Analysis of the Impact of Xiangyuan Culture & Tourism's Actual Controller Being Involved in a Case on the Company

1. Event Background and Core Situation
   : Yu Faxiang, the actual controller of Xiangyuan Culture & Tourism, was subject to criminal compulsory measures by the Shaoxing Municipal Public Security Bureau on suspicion of a crime [1]. The company announced that its control rights have not changed, Yu Faxiang does not hold any position in the company, production and operation are normal, and it has not received a notice to assist in the investigation [1]. However, it should be noted that Yu Faxiang is also facing the 10-billion-yuan redemption crisis of the Xiangyuan system, and his shares in Xiangyuan Culture & Tourism, Jiaojian Co., Ltd., and other companies have been judicially frozen [1].

2. Control Rights and Corporate Governance Risks
   : Although the company announced that control rights remain unchanged, the shares held by the controlling shareholder and its concerted actors are 100% frozen, with a sequential freezing ratio of 81% [1]. In the context of the actual controller being involved in a case and shares being frozen, if subsequent judicial disposal leads to changes in shares, the stability of the company’s control rights will face substantive challenges. In addition, the Shaoxing Municipal Assistance Working Group has entered Xiangyuan Holdings to investigate assets and liabilities [1]. Although it has not directly involved the listed company for the time being, it highlights the potential path for risks at the group level to spread to the listed company.

3. Market Reaction and Valuation Impact
   : After the announcement was released, Xiangyuan Culture & Tourism’s stock price fluctuated sharply, with a drop of 2.80% on December 23, and a cumulative drop of more than 17% since the beginning of this month [1]. Investors’ concerns about the company’s future uncertainty have led to an increase in risk premiums, and valuations face downward pressure. The market generally worries that the actual controller’s involvement in the case may trigger subsequent chain reactions such as debt disposal and asset transfer, which will affect the company’s normal operation and strategic layout.

1. Balance Between Information Disclosure and Market Trust
   : The company’s announcement emphasizes “normal production and operation” and “unchanged control rights”, but does not fully disclose the specific situation and potential impact of the controlling shareholder’s share freezing. This insufficiency in information disclosure has intensified market doubts and led to an accelerated decline in investor confidence.

2. Transmission of Group Risks
   : The 10-billion-yuan redemption crisis of the Xiangyuan system and the actual controller’s involvement in the case form a double negative event. Although the listed company is not directly involved for the time being, the capital chain risks of the controlling shareholder may spread to the listed company through related transactions, guarantees, and other channels. Although the entry of the assistance working group has released a certain risk resolution signal, there are still uncertainties about the subsequent disposal results.

1. Main Risk Points
   :
   • Control Right Stability Risk: Share freezing may lead to changes in control rights, affecting the continuity of the company’s strategy.
   • Operational Risk: If problems at the group level worsen, it may affect the resource support and business cooperation of the listed company.
   • Investor Confidence Risk: Sustained stock price declines may trigger further sell-offs and increase liquidity pressure.

2. Opportunity Window
   :
   • If the assistance working group can effectively resolve the group’s debt crisis and clarify the relationship between the listed company and the group, it may bring opportunities for long-term stable development of the company.
   • If the company can enhance the transparency of information disclosure and actively respond to market concerns, it may gradually restore investor confidence.

The involvement of Xiangyuan Culture & Tourism’s actual controller in the case and the Xiangyuan system’s debt crisis have had multi-dimensional impacts on the company: the stability of control rights is questionable, investor confidence has been damaged, stock price fluctuations are significant, and valuations face downward pressure. Although the company emphasizes normal production and operation, factors such as the freezing of the controlling shareholder’s shares and risks at the group level still need to be closely monitored. Investors should focus on changes in control rights, the progress of group debt disposal, and the transparency of the company’s information disclosure.