A controlling shareholder and executive at Nandu Power Source has experienced a margin call, adding to the company's growing list of troubles, which include a significant earnings miss, major internal control failures, and a potential restructuring. The situation raises serious questions about the management's priorities and the treatment of minority investors.

The company's financial performance has severely deteriorated. An initial earnings forecast for fiscal 2025 predicted a net loss between 890 million and 1.25 billion yuan. This was later dramatically revised to a loss between 2.4 billion and 2.8 billion yuan, with the actual loss settling at 2.642 billion yuan. The deviation between the initial lower bound and the final result was nearly 1.4 billion yuan, a massive margin of error that alarmed investors.

More concerning than the earnings miss was the auditor's report for fiscal 2025, which issued a qualified opinion citing "material weaknesses" in internal controls. The audit identified three critical financial irregularities. First, the company made inexplicably large prepayments to its top supplier, Anhui Kuadian Technology Co., Ltd. (Kuadian Technology). During the fiscal year, Nandu made cumulative prepayments of 4.633 billion yuan to this supplier, but received only 134 million yuan in goods in return. This relationship, which has historically drained Nandu's cash flow, appears to have been heavily supported by the company despite its own financial distress. Second, Nandu provided guarantees for substantial loans taken by Kuadian Technology and a major customer from non-financial institutions, totaling hundreds of millions of yuan, without following proper internal approval procedures. These guarantees were not recorded on the company's books. The audit also noted potential commingling of funds between these parties. Third, the recoverability of a significant 183.49 million yuan receivable from the fifth-largest customer, which is overdue and over a year old, could not be verified by auditors.

The company's high leverage, with a debt-to-asset ratio exceeding 93%, underscores the precarious financial position driven by these practices. The company's stock was placed under a "Special Treatment" (ST) designation starting April 30, 2026, following the adverse audit opinion, and has since experienced sharp declines, including three consecutive limit-down sessions shortly after the announcement.

Adding to the controversy, on April 7, 2026, just weeks before the annual report release, Chairman Zhu Baoyi announced a plan to sell up to 1.58% of the company's shares, with the sale period set to begin on April 29, the very next day after the report was to be published. This timing suggests an attempt to sell before the market could react to the likely negative news. However, the attempt backfired. Following the earnings revision on April 24 and the ST designation on April 28, the stock price plummeted. With 90% of his holdings already pledged as collateral, the sharp drop triggered margin calls, forcing the liquidation of some positions held by a related party, Zhu Baode. The Chairman’s plan to "beat" ordinary investors to the exit door ultimately failed.

On July 8, 2026, the company announced it had received a creditor's application for pre-restructuring and restructuring, citing an inability to pay debts. While restructuring could potentially allow the company to shed liabilities, it remains unclear whether the controlling shareholder and other parties who may have benefited from the questionable related-party transactions will face accountability for the losses incurred by the company and its shareholders.