Shares of Jiayuan Science And Technology Co.,Ltd. (301117.SZ), now trading under the ST designation, resumed trading on August 25 and were immediately hit with a 20% daily limit-down, closing at 14.18 yuan. The downward trajectory continued the next day, with the stock closing 8.32% lower at 13.00 yuan on August 26.
This sharp sell-off is a direct market response to a systematic financial fraud case that spanned four years and extended into the company's IPO reporting period. With inflated profits exceeding 40% in its pre-listing prospectus, the regulatory penalty of 14.5 million yuan raises questions about whether this marks the end of enforcement or the beginning of deeper market scrutiny.
Lawyer Dong Yizhi from Shanghai Zhengce Law Firm noted that the core violation lies in the company's systematic fraud spanning the IPO reporting period and four years post-listing, with profit inflation reaching up to 44%. This directly breaches the Securities Law's fundamental requirements for truthful, accurate, and complete information disclosure, with misconduct persisting through a critical stage of the company's listing.
According to the CSRC's advance notice of administrative penalties, Jiayuan Science began network information security business with Customer A in 2019, a client that ranked as its second-largest in 2019 and largest in 2020. Between 2019 and 2022, the company signed multiple research contracts and electronic product procurement agreements with this client, prematurely recognizing revenue despite not meeting the conditions for revenue recognition.
The improper accounting led to revenue overstatements of 20.156 million yuan in 2019, understatements of 20.156 million yuan in 2020, overstatements of 28.034 million yuan in 2021, and understatements of 25.625 million yuan in 2022. Total profit was similarly distorted, with overstatements of 16.138 million yuan and 18.039 million yuan in 2019 and 2021, respectively, and understatements of 16.138 million yuan and 16.345 million yuan in 2020 and 2022.
Additionally, in 2020, Jiayuan Science inserted itself into an ongoing purchase and sales chain between Wuxi Jindu Machinery Equipment Co., Ltd. and Kunming Boyuan Zhongling Technology Co., Ltd. This transaction lacked commercial substance, resulting in inflated revenue of 13.280 million yuan and inflated total profit of 442,400 yuan.
Combined, these violations resulted in revenue misstatements representing 15.39%, 3.61%, 8.85%, and 9.51% of reported revenue for 2019 through 2022, respectively. Total profit misstatements represented an even more severe 44.02%, 25.80%, 16.95%, and 24.43% of reported figures for the same periods. These actions directly caused false statements in the prospectus and the 2021 and 2022 annual reports.
Jiayuan Science listed on the ChiNext board on January 17, 2022, raising approximately 1.08 billion yuan in total proceeds. Financial and tax audit expert Liu Zhigeng explained that the fraud was highly concealed, employing alternating overstatement and reversal of revenue across different years, which could easily be mistaken for ordinary accounting corrections. The company also constructed fabricated transactions by inserting itself into third-party supply chains, combined with packaging abnormal business from major clients, effectively evading routine audits throughout the IPO phase.
The CSRC has proposed a combined penalty of 14.5 million yuan for these violations. Jiayuan Science faces a correction order, a warning, and a 6 million yuan fine, while the then-chairman, deputy general manager, chief financial officer, and board secretary each face individual penalties. Under the Shenzhen Stock Exchange ChiNext listing rules, the stock has been subject to other risk warnings since August 25, with the ticker changed to ST Jiayuan, though the daily price limit remains at 20%.
The company has stated that this matter does not yet trigger mandatory delisting for major violations. When contacted for comment, company staff declined to elaborate, stating that all relevant information has been publicly disclosed in accordance with regulatory requirements and that all matters should be referenced to official company announcements.
Industry experts note that from a penalty amount perspective, this represents one of the more substantial fines in recent financial fraud cases. However, four years of misconduct affecting the IPO phase with profit inflation of up to 44% ending in an ST designation may spark discussion about the relationship between fraud costs and delisting standards.
Liu Zhigeng further distinguished between two types of fraud: premature revenue recognition represents cross-period accounting adjustments based on genuine business activities with relatively limited damage to financial reports, while transactions lacking commercial substance involve entirely fabricated performance with no real business backing, fundamentally breaching compliance boundaries, severely distorting financial data, and potentially triggering criminal liability.
Financial reports show that in the first quarter of 2026, Jiayuan Science recorded revenue of 28.48 million yuan, up 28.77% year-on-year, but posted a net loss attributable to parent shareholders of 24.17 million yuan, with losses widening by 67.77% year-on-year. For ST Jiayuan, the true test lies in valuation restructuring once the limit-down opens.
Liu Zhigeng cautioned investors not to be misled by single-quarter revenue growth figures. When evaluating risk in such problem enterprises, investors should focus on core profitability metrics such as non-GAAP net profit, while remaining alert to the significant volatility risks posed by the 20% price limit on ChiNext ST stocks. Investors should avoid blindly buying the dip until compliance and operational risks are fully resolved.
Lawyer Dong Yizhi also reminded investors that those who suffered losses due to the company's financial fraud may file civil compensation lawsuits under the Securities Law once the CSRC's penalty decision takes effect, safeguarding their legitimate rights through legal channels.