Guang Yuyuan, a veteran of traditional Chinese medicine, was heavily fined by the Securities Regulatory Commission: the senior executives were fined more than 20 million yuan, and the title high-speed rail departed two days before the fine

Due to suspected violations of information disclosure laws and regulations, Guangyuyuan was filed by the China Securities Regulatory Commission on December 22, 2023, and after the market waited for nearly three months, the regulatory hammer finally fell.

On the evening of March 25, 2024, Guangyuyuan announced that it received the "Prior Notice of Administrative Punishment and Market Prohibition" (hereinafter referred to as the "Notice") issued by the Shanxi Supervision Bureau of the China Securities Regulatory Commission on the same day.

According to the "Notice", there are false records in the annual report and semi-annual report during the first half of 2016-2023, in which the operating income and sales expenses have been inflated and decreased many times, so Guangyuyuan shares were fined 8 million yuan, and the then chairman Zhang Bin was fined 5 million yuan and banned from the securities market for ten years, and the rest of the executives Fu Shuhong, Zhang Zhengzhi, Wang Junbo, Yang Hongfei, Li Zhong, and Zhao Xuanxuan were given different amounts of fines, with a total fine of more than 20 million yuan.

Just two days before receiving the "Notice", the "Guangyuyuan" high-speed rail title train had just held a ceremony for its debut from Taiyuan South Railway Station. Prosperity and disgrace are always changing rapidly, and this time-honored traditional Chinese medicine company in Shanxi, which has been established for nearly 500 years, where will it go in the future?

has been questioned one after another and has a wide reputation, and it has long been surging with thunder

According to public information, Guangyuyuan was founded in 1541, with a history of nearly 500 years, and is one of the first batch of "China Time-honored Brand" traditional Chinese medicine enterprises of the Ministry of Commerce.

Gu Ling Ji, Dingkun Dan, Angong Niuhuang Pill and Niuhuang Qingxin Pill are the four core varieties of Guangyuyuan, especially Gu Lingji and Dingkun Dan are national secret formula varieties.

However, in the late 90s of the last century, this time-honored brand has been inflated into a small pharmaceutical factory on the verge of bankruptcy, until 2003, Shaanxi capital tycoon Guo Jiaxue's Dongsheng Group acquired the insolvent Guangyuyuan for 0 yuan, and obtained 95% of its equity, and in 2013, Guo's name Dongsheng Technology was changed to Guangyuyuan.

In 2016, Guangyuyuan through the non-public issuance of shares, at a transaction price of 1.292 billion yuan to Xi'an Dongsheng Group to acquire 40% of the target assets of Shanxi Guangyuyuan, the large-scale restructuring of Dongsheng Group has made performance commitments, in 2016, 2017 and 2018, Shanxi Guangyuyuan deducted non-net profit attributable to the parent company was not less than 133 million yuan, 235 million yuan, 433 million yuan respectively. During this period, Guangyuyuan's revenue did soar, from 268 million yuan to 1.619 billion yuan.

In June 2021, Dongsheng Group repaid the debts of Jinchuang Investment by way of equity swap, and after the completion of the equity change, the actual controller was changed from Guo Jiaxue, a natural person, to Shanxi State-owned Assets Supervision and Administration Commission (the actual controller of Jinchuang Investment), with a shareholding ratio of 14.61%.

The penalty for financial fraud occurred before and after the exit of Dongsheng Group and the entry of the new shareholder, Shanxi State-owned Assets Supervision and Administration Commission, before and after the change of control.

Guangyuyuan's financial changes are not without warning, just after the performance commitment period, Shanxi Guangyuyuan's revenue and net profit have been declining for three consecutive years or even losses, and have repeatedly received regulatory letters and inquiry letters from the Securities Regulatory Commission, requiring the company to verify and warn of risks on the sharp decline in performance, the credit rate is much higher than that of peers, and the phenomenon of abnormally high sales expenses.

According to the "Prior Notice", Shanxi Guangyuyuan has implemented pressure on some downstream commercial companies under the condition that "the product is unsalable and the expiration date is near, and it can be returned unconditionally".

Recognition of revenue", recognize sales revenue in advance, and at the same time, the treatment of sales expenses is incorrect, and some sales expenses have inaccurate attribution periods or accounting treatment does not comply with the provisions of the accounting standards for business enterprises.

According to the analysis of the data disclosed in the "Prior Notice", if the real performance is followed, then the original performance of Dongsheng Group is not satisfactory.

Three chairmen in two years, where is the time-honored brand going?

Before the issuance of the "Prior Notice", Guangyuyuan announced on February 22 the reply announcement on the inquiry letter of the Shanghai Stock Exchange, and said in the section involving the division and treatment of the responsibilities of the relevant responsible persons that the reason for the correction of the accounting error was mainly due to the early recognition of revenue and the delay in the recognition of expenses in some businesses from 2016 to 2020, resulting in the digestion of inventory from 2021 to 2022, poor delivery, and more expenses in previous years.

After the state-owned assets entered, it was objectively based on the fact that it took time to be familiar with the business, and it was difficult to obtain the sales data of important customers in the country in recent years, so the possible problems in financial accounting were not discovered in time. From 2016 to 2020, the relevant senior executives who served as general managers, vice presidents of marketing, chief financial officers and presidents have left the company, and the board of directors of the company has also re-elected the chairman.

In fact, after Zhang Bin, who has served for 13 years, stepped down as chairman in 2021, the position of chairman of Guangyuyuan has changed hands three times in two years.

In January 2023, Yang Bo, who had previously worked in Fenjiu Group, replaced Ju Zhen as the chairman of Guangyuyuan, but after less than a year in office, Yang Bo resigned due to work adjustments.

A secondary market investor who has been paying attention to the liquor track for a long time told the "China Times" reporter that because of its performance in creating "Zhuyeqing" in Fenjiu for more than 20 years, Yang Bo was quite expected by the market when he became the chairman of Guangyuyuan, and the stock price of Guangyuyuan in the secondary market once walked out of Wulianyang to show support for this "female leader".

In December of that year, Yang Bo resigned due to work adjustments, and Li Xiaojun of Shennong Group (Shanxi SASAC was the actual controller) became the company's new chairman.

With the handover and straightening out of the old and new management systems, whether this time-honored brand can regain its original glory is obviously not a named high-speed rail, but the real performance in the long-term future.

Editor: Yan Yuan Editor-in-chief: Chen Yanpeng