Farm Equipment Veteran Fades Away! *ST Xingnong Faces Penalties for Financial Fraud, Loss-Making 7 of 11 Years Since Listing

In nearly eleven years listed, seven years of losses. *ST Xingnong (603789.SH), an agricultural machinery company originally known for its combine harvesters, is now facing a crisis.

On March 17, the company received a “Preliminary Notice of Administrative Penalty” from the Zhejiang Securities Regulatory Bureau. It was confirmed that in 2023, through its wholly owned subsidiary, the company fabricated business activities such as cotton harvesting to artificially inflate revenue by 60.7274 million yuan and profit by 5.2895 million yuan. Although the company claims it has not violated major laws requiring mandatory delisting, its stock has been subject to additional risk warnings since March 18.

Notably, the 2.5 million yuan fine and the joint penalties for four senior executives are only the tip of the iceberg. The deeper crisis lies in the continuously worsening fundamentals. Since 2020, *ST Xingnong has suffered losses for six consecutive years, with its revenue peak at 700 million yuan in 2019. Since then, it has plummeted and has struggled to break through the 500 million yuan mark again.

From the glory of going public in 2015 to the current peril, *ST Xingnong’s eleven-year journey in A-shares reflects the brutal reality of traditional manufacturing industry transformation. When financial fraud penalties and ongoing losses stack up, market watchers are watching whether *ST Xingnong can find a real profit point before its net assets are exhausted.

Nearly 20% of Revenue Inflated in Annual Report

*ST Xingnong Receives 2.5 Million Yuan Fine

In September 2025, *ST Xingnong was filed for investigation by the China Securities Regulatory Commission (CSRC) for suspected information disclosure violations. Now, the investigation results are out: on March 17, 2026, *ST Xingnong received the “Preliminary Notice of Administrative Penalty” from the Zhejiang Regulatory Bureau of the CSRC.

The investigation found that *ST Xingnong was suspected of illegal activities as follows: In 2023, its wholly owned subsidiary, Bazhou Xingguang Zhiyuan Smart Agriculture Technology Co., Ltd. (“Xingguang Zhiyuan”), engaged in false business activities such as cotton harvesting, consulting, and promotion services. The company inflated revenue by 60.7274 million yuan, accounting for 19.69% of the disclosed revenue for that period; inflated total profit by 5.2895 million yuan, representing 9.77% of the disclosed profit, leading to false records in the 2023 annual report. On September 27, 2025, *ST Xingnong issued an “Announcement on the Correction and Retroactive Adjustment of Previous Accounting Errors,” retroactively adjusting the above issues.

The Zhejiang Securities Regulatory Bureau believes that *ST Xingnong’s actions violate relevant laws and regulations, constituting illegal conduct. Based on applicable laws, the bureau plans to issue a warning and impose a fine of 2.5 million yuan; additionally, four involved senior executives will receive warnings and fines of varying amounts.

The notice’s impact extends beyond warnings and fines.

Because the company’s disclosed annual report contained false financial indicators, according to the relevant provisions of the “Shanghai Stock Exchange Stock Listing Rules,” *ST Xingnong’s stock will be subject to additional risk warnings starting March 18, 2026.

*ST Xingnong stated: “Regarding the matters involved in the ‘Preliminary Notice of Administrative Penalty,’ the company and relevant responsible persons will take this as a warning, learn lessons, actively implement rectifications, strengthen understanding and correct application of laws, regulations, and regulatory rules, continuously improve internal control standards and effectiveness, enhance financial professional capabilities, improve information disclosure quality, and strictly adhere to the requirements of listed company information disclosure norms.”

It is worth noting that, although *ST Xingnong’s situation as described in the notice involves circumstances that meet the “Other Risk Warning” criteria under the ‘Shanghai Stock Exchange Stock Listing Rules (Revised April 2025),’ it does not reach the level of major illegal violations requiring mandatory delisting.

*ST Xingnong’s 11 Years of Listing, 7 Years of Losses

Company’s Net Assets Less Than 200 Million Yuan

Xingguang Agriculture Machinery Co., Ltd. (currently trading as *ST Xingnong) was established in 2004. It was listed on the Shanghai Stock Exchange on April 27, 2015. At that time, the company’s main business was the research, development, production, and sales of combine harvesters, with its flagship product being the Xingguang series, used for harvesting wheat, rice, and rapeseed.

Today, *ST Xingnong still primarily engages in the research, manufacturing, sales, and service of agricultural machinery. In terms of product development, the company continuously expands its product line from single combine harvesters to cover six major crops: rice, wheat, corn, peanuts, rapeseed, and cotton, encompassing the entire mechanized industry chain from plowing, planting, management, harvesting, to post-harvest processing. In business extension, the company is transforming from a single agricultural machinery supplier into a provider of full-process mechanization solutions for agricultural production.

*ST Xingnong’s performance since listing. (Chart by Beijing News Shell Finance)

Looking at its performance, the revenue peak occurred in 2019, surpassing 700 million yuan for the first time, but has since fallen below 500 million yuan, rarely exceeding 300 million yuan. The highest net profit attributable to shareholders was in the first year of listing, not exceeding 100 million yuan.

Since 2020, net profit attributable to shareholders has been negative.

The 2020 losses were attributed to a significant decline in sales revenue, high fixed costs from amortization, and asset impairments. The sharp drop in revenue was the direct cause of losses, with declines over 50% across all business segments—traditional harvesters, balers, cotton pickers, both domestic and international markets.

According to financial reports, from 2021 to 2023, net profit attributable to shareholders narrowed but widened again in 2024.

This time, *ST Xingnong explained the losses with four reasons: First, in 2024, external factors such as low grain prices, industry homogenization, and market competition led to a decline in domestic agricultural machinery sales. Coupled with fixed costs from depreciation of factories, land, and equipment, product gross margins remained low, weakening profitability; second, receivables from cotton picker sales were delayed, and according to regulations, revenue was prudently recognized, reducing revenue by about 40 million yuan and net profit by about 4 million yuan; third, asset impairments continued to impact; finally, non-recurring gains and losses in 2024 reduced net profit attributable to the parent by about 30 million yuan.

The 2025 financial report has not yet been disclosed, but *ST Xingnong has announced a pre-loss.

*ST Xingnong stated: “Preliminary estimates by the finance department project that in 2025, total profit will be between -100 million and -70 million yuan, net profit attributable to the parent between -135 million and -90 million yuan, and net profit after deducting non-recurring gains and losses between -220 million and -150 million yuan. Operating revenue is expected to be between 350 million and 400 million yuan, with revenue excluding non-core and non-substantive income between 310 million and 350 million yuan. At the end of 2025, net assets are projected to be between 100 million and 150 million yuan.”

Regarding the reasons for the expected losses, *ST Xingnong explained: “During the reporting period, the company expanded new businesses, forming two main segments: agricultural machinery and automobiles, with revenue significantly increasing compared to 2024. However, overall costs remain high, especially in the agricultural machinery segment, affected by industry fluctuations and market competition. The company actively adjusted capacity and divested subsidiaries, leading to a substantial decline in revenue compared to 2024. Additionally, fixed costs from factories and equipment continue to exert pressure, resulting in high product costs and weak profitability. The new segment, being relatively recent, faces short-term profit pressure that cannot offset the losses from the original machinery segment, so overall performance remains in deficit.”

Furthermore, in 2025, the company will make provisions for bad debts and asset impairments according to accounting standards, which is expected to reduce net profit by about 37 million yuan.

Beijing News Shell Finance Reporter Yan Xia, Editor Chen Li, Proofreader Lu Qian