Jihua's losses widen as accounting scandal forces restatement
Regulator fines Jihua RMB 7 million for years of inflated revenue China's securities regulator fined Jihua RMB 7 million for disclosure violations, finding it inflated revenue by nearly RMB 10 billion from 2018 to 2021. This damages trust in the company's numbers and makes investors demand a bigger discount to hold the stock.
The fine and the scale of past accounting fraud are the core reason the stock is under pressure and directly answer what is driving it.
First-half loss widens to RMB 288 million as revenue falls 25% Jihua's first-half 2026 loss widened to RMB 288 million from RMB 79 million a year earlier, with revenue down about 25% and operating cash flow still negative. Weak demand from key customers and qualification issues are hurting sales, pushing the stock down.
The interim results show the underlying business is deteriorating, which is a fundamental driver of the stock's weakness.
Jihua restates 2018-2021 accounts after fraud finding Jihua will restate its 2018-2021 financial statements, correcting nearly RMB 10 billion in inflated revenue and a RMB 502 million profit overstatement in 2020. The restatement confirms past numbers were unreliable, keeping a cloud over the stock.
The restatement is a concrete consequence of the fraud and a new event that reinforces negative sentiment.
Jihua buys out knitting unit, but related-party dealings raise questions Jihua is paying RMB 99 million to take full ownership of Hubei Jihua Knitting, a small positive for control. But a separate related-party supply deal with its parent is set to jump 368%, raising concerns about dealings with affiliates while the company is losing money.
These transactions show both a modest positive step and governance concerns that affect how investors view the stock.