating income was approximately 60.917 billion yuan, a decrease of 2.99% year-on-year; the net profit attributable to shareholders of the listed company was 2.25 billion yuan, a sharp drop of 87.11%.
Data from Wind, a Chinese financial data service provider, shows that as of September 11, Huali Steel’s stock price has fallen by 34.5% year-to-date.
According to mainland media reports, out of thousands of A-share announcements released from September 1 to 7, 14 companies had a total of 18 obvious errors; in August, 67 companies had a total of 68 wrong announcements.
These errors include the non-existent “June 31st,” misspelling “Chief Financial Officer” as “Chief Financial But Interim,” and mistakenly writing “People’s Government” as “RMB Government.” The misspelling of “People’s Government” by Zijin Mining has been used from 2020 until this year.
Veteran investment banker Wang Jiyue told the “Daily Economic News” that these errors reflect that the relevant companies are “not serious.” While most minor textual errors may not affect investors’ decisions, they should not be used as a reason for repeated errors in public announcements by listed companies.