What happened
On September 4 evening, *ST岭南 announced it had received a case-filing notice from the Suixi County Urban Management Administrative Law Enforcement Bureau over alleged contract subcontracting in the Fengqi Lake coal mining subsidence comprehensive treatment project, which has a contract value of about 800 million yuan and is currently halted.
The project was originally contracted in July 2021, with the Liuqiao Township government as the owner and a consortium led by *ST岭南 and including Tongji University Architectural Design and Research Institute as the contractor. As of the end of June 2026, recognized output value reached 486 million yuan, equivalent to 36.02% of the company's latest audited net assets attributable to the parent. The authority said it has opened an investigation and will handle the matter according to law after the inquiry concludes.
This is the second time this year that *ST岭南 has been investigated for suspected illegal subcontracting. In April, it received a similar filing notice from the Wan'an County housing authority regarding an EPC project that had already completed acceptance. The combined contract amounts of the two cases exceed 1 billion yuan.
Why it matters
A second investigation within five months suggests that the alleged subcontracting issue may not be an isolated lapse, potentially pointing to broader compliance or internal-control weaknesses in how the company handles large construction contracts.
The halted project's recognized output value equals more than a third of the company's net assets, so any audit adjustment or regulatory penalty could materially affect its balance sheet. This adds to existing pressure from the company's delisting risk warning, a disclaimer of opinion on its 2025 annual report, a large net loss, and an ongoing CSRC investigation into the company and its former controlling shareholder.
Key facts
On Sept. 4, 2026, *ST岭南 received a case-filing notice from the Suixi County urban management bureau for suspected subcontracting in the Fengqi Lake project.
The Fengqi Lake project contract amount is about 800 million yuan and the project is currently in a suspended state.
As of end-June 2026, recognized output value for the project was 486 million yuan, equal to 36.02% of the company's latest audited net assets attributable to the parent.
In April 2026, *ST岭南 was also investigated by the Wan'an County housing authority for suspected illegal subcontracting in an EPC project.
The combined contract value of the two cases exceeds 1 billion yuan.
*ST岭南 has been under delisting risk warning since April 30, 2026, and its 2025 annual report received a disclaimer of opinion.
What to watch next
Whether the Suixi County investigation concludes with administrative penalties, fines, or any requirement to change the company's contracting practices.
Whether the third-party audit of the project's recognized output value leads to financial restatements or impairments, given the project is halted and under regulatory scrutiny.
Any updates from the CSRC investigation against the company and its former controlling shareholder, and how these overlapping cases affect the company's listing status and turnaround efforts.