On September 12, Beijing Dongfang Tong Technology Co., Ltd. has been penalized for the fourth consecutive year due to alleged false financial data in its regular reports. As a result, the Shenzhen Stock Exchange will initiate the delisting process.
By the closing bell on September 12, *ST Dongtong’s stock price was reported at 6.58 yuan, marking a cumulative decline of over 56% since the beginning of this year, with a total market value of 3.671 billion yuan.
On the same day, Dongfang Tong received a “Pre-notification of Administrative Penalty” from the China Securities Regulatory Commission. According to the document, Dongfang Tong, through its wholly-owned subsidiary Beijing Taice Technology, falsely recorded business transactions and prematurely recognized revenue from 2019 to 2022, resulting in an inflated revenue of approximately 432 million yuan and a profit overstatement exceeding 310 million yuan.
Specifically, the data provided by the Yicai website is as follows:
In 2019, revenue was inflated by about 61.45 million yuan, accounting for 12.29% of the total revenue; the profit was inflated by 52.23 million yuan, representing 34.11% of the profit.
In 2020, revenue was inflated by about 84.85 million yuan, accounting for 13.25% of the total revenue; the profit was inflated by 58.77 million yuan, representing 22.72% of the profit.
In 2021, revenue was inflated by about 126 million yuan, accounting for 14.54% of the total revenue; the profit was inflated by 79.48 million yuan, representing 30.35% of the profit.
In 2022, revenue was inflated by about 161 million yuan, accounting for 17.68% of the total revenue; the profit was inflated by 124 million yuan, representing 219.43% of the profit.
These false financial data not only affect the authenticity of the annual reports but were also used in the “Prospectus” disclosed by the company from June to November 2022.
In 2023, Dongfang Tong cited these false data in the disclosure of the “Report on the Stock Issuance Situation to Specific Objects” and raised approximately 2.2 billion yuan in funds.
According to public information from Dongfang Tong, the company was established in 1997 and is one of China’s earliest middleware software development enterprises. It was listed on the Shenzhen Stock Exchange in 2014. In December 2018, Dongfang Tong acquired 100% equity of Beijing Taice Technology Co., Ltd. According to Yicai, the company was still attempting to sustain its operations before regulatory penalties were imposed.
In its semi-annual report for 2025 released on August 26, Dongfang Tong disclosed that its revenue increased by 48.85% to 240 million yuan compared to the same period last year, while its net loss narrowed to 55.16 million yuan, a decrease of 66.8%.
The China Securities Regulatory Commission intends to impose a fine of 229 million yuan on Dongfang Tong, along with a total fine of 44 million yuan on seven responsible individuals.
Among them, former Chairman and CEO, the actual controller Huang Yongjun, was identified as the primary person responsible and is facing a proposed fine of 26.5 million yuan, as well as a 10-year ban from the securities market. Other executives are facing fines ranging from 500,000 yuan to 6.5 million yuan.
Dongfang Tong may trigger relevant provisions of the “Shenzhen Stock Exchange GEM Stock Listing Rules” regarding significant violations that mandate delisting. The Shenzhen Stock Exchange will initiate the delisting process. The CSRC also stated that any potential criminal clues would be transferred to the public security authorities.
The forced delisting of Dongfang Tong due to financial fraud is not an isolated case. In recent years, many Chinese listed companies have been delisted for violating the “significant violation leading to delisting” provisions. Based on various media reports, here are a few typical cases:
Kangmei Pharmaceutical falsified revenue for three consecutive years from 2016 to 2018, with a cumulative overstated amount reaching several billion yuan. In May 2021, Kangmei Pharmaceutical was delisted by the Shenzhen Stock Exchange. The financial fraud at Kangmei Pharmaceutical was referred to as “the largest financial fraud case in the history of China’s capital market,” affecting over 200,000 investors.
Luckin Coffee fabricated sales of approximately 2.2 billion yuan in 2019 and was delisted by Nasdaq in June 2020.
Xintai Electric inflated revenue and profit from 2011 to 2012 for its IPO. In 2016, it was determined by the CSRC to have engaged in fraudulent public offering and became the first Chinese company to be delisted for fraudulent issuance, and it has not been reinstated to this day.