Impact Assessment of the Investigation into ST Huluwa (605199) on Its Pharmaceutical Business and Investors' Rights and Interests

• On December 26, 2025, ST Huluwa (605199.SH) and its chairman Liu Jingping received the “Investigation Notification Letter” from the China Securities Regulatory Commission (CSRC) on suspicion of illegal and non-compliant information disclosure. The company disclosed this information to the public on the evening of December 28 [1].
• Official response from the company: “Currently, all production and operation activities are proceeding normally and in an orderly manner.” It will cooperate with the investigation and fulfill its information disclosure obligations in accordance with the law [1].
• ST Background: The company was given a negative opinion on its 2024 annual internal control, and has been subject to “Other Risk Warnings” (ST) since April 30, 2025 [1]. This investigation, combined with the previous risk warning, further amplifies market concerns about the company’s governance and information disclosure quality.

• The company emphasizes that its “production and operations are normal”, and there is no public disclosure of production suspension, R&D suspension, or supply chain disruption [1].
• Business Composition: Covers respiratory, digestive, anti-infective, and nutritional supplement categories. Its production bases and R&D centers are located in Haikou and Nanning, with an emphasis on “intelligent production lines” and an “online + offline” marketing system [1].
• Although the investigation targets the field of information disclosure, the continuous operation of the pharmaceutical business still requires attention to regulatory progress and the spillover effects of supporting rectifications.

• Financial data shows sustained performance pressure: Net profit attributable to shareholders in 2024 was a loss of approximately 274 million yuan; the loss in the first three quarters of 2025 was approximately 11.2139 million yuan [1].
• Management noted in the 2025 semi-annual report that intensified industry competition and phased adjustments in demand have put pressure on revenue and profits [1].

• Illegal and non-compliant information disclosure does not necessarily equate to “product quality issues”. It may involve areas such as financial/disclosure standards, related-party transactions, or failure to disclose major matters in a timely manner.
• If the investigation results point to major deficiencies closely related to business substance, such as revenue recognition, expense accrual, or related-party transactions, it may trigger:
  • Reassessment of commercial terms for mergers and acquisitions or channel cooperation;
  • Potential tightening of bank credit and supplier payment terms;
  • Increased risk control prudence from partners (hospitals, chain pharmacies, e-commerce platforms).
• Conversely, if the violations mainly focus on procedural or timeliness disclosure issues, the direct impact on the pharmaceutical main business operations is relatively controllable.

• The pharmaceutical industry is highly sensitive to compliance and information disclosure. During the investigation period, it may affect bidding, as well as the confidence of customers and channel partners.
• If the final penalty confirms major false statements, the restoration of goodwill and brand will take longer, and compliance costs and communication costs will increase.

• Current Price: 8.85 yuan/share, with a significant decline this year. The 52-week range is 8.18-21.00 yuan, market capitalization is approximately 3.54 billion yuan, and P/E is negative (around -21x) [0].
• On December 26 (the day of the investigation announcement): Closing price was 8.85 yuan, a slight increase of 0.11%, with a turnover of approximately 3.6206 million lots; recent average daily turnover is approximately 5.3826 million lots, and the volume on that day was low [0].
• Technical Form (Based on Python Data Analysis):
  • Recent daily volatility is approximately 2.10%, with a maximum single-day drop of about -4.97% in late October [0].
  • The 5-day/10-day/20-day moving averages are 8.96/8.79/8.89 yuan respectively. The moving averages are intertwined, the trend is unclear, and it has entered a short-term consolidation phase [0].
• The market reaction after the investigation announcement was mild, but combined with the ST status and the cumulative annual decline (-44.34%) [0], it indicates that the market has partially priced in negative expectations.

(Note: The chart shows the full-year 2025 price trend and trading volume; the red dashed line marks the investigation date of December 26)

• If the investigation confirms illegal information disclosure with serious circumstances, the company and relevant responsible entities may face administrative penalties such as warnings, fines, and market entry bans; in severe cases, further criminal liability cannot be ruled out (refer to other similar cases) [2].
• With the investigation coinciding with the ST status, regulatory attention has increased significantly, and subsequent continuous inquiries, special inspections, and rectification requirements may follow [2].

• For false statement cases, investors can file civil compensation lawsuits based on relevant judicial interpretations after administrative penalties or criminal judgments take effect (claim conditions are subject to court confirmation) [3].
• Key Points for Investor Claims:
  • Scope of Claims: Investment difference losses, commissions, stamp duties, interest, etc.;
  • Evidence Materials: Identity proof, account information, transaction statements, etc.;
  • Agency Channels: Lawyer teams, professional claim platforms, etc. [3].
• Compensation Limitation: Pay attention to the statute of limitations and initiate the rights protection process in a timely manner.

• The controlling shareholder, Hainan Huluwa Investment Development Co., Ltd., holds approximately 41.76% of the shares, of which about 23.9 million shares are under judicial freeze (accounting for 14.3% of its holdings and 5.97% of the total share capital), with the freeze period until December 2028 [1].
• The combination of judicial freeze and investigation may exacerbate market concerns about potential control stability and refinancing capabilities.

• Business Side: No public announcement of production/R&D suspension; short-term operations may remain stable, but compliance rectifications may increase management costs and affect commercial terms and cooperation confidence. Medium- and long-term impacts depend on the investigation conclusions and rectification effectiveness.
• Investor Side:
  • Short-term liquidity may be constrained, and market sentiment is cautious;
  • Medium- and long-term attention should be paid to the potential financial impact of penalty results, rectification progress, and claim scale.
• Core Observation Indicators:
  • CSRC investigation progress and penalty decisions (nature, amount, rectification requirements);
  • Systematic rectification and verification of the company’s internal control and information disclosure;
  • Changes in controlling shareholder’s pledges/freezes and refinancing environment;
  • 2025 annual report and audit opinion type, auditor communication, and regulatory letter status;
  • Progress of investor claims and judgment/settlement status.

• The investigation conclusion has not been announced, and there are uncertainties regarding the specific violations and legal liabilities, which may have a significant impact on business and finance;
• Against the ST background, delisting risk and progress in removing the ST label still depend on subsequent financial and compliance performance;
• Investors should closely monitor company announcements, regulatory disclosures, and judicial progress, and evaluate their personal holdings and rights protection timing.

[0] Jinling API Data (Real-time quotes, company overview, financial analysis, technical indicators, Python quantification and charts)
[1] Sina Finance - 605199, Under Investigation by CSRC! (https://finance.sina.com.cn/stock/s/2025-12-28/doc-inheixvi8888963.shtml)
[2] Securities Times - 605199, Under Investigation by CSRC! (https://www.stcn.com/article/detail/3561335.html)
[3] 21st Century Business Herald - Latest Regulatory Updates: Two Companies Under Investigation, Two Companies Receive Pre-penalty Notices (https://www.21jingji.com/article/20251226/herald/315b3588f2215d16043fec823d3b370a.html)