Hengxin Orientals to be restricted: Inflated revenue by 182 million yuan, the company and four senior executives fined 12.5 million yuan

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Late at night on April 3, the ChiNext-listed company Hengxin Dongfang (300081.SZ) issued a sudden announcement, stating that on that day it received from the Beijing Securities Regulatory Bureau a 《Administrative Penalty Pre-Notice Letter》. Due to false records and inflated revenue totaling 182 million yuan in its 2022 annual report, the company and four former senior executives will face a combined fine of 12.5 million yuan. At the same time, the company’s stock will be subject to other risk warnings (ST); the abbreviation is expected to be changed to “ST Hengxin.”

The announcement shows that after investigation, the Beijing Securities Regulatory Bureau confirmed that during Hengxin Dongfang’s 2022 creative information business and related Nobikan business, there were clear financial compliance violations. According to the findings, the company did not have control over the relevant goods in those businesses; in essence, it only played the role of a “sales agent.” Nevertheless, despite knowing the transaction model of the businesses in question, it still improperly used the gross amount method to recognize revenue, violating the relevant provisions of 《Accounting Standards for Business Enterprises No. 14 — Revenue》, which in turn caused serious distortion of financial data.

Specifically, the improper operation directly resulted in Hengxin Dongfang’s 2022 annual report overstating operating revenue by 182 million yuan, accounting for 37.12% of the total operating revenue disclosed for the period. A review by reporters found that the company’s original disclosed revenue for 2022 was 489 million yuan; after retrospective restatement and adjustment, its true revenue was only 308 million yuan. The overstated portion was close to 40% of the revenue for the period, and the violations were relatively serious. The regulatory authority determined that the above conduct constitutes an information disclosure violation as stipulated in the Securities Law; the 2022 annual report contains false records and is suspected of misleading investors.

In response to these unlawful facts, the Beijing Securities Regulatory Bureau made a strict penalty decision. Among them, it issued a warning to Hengxin Dongfang itself and imposed a fine of 5 million yuan. For four senior executives—former chairman and general manager Meng Nan, former director Chen Wei, former chief financial officer Wang Linhai, and former deputy general manager Li Xiaobo—it issued warnings and imposed fines of 2.5 million yuan, 2.3 million yuan, 2.0 million yuan, and 0.7 million yuan, respectively. The total fines for the four individuals add up to 7.5 million yuan.

In addition to the fines, Hengxin Dongfang will also face the consequence of having a “hat” placed on its stock. According to relevant regulatory provisions, because the company’s 2022 annual report contains false records, its stock trading will be subject to other risk warnings. However, this violation has not yet reached the threshold for mandatory delisting for major illegal conduct. In the announcement, the company made it clear that the stock will be suspended for one day starting from the opening of trading on April 7, and resume trading on April 8, with the securities abbreviation officially changed to “ST Hengxin.” This means that trading in the company’s stock will be restricted, and financing, business expansion, and so on will also face more obstacles.

Public information shows that Hengxin Dongfang’s predecessor was Hengxin Mobile Commerce Co., Ltd., founded in 2001. In 2010, it successfully listed on the ChiNext board of the Shenzhen Stock Exchange. It is an enterprise focusing on the digital culture and creative sector. Its core businesses include the application and services of digital creative products, internet video application products and services, integration of computing power systems, and more. It has previously been involved in popular tracks such as VR content development and the AI Home Family platform, and it was also selected in 2022 as one of China’s top 50 VR companies.

But behind the impressive concepts lies the company’s long-running operational difficulties. Reporters reviewed the company’s recent financial data and found that Hengxin Dongfang has been stuck in a situation of consecutive losses since 2020. Over the five-year period from 2020 to 2024, cumulative losses exceeded 2.07 billion yuan, and its operating conditions have continued to deteriorate.

Among them, in 2022, despite overstated revenue, net profit still recorded a loss of 495 million yuan. In 2023, revenue was 402 million yuan and losses were 308 million yuan. In 2024, revenue fell year over year by 6.72% to 375 million yuan, and losses widened to 346 million yuan. In the first three quarters of 2025, the company’s revenue was 259 million yuan and losses were 163 million yuan, with no improvement to its slump.

At the same time, the company’s asset scale has kept shrinking and debt pressure has kept rising. Data shows that at the end of 2019, Hengxin Dongfang’s total assets were 3.15B yuan. By the end of 2024, they had shrunk to 1.83B yuan—a drop of more than 42% over five years. By the end of the third quarter of 2025, the company’s total liabilities were 977 million yuan, and the asset-liability ratio exceeded 53%. Liquidity pressure has become prominent, and the ability to sustain future operations faces severe challenges.

It is worth noting that this financial fraud is not the first time Hengxin Dongfang has crossed the regulatory red line. The company and its executives have a dense record of past violations.

Reporters found that in February 2020, the company—along with the relevant issues—received a warning letter from the Beijing Securities Regulatory Bureau for failing to disclose its related relationship and related transactions with Zhongke Beiying. In July 2023, again due to issues including insufficient basis for impairment of intangible assets, incorrect parameters for goodwill impairment, noncompliant financial accounting, and inaccurate information disclosure, the company and executives such as Meng Nan and Wang Linhai were once again issued warning letters and their cases were recorded in the integrity archive. On August 12, 2025, the company was filed for investigation by the China Securities Regulatory Commission for alleged violations in information disclosure. This penalty is the final outcome of that investigation.

From failing to disclose related transactions, to frequent errors in financial accounting, to this systematic overstating of revenue—Hengxin Dongfang’s information, having formed a vicious cycle of “violation—penalty—another violation,” also reflects serious gaps in corporate governance.

Pengpai News reporter Dai Gaocheng

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