Recently, the review process at the Beijing Stock Exchange has been maintaining a relatively high frequency.
This week (March 9-13), a total of 5 companies, including Xiangyang Chia Tai Seed Industry Co., Ltd. (hereinafter referred to as &#34;Chia Tai Seed Industry&#34;) and Guangzhou Kelairedi Medical Equipment Co., Ltd., have been reviewed, averaging one company advancing the listing committee's review each day.
Among them, Chia Tai Seed Industry has attracted significant attention.
As a corn seed company, Chia Tai Seed Industry is one of the rare agricultural projects listed on the Beijing Stock Exchange, with many individual businesses among its top five customers, and its performance over the past three years has not been particularly outstanding.
In 2025, Chia Tai Seed Industry's revenue was 361 million yuan, a year-on-year decline of 5.12%; during the same period, the net profit attributable to the parent company increased by 11.85% to 91 million yuan.
Behind this set of &#34;profit increase without revenue increase&#34; data, the financial fragility of Chia Tai Seed Industry, which is highly dependent on &#34;estimates,&#34; has begun to surface.
Last year, Chia Tai Seed Industry had to adopt a retrospective restatement method due to inaccurate estimates of the scale of cross-period returns, resulting in a reduction of over a quarter of the net profit for the first half of 2025.
With such a performance record that is highly reliant on &#34;estimates&#34; and full of volatility risks, whether Chia Tai Seed Industry can withstand the stringent scrutiny of the listing committee remains uncertain. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3daf1430-f370-4be1-8ded-9d92f18571dc.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3daf1430-f370-4be1-8ded-9d92f18571dc.png"/>
<h2>Net Profit Reduced by Over 1/4</h2>
Chia Tai Seed Industry's main advantage products include hybrid corn seeds such as Chia Tai 719 and Chia Tai 808, covering four major corn production areas: East North China, Huanghuaihai, Southwest, and Northwest.
In the first half of 2025, the seed business generated revenue of 84 million yuan, accounting for as much as 98.44%.
Behind this nearly 100% revenue share, Chia Tai Seed Industry mainly sells seeds through distributors.
Under this model, Chia Tai Seed Industry generally adopts a &#34;payment before delivery&#34; settlement policy. That is, after pre-collecting payment from distributors, they arrange for delivery and confirm sales revenue based on the actual delivery of products and the transfer of control.
On the surface, Chia Tai Seed Industry seems to have strong bargaining power over downstream distributors, but the return policies agreed upon by both parties are like a ticking time bomb that could erase revenue at any time.
According to Chia Tai Seed Industry, the sales practice in the seed industry is that after the sales season for each variety ends, distributors can return unopened, undamaged, and non-moldy original packaged seeds within the agreed period according to the return policy and agreement.
This means that if there is a large scale of returns in the future, it may challenge the reliability of Chia Tai Seed Industry's performance in previous years.
Currently, Chia Tai Seed Industry estimates the sales return rate for the current year based on the actual sales return rate from previous years and makes provisions for sales returns to offset the corresponding revenue and costs.
In fact, due to the special operating characteristics of the seed industry, such &#34;estimates&#34; are prone to deviation.
The main operating period for corn seeds is from October of the current year to September of the following year, while the conventional concentrated return season for the industry is from June to August each year, which has a clear misalignment with the accounting year. Additionally, agriculture is easily affected by uncontrollable factors such as climate and pests, making it difficult to accurately predict the actual return rate
Xinfeng noticed that Chia Tai Seeds had significantly reduced its performance forecast for the first half of 2025 due to deviations in accounting estimates.
According to disclosures, when Chia Tai Seeds prepared its semi-annual report in August 2025, it estimated the return volume based on information available at the time, as some distributors had not yet completed returns. However, subsequent actual counts revealed that the true return volume was significantly higher than the estimated value.
As a result, Chia Tai Seeds had to adopt a retrospective restatement method to make substantial corrections to its financial statements for January to June 2025.
Among these, operating income was retrospectively adjusted down by 7.7472 million yuan, a decrease of 7.96%; net profit was adjusted down by 4.0887 million yuan, a reduction of 25.51%.
Although Chia Tai Seeds emphasized that this error was due to &#34;differences in accounting judgment&#34; and did not involve financial fraud, the financial vulnerability determined by the cross-period return mechanism has been exposed.
At the critical moment of sprinting towards the Beijing Stock Exchange, such a high proportion of profit retrospective adjustments undoubtedly cast a shadow over Chia Tai Seeds' performance quality. The agricultural characteristic of &#34;relying on the weather&#34; combined with the commercial practice of cross-period returns leads to fluctuations in its financial performance.
How to ensure the reliability of accounting estimates has become an unavoidable issue on Chia Tai Seeds' path to listing.
<h2>Increased Profit Without Increased Revenue</h2>
Looking back at Chia Tai Seeds' performance trajectory over the past three years, it resembles a &#34;history of setbacks&#34; in the difficult game between costs and the market.
In 2023, affected by factors such as tight supply of upstream seed production land, seed production costs rose sharply, directly squeezing profit margins, resulting in a year-on-year decline of 6.61% in net profit attributable to the parent company; in 2024, Chia Tai Seeds proactively reduced its seed multiplication and production technical service business, coupled with downward pressure on corn spot prices, leading to further declines in both revenue and profit.
By 2025, with a decrease in seed production costs and expansion in the two core production areas of East China and the Huang-Huai-Hai region, Chia Tai Seeds' performance showed a divergence of &#34;increased profit without increased revenue.&#34; The annual revenue reached 361 million yuan, a slight year-on-year decrease of 5.12%; however, the net profit attributable to the parent company reached 91 million yuan, an increase of 11.85% year-on-year against the trend.
This time, it was the result of Chia Tai Seeds proactively adjusting its accounting estimation strategy.
On the revenue side, Chia Tai Seeds raised the estimated return rate for the period based on the actual return situation from the previous sales season, objectively lowering the revenue recognized in the current period; on the profit side, the overall decrease in seed production costs and the increase in core product volume released more profit space.
However, this performance based on &#34;estimates&#34; still faces uncertainties. If the actual return volume in the future exceeds expectations, the recognized profits may still be subject to reduction.
This potential fluctuation in fundamentals has attracted regulatory attention. The Beijing Stock Exchange, in its inquiry letter, required Chia Tai Seeds to explain whether there is a risk of continued performance decline and to provide sufficient risk warnings.
In response, Chia Tai Seeds provided a relatively optimistic expectation: as the overall seed production area in the industry shrinks, it is expected that the prices of new season corn seeds will remain stable and the production and sales rate will not decrease, based on this, the gross profit margin is expected to stabilize, and the probability of further performance decline is relatively low
However, Charoen Pokphand Seeds also admits that if the market conditions and competitive landscape change unfavorably in the future and they fail to respond effectively, in extreme cases, operating income, net profit, and other performance metrics may still face a risk of decline exceeding 50% or even losses.
In fact, the uncertainty of performance has always been a difficult question for seed companies when attempting to go public.
In 2023, Kangnong Seeds, which is also in the seed industry, faced a delay in review during its first attempt to list on the Beijing Stock Exchange. At that time, one of the core concerns of the regulatory authorities was whether the performance growth of Kangnong Seeds would be sustainable as it expanded into more competitive regional markets under its existing operational capabilities.
Whether it is the financial data vulnerability brought about by the cross-period return mechanism or the performance halving crisis that may be triggered in extreme cases, these are hard battles that Charoen Pokphand Seeds must confront. How to demonstrate the certainty of performance and resilience to risks to regulators and investors in an industry that &#34;relies on the heavens for food&#34; may be the key to whether it can successfully open the door to the capital market

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