Yunnan Jinggu Forestry faces uncertainty as subsidiary litigation escalates

Yunnan Jinggu Forestry announced that its controlling subsidiary, Tangxian Huiyin Timber Co., Ltd. (Huiyin Timber), is facing new litigation involving a principal amount of 10.8 million yuan, plus interest, related to private lending disputes. The case, initiated by Qian Qiongfang, has been accepted by the Suzhou Wuzhong District People's Court, though no hearing date has been set. This new lawsuit is part of a larger pattern, with Huiyin Timber's 12 bank accounts currently frozen and its two production lines (fiberboard and particleboard) halted, raising concerns about its ability to resume operations.

As of the announcement date, Huiyin Timber is involved in 32 private lending disputes, with a total alleged principal amount of approximately 211.783 million yuan. This figure represents 222.68% of Yunnan Jinggu Forestry's net assets attributable to shareholders as of the latest audited period. The company estimates that approximately 191.9684 million yuan of this amount is related to the company, with 171.3684 million yuan predating the acquisition and 20.6 million yuan incurred post-acquisition. The total amount is expected to increase as creditors pursue further claims.

The ongoing litigation, coupled with a third-quarter operating performance decline reported in 2025, significantly impacts Yunnan Jinggu Forestry's sustainable operating capacity. The company has established a dedicated team and engaged legal counsel to address the disputes and mitigate the negative impact on its profitability.