Shandong Zhanggu will suspend trading today and is expected to be designated as ST

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（Source: Investigation Team of 大鱼财经）

Recently, Shandong Zhanggu (002598.SZ) released an announcement stating that the company and relevant parties received a written notice of advance information regarding administrative penalties issued by the Shandong Securities Regulatory Bureau. Because the 2024 annual report contained false statements and artificially reduced profits, the company will be subject to other risk warnings, and its stock abbreviation will be changed to “ST Zhanggu”.

This kind of “reverse accounting fraud” is relatively rare in the capital market. Unlike the more common practice of inflating profits to embellish performance, this company instead lowered the book profit by fabricating expenses, causing nearly RMB 8.5 million in profit to disappear from the books, and the actual whereabouts of the funds are unclear. Reducing profits artificially has touched the compliance red line; not only will regulators impose fines, but the stock will also be subject to other risk warnings (ST). Combined with the company’s past stock market performance and earnings trend, the underlying risks behind this compliance incident have gradually come to light.

On April 7, Shandong Zhanggu’s stock was suspended for one day. Starting tomorrow, it will “wear the hat,” with the stock abbreviation changing from “Shandong Zhanggu” to “ST Zhanggu,” and the daily price fluctuation limit tightened to 5%.

Artificially reduced profits of RMB 8.46 million; the whereabouts of the funds are unclear

According to findings by regulators, in 2024 Shandong Zhanggu falsely recognized sales expenses and management expenses totaling RMB 8.4627 million, despite the fact that services such as accepting repairs and technical services did not actually occur, resulting in the annual report’s artificially reduced profit total of RMB 8.4627 million for the year, accounting for 10.37% of the profit total disclosed for the period.

The Shandong Securities Regulatory Bureau plans to impose an aggregate fine of RMB 6.9 million on the company and relevant responsible persons. Specifically, it will order Shandong Zhanggu to make corrections, issue a warning, and impose a fine of RMB 2.5 million; the then joint chair and general manager, Fang Shupeng, will be fined RMB 1.8 million for implementing the above expense handling items through decision-making; Shen Chunfeng, the then head of the Electrical Business Division, will be fined RMB 1.0 million; and Fang Runjiang, the then chairman, and Zhao Xiafen, the then financial controller, will each be fined RMB 0.8 million for failing to perform their duties diligently.

Accompanying the penalty notice is a direct punishment from the capital market. Under the rules of the Shenzhen Stock Exchange on the listing of stocks, Shandong Zhanggu’s stock and its convertible bonds (Zhanggu Convertible Bonds) will be suspended for 1 day on April 7, 2026, and will resume trading starting from April 8. The stock abbreviation will officially be changed to “ST Zhanggu,” and the daily price fluctuation limit for trading days will be adjusted from 10% to 5%.

Shandong Zhanggu stated that it believes this matter does not involve any situation of mandatory delisting for major illegal violations. The board of directors has apologized to investors and will urge management to take effective measures actively, so as to apply to the exchange to revoke the other risk warnings as soon as possible.

However, according to relevant regulations of the SZSE, an application to revoke other risk warnings must satisfy two conditions at the same time: a retrospective restatement for the relevant year’s financial and accounting reports, and it must have been more than twelve months since the China Securities Regulatory Commission made its administrative penalty decision. This means that the company’s “hat removal” will need to wait at least one year.

It is worth noting that this is not the first time Shandong Zhanggu has come into contact with regulatory red lines.

In December 2025, the company was ordered to make corrections by the Shandong Securities Regulatory Bureau due to issues including violations in connection transaction approval and information disclosure, violations in the use of raised funds, and improper corporate governance. Only half a month later, the company was again filed for an investigation by the China Securities Regulatory Commission on suspicion of illegal and违规 disclosures of financial information in periodic reports. Within just one month, the company faced regulatory accountability multiple times, exposing deep-seated deficiencies in its internal control management.

Earnings under pressure and growth lacking momentum; the decline in the year nearly 20%

Shandong Zhanggu was founded in 1968. It is the largest manufacturer of roots blowers in China for production and sales. It was listed on the Shenzhen Stock Exchange in 2011.

From financial data, the company’s performance in recent years has been lackluster. In 2024, it recorded total operating revenue of RMB 2.09B, attributable net profit of RMB 71.5353 million, and basic earnings per share of RMB 0.23, a noticeable decline from RMB 0.34 in 2023.

The company’s 2025 performance forecast shows that it expects attributable net profit of RMB 72.0 million to RMB 80.0 million, representing an increase of 0.65% to 11.83%; non-recurring items adjusted net profit of RMB 66.0 million to RMB 74.0 million, representing an increase of 1.32% to 13.6%. Although it maintains growth, the growth rate is relatively slow, and the financial problems exposed by the 2024 artificially reduced profits event have caused investors to worry about its true operating situation.

In terms of equity structure, Shandong Zhanggu has long been dominated by the “Fang family father and son.” In this round of punishment, Fang Runjiang and Fang Shupeng father-and-son together were fined RMB 2.6 million, accounting for the largest share among the four executives fined.

Over the past three years, Shandong Zhanggu’s share price has cumulatively fallen by 23.99%, putting long-term investors under significant pressure. Since the beginning of this year, the share price has cumulatively fallen by 18%.

Before the suspension, Shandong Zhanggu’s share price was RMB 8.76, with a market value of approximately RMB 2.73B. After being subjected to the ST treatment, the liquidity of the company’s shares may be affected to a certain extent. As of the disclosure date of the announcement about the penalties, the company’s production and operations remained normal, but the compliance turmoil and the deterioration in performance have cast a shadow over the company’s development. How it will subsequently improve and refine internal controls and enhance performance through rectification has become an urgent issue for Shandong Zhanggu to resolve.

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