When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.

Caixin Media reported on December 3rd (Reporter Wu Weiling), just as one wave subsided, another wave rose again. Following the auction of part of the controlling shareholder's family's equity, ST Jiajia (002650.SZ) was once again urged by independent directors to conduct a comprehensive review and improvement of the internal control system.

This evening, ST Jiajia announced that due to issues such as unreimbursed related party transaction losses and inventory loss risks, the company received a letter of urging from independent directors Yao Lushi and Tao Hao.

Previously, ST Jiajia and its wholly-owned subsidiary Jiajia Food Group (Ningxia) Biotechnology Co., Ltd. (referred to as 'Jiajia (Ningxia)') entrusted related parties Ningxia Cocomei Bioengineering Co., Ltd. (referred to as 'Ningxia Cocomei') and Ningxia Yumit Starch Co., Ltd. (referred to as 'Ningxia Yumit') to process and produce monosodium glutamate. Due to the failure of Ningxia Cocomei and Ningxia Yumit to produce monosodium glutamate in accordance with the contracted production standards, excessive raw material consumption occurred, resulting in a total processing loss of 67.2468 million yuan in the first quarter of 2023 and 2024. ST Jiajia recognized this loss as receivables from Ningxia Cocomei and Ningxia Yumit, and recorded it as other receivables.

The company's controlling shareholder, Yang Zhen, Ningxia Cocomei, and Ningxia Yumit had promised to pay the aforementioned compensation in installments or in a lump sum no later than November 30, and to pay the corresponding interest. However, as of the due date, ST Jiajia had not received the aforementioned payment.

ST Jiajia stated that today it received an 'Explanatory Letter' issued by Yang Zhen, explaining the reasons for not being able to pay the compensation and interest on time, promising to continue to raise funds to repay the aforementioned compensation, but did not specify a detailed repayment plan and deadline.

Caixin Media reporters noted that Ningxia Cocomei and Ningxia Yumit have entered the stage of bankruptcy liquidation. According to the announcement from the Tongguanxia People's Court in Ningxia, the first creditor's meeting for the bankruptcy liquidation of Ningxia Cocomei and Ningxia Yumit was held on October 29. In addition, Yang Zhen himself has been listed as a dishonest person subject to enforcement.

In addition to the aforementioned debts, Jiajia (Ningxia) also has inventory stored at Ningxia Kekemei. As of the end of the third quarter, the net book value of the inventory was 71.2941 million yuan (unaudited). ST Jiajia stated that due to labor disputes and bankruptcy liquidation issues at Ningxia Kekemei, there is uncertainty about whether the inventory can be returned or realized, while some raw materials may have expired, deteriorated, or been damaged.

In response, the independent director urged Yang Zhen, Ningxia Kekemei, and Ningxia Yumi to take effective measures to ensure timely return of funds; at the same time, regarding the inventory management issues mentioned above, urged the company to consider legal measures, including but not limited to filing lawsuits or arbitration, to recover company assets and protect company interests.

Furthermore, considering the internal control audit report for 2023 that was issued with a disclaimer of opinion, the independent director requested the company to conduct a comprehensive review and improvement of the internal control system, strengthen internal audit functions, enhance management and staff's awareness of internal controls, and ensure the company's operational efficiency and compliance.