For 34 years since its founding and nearly 30 years after listing, the veteran pharmaceutical company Haiwang Biotechnology has become an ST stock with concentrated risk exposure. The company reported a projected net loss of 1.3 billion to 1.8 billion yuan for the first half of 2026, shifting from profit to loss. This reversal is underpinned by a cumulative loss of over 44 billion yuan over four consecutive years, a debt burden of 10 billion yuan, and a 1.3 billion yuan irregular fund operation that exposed major internal control flaws. Combined with the rule that a non-standard opinion on the 2026 internal control audit could trigger a *ST designation, the company stands at a critical juncture of both operational and compliance challenges.

Main Business Continues to Slow, Financial Risks Escalate

The centralized procurement policy has persistently squeezed profit margins in the distribution channel, and the company's own imbalanced business structure has led to a four-year operational decline for Haiwang, with all financial indicators deteriorating. Revenue has shrunk from 37.83 billion yuan in 2022 to 26.668 billion yuan in 2025, and in the first quarter of 2026, revenue was 5.945 billion yuan, down 19.39% year-on-year. On the profit side, net profit attributable to the parent company from 2022 to 2025 recorded losses of 1.027 billion yuan, 1.69 billion yuan, 1.193 billion yuan, and 563 million yuan, respectively, totaling over 4.4 billion yuan in losses over four years. The first half of 2026 is again expected to be a loss, a complete reversal from the 31.68 million yuan profit in the same period last year. Asset divestitures will bring a one-time loss of 40 million to 60 million yuan, and the extended collection cycle will require substantial provisions for receivables impairment, further eroding profits.

Debt and receivables form two major capital blockages. As of the end of 2025, the company's asset-liability ratio was as high as 91.73%, with short-term borrowings of 11.106 billion yuan, accounting for 42.17% of total assets. However, the available cash on the books was only 1.455 billion yuan, creating a massive short-term debt repayment gap. Accounts receivable have consistently exceeded 13 billion yuan, with the collection cycle extending from the industry norm of 6 months to over 190 days and worsening. Downstream medical institutions are occupying funds for extended periods, while upstream suppliers are tightening prepayment and payment terms. Squeezed from both sides, the company relies on high-interest bank loans for working capital, and financial costs continue to consume its meager profit margins.

The pharmaceutical distribution industry naturally has the characteristics of "high debt, high receivables, and low margins." However, while leading industry peers offset these pressures through scale and supply chain finance, Haiwang's weak bargaining power and declining capital turnover efficiency have amplified inherent industry risks, leaving its cash flow perpetually tight.

Internal Control Failure, 1.295 Billion Yuan in Irregular Operations Create Compliance Risks

In May 2026, the exposure of a 1.295 billion yuan irregular fund operation, conducted without approval or disclosure, directly led to the company being placed under an ST designation, revealing a systemic failure in the company's internal governance. In September and December 2025, the company provided a total of 1.295 billion yuan in financial assistance to unrelated third parties in two separate transactions. This process completely bypassed board and shareholder meeting approval and was never disclosed. After the borrowers failed to repay on time, management did not initiate recovery procedures. Instead, it used subsidiary certificates of deposit to provide 610 million to 650 million yuan in mortgage guarantees for the counterparties. The entire set of fund operations completely circumvented internal control procedures. Although the company stated that all principal was recovered, the guarantees were lifted, and no asset losses were incurred, the auditing firm explicitly stated that it could not verify the commercial rationality of these fund flows and could not rule out potential fund occupation, directly issuing an adverse opinion on internal controls.

This single instance of large-scale, irregular fund operations is not an isolated incident, reflecting a failure in the company's entire chain of controls, including fund approval, external guarantees, and information disclosure. Even if corrective measures and internal accountability are completed, the long-standing management inertia is difficult to reverse in the short term, and there remains significant uncertainty about whether the internal control system can operate effectively. According to Shenzhen Stock Exchange rules, if the 2026 internal control audit again results in an adverse opinion or a disclaimer of opinion, the company will be directly upgraded to *ST, formally triggering delisting risk. The company has less than a year to repair its compliance system.

Self-Rescue Efforts Fail to Address Core Contradictions, Long-Term Prospects Doubtful

Facing multiple risks, Haiwang has chosen to shrink low-margin businesses and divest loss-making subsidiaries, attempting to exchange short-term pain for healthy long-term operations. However, the current self-rescue measures are insufficient to resolve the core contradictions. In the short term, voluntarily abandoning inefficient businesses and disposing of non-performing assets will continue to generate asset disposal losses. Combined with the centralized procurement policy persistently reducing distribution profit margins, a recovery in revenue and profit is unlikely in the near term. The collection cycle for accounts receivable continues to lengthen, the pressure to provision for impairments persists, and cash flow is unlikely to improve quickly. Over the medium to long term, the high debt structure cannot be optimized quickly. Private enterprises face higher financing costs, and interest expenses continue to exacerbate losses. With increasing competition in the pharmaceutical distribution sector, the company lacks a differentiated competitive advantage and struggles to break free from the low-margin, capital-intensive business model.

With multiple risks superimposed, ST Haiwang faces three major tests: first, can it stop the continuous losses and repair cash flow on the operational front; second, can it thoroughly rectify internal control loopholes and pass the 2026 internal control audit to avoid *ST; third, can it reduce the tens of billions in short-term debt and shorten the receivables collection cycle on the financial side. If all three are not addressed effectively, the company will remain trapped in a negative cycle of losses, debt, and compliance risks, with delisting pressure intensifying. Investors must be highly vigilant about the significant uncertainty of the company's ability to continue as a going concern.