Summary of Key Points
Shijing Technology initially went public relying on environmental protection equipment, which accounted for over 70% of the domestic market. However, when it crossed into the photovoltaic industry, it suffered huge losses. In 2025, its net profit attributable to the parent company was in the red by 1.346 billion yuan, and revenue plummeted by 93% in the first quarter of 2026. The company was designated as an ST stock (a symbol of financial distress) and is under investigation by the China Securities Regulatory Commission (CSRC). To avoid delisting, creditors have pushed for a pre-restructuring process, with local governments taking the lead in trying to use legal procedures and state-owned assets to acquire the company and maintain its listing status. Nevertheless, the company's actual operations have collapsed systematically: its main environmental protection business has stagnated, photovoltaic projects have failed, inventory is outstanding, accounts receivable cannot be collected, and cash flow is dried up. There may also be issues with capital manipulation, as well as numerous problems with financial reporting and disclosure.
I. Pre-restructuring: A Last-ditch Effort or a Strategy to Avoid Delisting?
Pre-restructuring can be seen as an out-of-court negotiation backed by the court—more flexible than a direct bankruptcy liquidation and offering more room for maneuver. Shijing Technology's pre-restructuring seems to be a well-timed attempt to avoid delisting:
- Creditors Take the Initiative: Changshu Shanmu Electric Appliance applied for pre-restructuring, arguing that a direct liquidation would result in less than 5% of their claims being settled, while avoiding delisting could increase the repayment rate. In other words, creditors do not want the company to fail because the “shell” (the listed status) is valuable and can generate more profits for them.
- Local Government Gets Involved: The government of Xiangcheng District in Suzhou took the lead, bringing in top law firms such as Fangda and Jintiancheng. This indicates that local authorities want to preserve the listed company as it brings taxes and jobs, which is important for the local economy. With government intervention, coordinating with banks and finding state-owned buyers becomes much easier.
- Unusual Speed: The process from court approval to investor recruitment took only 21 days, which is 1-2 months faster than the usual route. This suggests that the pre-restructuring plan was already agreed upon privately, and the formalities were just a formality.
- State-Owned Assets Set the Stage: Xiangcheng's state-owned assets have provided over 100 million yuan in relief funds, which were not recorded as liabilities but treated as “government grants” or “intercompany payments”. This lays the groundwork for the state-owned assets to take over the company later on, since the losses are ultimately borne by the public.
The real goal of pre-restructuring is not to save the company but to retain its listing status, allowing all parties to benefit in some way.
II. The Photovoltaic Transformation: A False Prosperity That Leads to Further Losses
Shijing Technology's original environmental protection business was its main source of revenue, accounting for 74% in 2021, but this dropped to just 19% by 2025 and has essentially ceased. To cover the gaps, the company announced a 11.2 billion yuan investment in photovoltaic battery projects in 2023, which turned out to be a money-losing endeavor:
- Increasing Losses: Photovoltaic business revenue in 2024 was 640 million yuan, with a gross margin of -40% (lossing 40 yuan for every 100 yuan sold); in 2025, revenue was 460 million yuan, and the gross margin dropped to -45%. The industry average loss is between -15% and -20%, but Shijing Technology's losses are more than twice that.
- Project Failures: The Ziyang project had 670 million yuan worth of inventory that was “sealed” and unusable, and the Ningguo Phase II project had 490 million yuan worth of inventory that did not match the records. These 1.1 billion yuan in assets are essentially worthless but are still listed on the financial statements.
- Complete Loss of Revenue: Accounts receivable amounted to 1.295 billion yuan, with only 46% collected, and 690 million yuan in bad debts were recognized (half of which will not be recovered). Customers have collectively defaulted, and the company has been sued 45 times for a total of 540 million yuan.
The so-called “photovoltaic transformation” is merely using new debt to support old failing businesses, with no real improvement—yet the company still claims it is undergoing a strategic shift, which is essentially a recognition of continuous losses.
III. The Capital Game: Who Really Benefits from the Losses?
Shijing Technology's crisis seems like a carefully orchestrated scenario where the controlling shareholder transfers funds through capital manipulation, allowing state-owned assets to absorb the losses, and then uses pre-restructuring to “legally” wrap up the situation:
- State-Owned Assets Take the Blame: For the Ningguo project, the local government provided land and factories, while the company only paid 35% of the equipment costs. For the Ziyang project, Ziyang's state-owned assets built it entirely, with the company holding only 10% of the shares but bearing the “technical responsibility”. If the project loses money, it is the state-owned assets that suffer the losses, and the listed company only needs to record an impairment without going bankrupt.
- Fund Transfer: The controlling shareholder, Dong Shihong, participated in the acquisition of Xinjiang Jinko for 4.3 billion yuan in 2023. Where did the money come from? It is possible that the company transferred its funds through equipment purchase contracts. Auditors stated that the inventory for the Ningguo Phase II project could not be verified, suggesting either that the equipment was never purchased or that the prices were inflated, with the money being misappropriated.
- The Controlling Shareholder’s Safety Net: Dong Shihong pledged over 60% of his shares but did not face a margin call because he had already transferred cash elsewhere. Even if the company delists, he remains unscathed. The pre-restructuring process is used to package these bad debts and hand them over to new investors (state-owned assets), allowing the controlling shareholder to walk away unscathed.
In short, it is the public funds that are lost, while the controlling shareholder makes a profit, and the company uses pre-restructuring to shift the blame onto others.
IV. The Financial Report: A Maze of Inaccuracies
Shijing Technology’s financial reports are a mess that even auditors dare not sign off on:
- Outstanding Inventory: 1.1 billion yuan in inventory is either sealed or does not match the records, and auditors acknowledge they cannot confirm its authenticity.
- Bad Debt on Accounts Receivable: Only half of the 1.295 billion yuan in accounts receivable has been collected, and 690 million yuan in bad debts have been recognized (half of which will never be recovered).
- Auditor Turnover: Three different audit firms were hired within a year, with the first two resigning due to inability to conduct an accurate review. The final firm, Shandong Shuntian Xincheng, issued a report stating it could not express an opinion after just 6 days, indicating it couldn’t figure out the situation.
- Non-compliant Disclosure: The company only touted large photovoltaic projects while concealing the facts of failed projects and extremely low gross margins, leading to the CSRC’s investigation.
Financial reports are like a company’s medical report; Shijing Technology’s reports are so flawed that even auditors refuse to sign them off on.
Final Warning
This analysis is based on public information and does not constitute investment advice. Shijing Technology’s case shows that when evaluating companies, one should not rely solely on transformation stories but on real financial data. If a company continues to lose money despite transformations, auditors are hesitant to sign off on its reports, and the government has to step in, even the most valuable “shell” may be a trap. The market is risky, and investments should be made with caution.