Jinan Zhuocheng Bio-Tech Co., Ltd.

Once considered a benchmark company in Lingnan traditional Chinese medicine, *ST Xiangxue Pharmaceutical (300147) has entered a critical restructuring phase after more than 18 months of pre-restructuring procedures and four extensions. The company has attracted a state-owned investor, Guangzhou Pharmaceutical Capital, bringing new hope for recovery. However, behind the restructuring opportunity, the company continues to face pressure from investor compensation claims related to financial disclosure violations and inaccurate earnings forecasts.

Guangzhou Pharmaceutical Capital Selected as Pre-restructuring Investor

On July 3, 2026, Xiangxue Pharmaceutical announced that Guangzhou Pharmaceutical Capital Co., Ltd. had been selected as the preferred investor in its pre-restructuring process.

Guangzhou Pharmaceutical Capital is wholly owned by Guangzhou Pharmaceutical Holdings, with registered capital of RMB 2 billion. It serves as the group’s dedicated industrial investment platform for implementing its long-term acquisition strategy.

The company’s restructuring process began in January 2025, when creditor Guangdong Jinglong Construction applied to the Guangzhou Intermediate People’s Court for pre-restructuring, citing Xiangxue Pharmaceutical’s inability to repay debts and deteriorating solvency. In April 2025, the court officially approved the launch of the pre-restructuring procedure.

Due to multiple factors, including creditor verification, asset reviews, and investor recruitment, the pre-restructuring period was extended four times, with the latest deadline set for July 11, 2026.

Financial pressure remains significant. From 2021 to 2025, Xiangxue Pharmaceutical recorded losses for five consecutive years. In 2025, the company reported a net loss of RMB 1.392 billion, while total liabilities reached approximately RMB 6.7 billion by the end of the year.

According to market rules, if the company’s net assets remain negative at the end of 2026, it could face mandatory delisting risk from the ChiNext market.

In April 2026, the temporary administrator launched a public search for restructuring investors, with Guangzhou Pharmaceutical Capital eventually selected. However, the two parties have not yet signed a formal pre-restructuring investment agreement, and key terms including investment amount and creditor repayment arrangements remain under negotiation.

Previously Penalized for Financial Disclosure Violations

The company’s restructuring challenge is closely linked to previous regulatory violations.

In August 2025, the Guangdong Securities Regulatory Bureau issued an administrative penalty decision, finding that Xiangxue Pharmaceutical had violated information disclosure requirements.

Regulators determined that the company failed to properly recognize losses related to the demolition of a villa, resulting in inaccurate information in its 2019 annual report. In addition, between 2016 and 2020, the company failed to disclose related-party non-operating fund occupation, leading to material omissions in its annual reports.

As a result, Xiangxue Pharmaceutical was ordered to rectify its violations, received a warning, and was fined RMB 6 million. The company’s actual controller and former chairman Wang Yonghui was also warned and fined RMB 10 million.

The regulatory penalty has become an important legal basis for investor compensation claims. Legal teams have already submitted multiple batches of cases to courts, and eligible investors may still participate before the expiration of the statutory limitation period.

Based on current legal interpretations, investors who meet certain trading conditions during specified periods may be eligible to seek compensation for investment losses.

Public Reprimand Issued Over Inaccurate Earnings Forecast

On July 10, 2026, the Shenzhen Stock Exchange announced disciplinary action against *ST Xiangxue, its chairman and general manager Wang Yonghui, and former chief financial officer Lu Feng, issuing public reprimands and recording the penalties in their integrity files.

The action was triggered by significant discrepancies between the company’s earnings forecast and final financial results.

On January 30, 2026, Xiangxue Pharmaceutical initially forecast a 2025 net loss of RMB 635 million to RMB 934 million. However, on April 22, the company revised its forecast sharply, increasing the expected loss range to RMB 1.264 billion to RMB 1.464 billion, while warning that its year-end net assets could turn negative and that the company might face delisting risk warnings.

The final annual report showed that Xiangxue Pharmaceutical recorded an actual net loss of RMB 1.392 billion in 2025, with net assets of negative RMB 360 million, resulting in the company being placed under delisting risk warning.

Restructuring Brings New Hope, but Governance Challenges Remain

The entry of Guangzhou Pharmaceutical Capital provides a potential turning point for Xiangxue Pharmaceutical’s future development. However, the company must still address significant challenges, including debt restructuring, corporate governance improvement, regulatory compliance, and investor compensation issues.

For the traditional Chinese medicine sector, the case highlights the importance of financial transparency, sustainable operations, and compliance management as pharmaceutical companies navigate restructuring and industry transformation.