Summary of Key Points
Guo Henghua, the actual controller and founder of Huaheng Biology, has been detained on suspicion of illegally absorbing public deposits, triggering a chain reaction: the company's stock price plummeted by 20% on the following day, and the company urgently terminated its Hong Kong stock listing plan, which had already passed the review process. At the same time, the company's leadership was changed (Fan Yi, a former employee, was appointed as the new chairman and general manager), with emphasis on the fact that the investigation is unrelated to daily operations. Guo Henghua has been involved in several previous cases related to illegal deposit-taking, and this detention may be connected to recent guarantee lawsuits. Additionally, the company has experienced growth in revenue but not in profit in recent years, raising concerns about its future performance.
1. Suddenly! Actual Controller Detained, Stock Price Plunges, and Hong Kong Listing Canceled
The news of Guo Henghua's detention hit Huaheng Biology hard:
- Stock Price Plunge: On June 25, the stock opened with a 20% drop, the largest single-day decline on the Science and Technology Innovation Board. The top five traders were all individual investors and small and medium-sized institutions, with a total net sale of over 17 million yuan—indicating widespread panic among investors.
- Cancellation of Hong Kong Listing: Just two days before the detention announcement (on June 22), the company released the final materials for its Hong Kong listing review. However, on June 24, it suddenly announced the cancellation, citing “multiple factors.” It is clear that the detention of the actual controller was a major factor, as the Hong Kong stock market has very low tolerance for such risks, making further listing impossible.
2. Who Is Guo Henghua? How Much Control Does She Have Over the Company?
Guo Henghua is the key figure behind Huaheng Biology:
- Founder and Actual Controller: She founded the company in 2005 and has been in charge for 21 years. According to the first-quarter report of 2026, she directly holds 18.08% of the shares, and her brother Guo Hengping holds 2.02%. Together, they are considered “acting in concert,” meaning their votes are aligned. Including the two investment companies she controls (Ningbo Ruiheyuan with 7.77% and Anhui Hengrun Huaye with 2.91%), she has a total of 30.78% of the company's voting rights, giving her significant control over major decisions.
- Resignation and Transfer of Responsibility: The announcement states that she resigned from all positions, but her role as the actual controller remains unchanged; she is only temporarily stepping back from management. This move is intended to separate her personal issues from the company’s operations, but the market does not seem convinced.
3. Doubts Surrounding the Detention: Is It Related to Past Cases? Could a Guarantee Lawsuit Be the Trigger?
Guo Henghua's detention was not unexpected, as she has a history of legal issues:
- Past Cases: Before the company went public, she was involved in several civil lawsuits, most related to illegal deposit-taking cases involving her former business partner Xue Jinhé. Although the prospectus claims that the companies she owned (including those involved in small loans and pawnshops) were not involved in criminal activities, a new lawsuit emerged in 2024, accusing her of being a guarantor and demanding repayment of a 3.4 million yuan loan. She lost the first trial and is appealing. This detention is likely related to this guarantee, as the loan may be linked to illegal deposit-taking.
- Company's Denial: The company claims that the investigation is unrelated to its operations, but investors are concerned: As the actual controller, could her personal problems affect the company’s finances? For example, did she use the company’s name to borrow money? Although no official investigation documents have been received, the risk remains.
4. Urgent Change in Leadership: Can It Stabilize the Situation?
To mitigate the impact, the company quickly appointed Fan Yi as the new chairman and general manager:
- Who Is Fan Yi?: He is a long-time employee, having served as director, deputy general manager, and financial officer. His appointment aims to stabilize the company, especially in terms of finance, to prevent potential issues with the capital chain.
5. Performance Concerns: Growth in Revenue Without Profit Increase, and Regulatory Attention
Huaheng Biology already faces performance challenges:
- Revenue Growth Without Profit Increase: Revenues have been increasing in 2024, 2025, and the first quarter of 2026, but net profit for shareholders has decreased by 57.8%, 30.13%, and 17.61% respectively. This indicates that the company is selling more products but earning less, possibly due to high costs or lack of competitiveness.
- Regulatory Inquiry: The stock exchange has sent a letter asking for an explanation for the decline in profit despite increasing revenue. With the additional pressures of the actual controller’s detention and the failed Hong Kong listing attempt, the company is under significant operational and public pressure.
Conclusion
Huaheng Biology's current crisis stems from both internal and external issues: the detention of its actual controller has caused a trust crisis, while the company also faces fundamental problems with declining performance. Although the company is trying to separate personal issues from operations and stabilize the situation by changing leadership, investors' fears have already been unleashed. Whether confidence can be restored depends on the outcome of Guo Henghua’s case, the new management's performance, and whether the company can turn around its financial trends.
(The entire analysis is written in plain language to make it easy for non-financial professionals to understand the situation.)