What happened
On the evening of September 4, *ST Lingnan announced it had received a case filing notice from the Suixi County Urban Management Administrative Law Enforcement Bureau, which has opened an investigation into the company's suspected subcontracting of engineering work.
The matter dates back to July 2021, when the Liuqiao Town People's Government in Suixi County signed a design-procurement-construction contract for the Fenghu Lake coal mining subsidence area comprehensive treatment project. The contractor was a consortium led by Lingnan Co., Ltd. and including Tongji University Architectural Design and Research Institute. The contract value was about 800 million yuan, and by the end of June 2026 the company had recognized output value of 486 million yuan, equal to 36.02% of its latest audited net assets attributable to the parent. The project is currently halted.
The company said it has no other projects in Suixi County and will cooperate with the investigation. It also faces multiple existing risks, including frozen bank accounts, regulatory penalties, three consecutive years of negative net profit after excluding non-recurring gains or losses, and an audit report highlighting uncertainty about its ability to continue as a going concern.
Why it matters
This new investigation adds another layer of legal and reputational pressure to a company already carrying several risk warnings. Because the stock closed at exactly 1 yuan on September 4, near the face value threshold, any adverse development could weigh on investor sentiment and test whether the listing status remains viable.
Key facts
*ST Lingnan received a case filing notice from Suixi County's urban management law enforcement bureau over suspected project subcontracting.
The probe involves a July 2021 EPC contract for the Fenghu Lake coal mining subsidence area treatment project in Suixi County, valued at about 800 million yuan.
As of the end of June 2026, the company had recognized 486 million yuan in project output, representing 36.02% of its latest audited net assets attributable to the parent; the project is currently suspended.
The company says it has no other projects in Suixi County and will cooperate with the investigation.
What to watch next
The market's reaction when trading resumes on Monday, given the stock price closed at 1 yuan.
The outcome and potential penalties from the administrative investigation.
Whether this development affects the company's already uncertain ability to continue as a going concern or its standing with regulators and investors.