After three consecutive years of financial fraud were exposed, the delisting outcome for *ST Lifang has been finalized. On the evening of February 14, the Anhui Securities Regulatory Bureau announced an administrative penalty decision revealing that Lifang Digital Technology Co., Ltd. (referred to as *ST Lifang) had significantly inflated its operating revenue through agency business, financing trade, and fictitious trade. The company's annual reports from 2021 to 2023 contained false records. The Anhui bureau ordered the company to make corrections, issued a warning, and imposed a fine of 10 million yuan.
On the same day, the company received a prior notice from the Shenzhen Stock Exchange indicating its intention to terminate the listing of the company's shares. Trading of the company's stock will be suspended starting February 24.
According to the penalty decision, *ST Lifang engaged in financial fraud through three methods. First, it inflated revenue and costs via agency business from 2021 to 2023, improperly using gross method accounting despite not having control of the goods. Second, it conducted financing trade with 12 companies, essentially providing capital support and earning interest, which should not have been recognized as operating revenue or cost. Third, in 2022, it engaged in fictitious trade with a media company, forming a closed-loop transaction without commercial substance, which should not have generated any recognized revenue, cost, or profit.
Combining these violations, *ST Lifang's annual reports from 2021 to 2023 contained false entries. Specifically, in 2021, it inflated revenue by 280 million yuan, representing 50.09% of that year's total, and inflated costs by 277 million yuan, accounting for 60.61%. In 2022, it overstated revenue by 312 million yuan (51.67% of the total), costs by 305 million yuan (53.54%), and total profit by 510,000 yuan (0.33% of the absolute value). In 2023, inflated revenue was 45.87 million yuan (24.00%), and costs were 45.23 million yuan (27.55%).
The company argued that it did not intentionally participate in fake trade and that the penalty was excessive, but the Anhui bureau dismissed these claims.
Concurrently, *ST Lifang is set to face mandatory delisting due to serious violations. The company disclosed that based on the penalty facts, its 2021 and 2022 annual reports contained false revenue entries totaling over 500 million yuan, exceeding 50% of the total reported revenue for those two years. This situation triggers termination conditions under the ChiNext listing rules.
Signs of crisis for *ST Lifang had emerged earlier. Originally established in 1999 as Space Panel Industry, focusing on lightweight building materials, the company rebranded as Space Intelligence in 2017 to enter construction informatization. After a change in controlling shareholder in 2020, it shifted to become a digital technology service provider and renamed itself Lifang Digital Technology. However, this transformation devolved into a farce of "label trading" and "concept speculation."
By October 2024, *ST Lifang's stock price hovered around 3 yuan. But as market frenzy for AI concepts grew, investors tagged the company with "AI servers + digital infrastructure" labels, primarily due to its wholly-owned subsidiary, Shenzhen Super Cube Data Technology Co., Ltd. From September 2024 to March 2025, the stock surged from around 3 yuan to 15.26 yuan, a gain of approximately 400%.
Reports indicated that Super Cube's team included members from major software and hardware firms in the U.S. and Taiwan, China, aiming to become a leading data center solutions provider. To retain this core team, Lifang Digital introduced a restricted stock incentive plan tied to Super Cube's net profit targets from 2024 to 2026.
In January 2025, *ST Lifang announced plans to acquire control of Yunzhang Financial Advisory Co., Ltd., a subsidiary of Anhui Yunzhang, to expand into financial data services. However, media reports later revealed that the company's "smart hardware" business essentially involved reselling Dell and HP servers with a gross margin of only 10% and R&D spending below 3%, far from being "core technology." The acquisition was viewed as a questionable跨界 move with doubtful synergy.
Financial reports showed that by the end of 2024, the company's goodwill impairment had reached 439 million yuan, a 94.7% impairment rate, nearly wiping out earlier acquired assets.
On January 22, 2025, the Anhui bureau issued its first supervisory concern letter, pointing out irregular accounting practices and demanding a comprehensive review and rectification of revenue recognition issues, while sternly warning against financial fraud. The company's rectification was superficial, leading to another concern letter on April 2, which found missing self-inspections for its smart hardware business and severe discrepancies in disclosed AI all-in-one machine sales data—zero sales on its WeChat store despite promoting itself as a "DeepSeek concept stock" to hype its share price.
Additionally, the company's 2024 annual report showed distorted revenue and cost accounting due to internal control failures in sales operations, following corrections of accounting errors for two consecutive years.
Since last year, *ST Lifang has repeatedly issued risk warnings about potential delisting. As early as November, it had received a prior notice of administrative penalty and market ban from the Anhui bureau, along with announcements highlighting risks of delisting due to share price falling below par value or major violations.
Notably, regulators stated that the accounting firm responsible for audits from 2021 to 2023, Zhongxingcai Guanghua Certified Public Accountants, has been placed under investigation for alleged failure to exercise due diligence. Evidence of possible securities crimes will be transferred to judicial authorities.