Chao Xun Communication (603322) In-depth Analysis of Regulatory Warning Letter and Accounts Receivable Issues

Chao Xun Communication received a warning letter from the Guangdong Securities Regulatory Bureau on December 12, 2025, exposing the following serious issues:

• Inaccurate revenue accounting
  : Periodic reports have cross-period revenue accounting issues [1]
• Irregular internal controls
  : Violated the requirement of segregation of incompatible duties; some employees provided services to certain suppliers at the same time [1]
• Insufficient attention from governance layer
  : Reflects weak internal control environment and control activities, and insufficient attention from the governance and management layers to internal controls [1]

• Inaccurate financial data
  : Disclosed relevant financial data was inaccurate [1]
• False internal control report
  : The internal control self-assessment report did not truthfully reflect the above issues [1]

According to search results, Chao Xun Communication’s accounts receivable issues have caused serious consequences:

• Huge impairment loss
  : Due to uncollectible receivables, the net profit attributable to the parent company’s owners in the 2024 consolidated financial statements is expected to decrease by approximately 66 million yuan in total [2]
• Difficulties in collection
  : The company has strengthened collection efforts for accounts receivable and other receivables, and may adopt methods such as debt settlement with goods to collect payments
• Correction of accounting errors
  : The company has corrected previous accounting errors

Accounts receivable recovery difficulties will directly affect the company’s cash liquidity, possibly leading to:

• Deterioration of operating cash flow
• Tight working capital
• Decline in debt-servicing capacity

As can be seen from the above chart, after the release of the regulatory warning letter, the company’s stock price fluctuated significantly, dropping by 10.01% on December 12 [1], reflecting the market’s strong reaction to this negative news.

Risk analysis shows that after the regulatory warning letter, the company’s scores in accounts receivable recovery risk and accounting information accuracy increased, indicating these risks have intensified; however, there were improvements in internal control quality and shareholder rights protection, possibly due to the rectification measures taken by the company.

• Stock price decline
  : The stock price fell immediately after the warning letter was released, and market confidence was hit [1]
• Increase in financing costs
  : Regulatory penalties may increase the company’s future financing difficulties and costs
• Investor trust crisis
  : Information disclosure violations have damaged investors’ trust in the company

Despite challenges, Chao Xun Communication still has development potential in computing power construction business:

• Cooperation with Muxi Semiconductor
  : The company is the national general agent of Muxi’s domestic GPU chips for specific industries, and completed batch deliveries to customers in 2024 [1]
• Computing power business layout
  : The company’s computing power construction business met acceptance conditions, and relevant project revenue and profits were confirmed [1]
• Joint venture establishment
  : Co-founded “Xunxi Intelligence” with Muxi Semiconductor to expand into businesses such as chip packaging and testing, and server complete machine production [4]

• Financial risk
  : Difficulties in accounts receivable recovery and accounting errors may affect the stability of the company’s performance
• Regulatory risk
  : May face stricter regulatory scrutiny in the future
• Liquidity risk
  : Slow accounts receivable recovery may affect cash flow

• Domestic computing power track
  : Benefiting from AI and localization substitution trends, the computing power business has broad prospects
• Business transformation
  : Strategic layout of transforming from traditional communications to intelligent computing services
• Policy support
  : National policy support for domestic computing power infrastructure

Investors should pay close attention to:

• Progress of accounts receivable recovery and provision for bad debts
• Implementation effect of internal control rectification measures
• Order execution and revenue recognition of computing power business
• Follow-up penalties and requirements from regulatory authorities

The regulatory warning letter and accounts receivable issues have had a significant negative impact on Chao Xun Communication’s financial risk and investment value. In the short term, the company faces challenges such as stock price fluctuations, increased financing costs, and declining investor confidence. However, if the company can effectively rectify its internal control system, accelerate accounts receivable recovery, and successfully promote the transformation of its computing power business, there is still potential for the recovery of long-term investment value.

Investors should fully weigh short-term risks and long-term opportunities when making decisions, and it is recommended to focus on the actual effect of the company’s rectification measures and the verification of the profitability of the computing power business.

[1] Ca联社 - “False records in financial reports, information disclosure violations, etc. ‘confirmed’ tonight: multiple listed companies announced penalties” (https://news.futunn.com/post/66146061/factual-findings-of-false-records-in-financial-reports-and-violations)

[2] Zhihu Column - “Chao Xun Communication: Double Storm Triggered by Customer Arrears” (https://zhuanlan.zhihu.com/p/1899508121308725518)

[3] Sina Finance - “V View Financial Report | Chao Xun Communication Receives Warning Letter, Is the National General Agent Distributor of Muxi Semiconductor” (https://finance.sina.com.cn/tech/roll/2025-12-11/doc-inhamhsp6145832.shtml)

[4] Chao Xun Communication Investor Relations Activity Record Form - (http://dataclouds.cninfo.com.cn/shgonggao/2025/2025-05-20/f88da0a6354c11f09c62fa163e39923a.pdf)