2B yuan financing can't buy an annual report: The suspension suspense behind Mirui's $14.8 million prepayment | Financial report anomaly insight

This newspaper (chinatimes.net.cn) reporter Zhao Wenjuan and You Na Beijing report

On April 2, 2026, MiRui (02629.HK) issued an announcement disclosing the core details behind the trading halt: during the audit of its 2025 annual report, KPMG found 14 prepayment items totaling approximately US$14.8 million. Of this, about US$9.5 million had already been refunded by the relevant service providers, and the remaining approximately US$5.3 million related to prepayments for work that had been completed or was in progress. The company also announced the establishment of an independent investigation committee and the appointment of a law firm and professional institutions to assist in the review.

Just the previous day, on April 1 at 9:00 a.m., this listed biotech company—still less than a year old—was officially suspended by the Hong Kong Exchanges and Clearing (HKEX) for failing to publish its audited annual report on time. The US$14.8 million “audit question” instantly became a market focus. This 18A newcomer that only listed on the Main Board of the Stock Exchange of Hong Kong on May 23, 2025, had been listed for less than a year and, due to “annual report delays,” stepped onto the red line for a trading halt. Along with Noah Health, it once again pushed financial compliance anxiety in the tumor early screening “early detection” track to the forefront.

This is not an isolated case. On the same day, more than 20 Hong Kong-listed companies suspended trading for the same reason. With the auditing environment being tightened across the board, MiRui’s suspension looks more like a snapshot of a systemic compliance stress test.

US$14.8 million—what was checked

Starting at 9:00 a.m. on April 1, MiRui shares were suspended from trading on the Hong Kong Stock Exchange. In the company’s announcement, it stated that because the auditors needed more time to assess certain prepayment items the company paid to service providers and suppliers, it was unable to publish the 2025 annual results before the March 31 deadline. Under the HKEX Listing Rules, failure to publish an audited annual report on time triggers a mandatory trading halt; if the suspension lasts more than 18 months, the company will face the risk of delisting.

The next day, MiRui’s announcement disclosed more details: during the audit process, KPMG identified 14 prepayment items involving payments the company made to service providers and suppliers, most of which occurred in the second half of 2025, with a total value of approximately US$14.8 million. As of the date of the announcement, about US$9.5 million had been refunded by the relevant service providers and suppliers, and the remaining approximately US$5.3 million constituted prepayments related to work that had been completed or was in progress. Meanwhile, MiRui’s board approved the establishment of an independent investigation committee, led by two independent non-executive directors, Lin Qianli and Fang Xiao, and it appointed a law firm and professional investigation institutions to assist with the review. The company emphasized that the transactions requiring additional review have no direct relationship with the company’s R&D, commercial operations, or related technology platforms. The company also noted that its normal day-to-day operations are progressing and have not been affected.

( Screenshot from the company’s latest announcement )

It is worth noting that MiRui is not the only company that “triggered trouble” during the annual report season. Data shows that on April 1, more than 20 Hong Kong-listed companies collectively suspended trading because they failed to publish their 2025 annual results on time. The list includes Comwell Bio-B, Contemporary Real Estate, Shanghai Xiaonan Guo, Shenghe Bio-B, Sino Grandness Development Group, among other industry players. Behind this phenomenon is a significant tightening of the audit environment for Hong Kong-listed companies. Affected by events such as PwC resigning from auditing assignments for some Hong Kong enterprises, the “Big Four” audit firms—including KPMG—generally increased their scrutiny requirements for audit compliance. Their efforts to verify key financial line items such as prepayments and related-party transactions were clearly strengthened. Industry insiders noted that audit firms no longer limit themselves to matching contracts and transaction statements; instead, they have turned to more stringent cross-border, penetration-style confirmations. Prepayment review has become one of the common reasons leading to annual report delays.

MiRui’s trading halt inevitably led the market to draw comparisons with Noah Health. Noah Health, once the “No. 1 early screening stock” with a market value exceeding HK$30 billion, faced challenges from short-selling institutions in 2023 regarding alleged sales fraud. Afterwards, its auditor Deloitte refused to issue an opinion on the annual report, directly pointing to the authenticity of revenue. It was ultimately compulsorily delisted in October 2025. However, many market participants pointed out that the two companies have fundamental differences. Noah Health’s core issue was “revenue authenticity,” which constitutes malicious financial fraud involving fabricated performance; while MiRui’s current review focuses on the expenditure-side item of “prepayments.” This is an operational prepayment by the business—only delayed because, under a context of stricter regulation, the audit firm requires more time to verify materials—so its nature is entirely different.

One detail worth asking is why MiRui had project cancellations and prepayment refunds totaling nearly a million US dollars. The explanation the company provided was “some projects were canceled.” This raises deeper questions: the company listed in May 2025 and raised HK$1.09B. After listing, the project schedule accelerated sharply. Why were multiple new projects canceled within just half a year? Was it due to overly careless approval of project initiation, or did major undisclosed changes occur in the external business environment? Perhaps these are the key doubts targeted by the 14 transactions that the independent investigation committee needs to review in depth.

A gap between HK$2.0 billion in financing and a market cap of HK$3.7 billion

Before the trading halt controversy, MiRui’s 2025 interim performance had plenty of bright spots. In the first half of the year, revenue was US$10.47 million, up 9.4% year over year; gross profit was US$7.10 million, up 51.1%; loss attributable to equity shareholders was US$28.35 million, significantly narrowed from US$44.45 million in the same period last year; and the gross margin increased from 49% to 67.6%. The growth in performance was mainly driven by the performance of early detection and precision multi-omics businesses. Its core products GASTROClear™ and LUNGClear™ performed strongly in sales within the Asian cancer diagnosis market.

However, viewed over a longer horizon, MiRui’s financial position shows clear fluctuations. In 2021, due to a sales peak for its COVID testing product Fortitude, full-year revenue reached US$60.6498 million. After the pandemic improved, revenue plummeted to US$17.7590 million in 2022, rebounded to US$24.1850 million in 2023, and fell again to US$20.2827 million in 2024. Meanwhile, losses continued to widen. From 2022 to 2024, the company recorded losses of US$56.2027 million, US$69.5693 million, and US$92.2147 million, respectively, for cumulative losses of approximately US$218 million over three years. In the first half of 2025, losses narrowed, but they were still at a high level of nearly US$30 million.

What is intriguing is that just three months before the trading halt, MiRui was staging a “glorious moment” in the capital market. On January 29, 2026, the company completed a placing of new shares, raising approximately HK$711 million. The placing price was HK$32.5 per share, which was nearly 40% above the IPO issue price of HK$23.30 per share in May 2025. In addition to the HK$1.09B raised in the IPO, MiRui’s cumulative financing over 8 months since listing totaled nearly HK$2.0 billion—quite eye-catching among Hong Kong biotech companies in recent years. However, that impressive financing performance could not support the share price. As of the trading day immediately before the trading halt (March 31), MiRui’s closing share price was HK$12.41, and its total market cap was approximately HK$3.7 billion—nearly half of the market cap of more than HK$8 billion at the beginning of listing. More severely, this market cap had already fallen well below the HKEx Stock Connect daily market cap floor of HK$5.0 billion for Hang Seng Composite Small Cap stocks. This meant the company had entirely missed out on funding from Mainland investors through Stock Connect, and future financing and trading liquidity would face further pressure.

From the perspective of the product pipeline, MiRui has indeed built differentiated technology barriers in the miRNA liquid biopsy field. As of June 30, 2025, the company had its core product GASTROClear™ (the world’s first approved IVD molecular diagnostic product for gastric cancer screening), two other commercialized products LUNGClear™ and Fortitude™, and six candidate products in preclinical stages. GASTROClear™ was approved for launch in Singapore in May 2019. In October 2025, it obtained China’s NMPA Class III medical device registration certificate, becoming the first non-invasive testing product in China specifically for gastric cancer early screening indications. In March 2026, the company successfully won a bid for a gastric cancer screening and early intervention project in Lianxi District, Jiujiang City, Jiangxi Province, marking that the core product has formally entered the implementation stage in the China market. However, a technological barrier does not automatically equate to commercial success. Under the current highly regulated environment for Hong Kong-listed companies, financial authenticity and internal control compliance have become more of a survival baseline for companies than pipeline stories or the pace of commercialization.

KPMG’s conclusions—these are the real variables

The biggest uncertainty regarding MiRui’s resumption of trading lies in the final conclusion of the auditors’ “additional assessment.” Zeng Siqiao, a securities litigation expert and lawyer at Hunan Kuangzhen Law Firm, pointed out that “for certain key financial data, there must be some differences between the auditors’ and the company’s audit positions, which may in turn affect the true and reliable nature of MiRui’s full-year performance data.” Bai Wenxi, deputy chairman of the China Enterprise Capital Alliance, analyzed that “the biggest uncertainty for the resumption is whether the auditors’ conclusion is merely accounting treatment adjustments, or whether more serious internal control failures or evidence of fraud are found. ‘If it is the latter, it may trigger HKEX disciplinary investigations, or even referral to the CSRC; then the path to resumption of trading would be far from clear. In addition, whether the company can maintain operational funding during the suspension (especially right after completing a placing, when funding adequacy should be an advantage) is also key.’”

As of the time of this release, MiRui’s independent investigation is still ongoing, and KPMG’s audit work has not yet been completed. On the positive side, after the event, MiRui proactively established an independent investigation committee. This is not a mandatory requirement under HKEX regulatory rules, and it reflects the company’s determination to push for an early resumption of trading. However, neither the independent investigation nor the audit has yet been finalized. The trading halt status continues, and investors’ patience is limited. Under HKEX rules, trading halted for more than 18 months will result in delisting. “The prerequisite for resumption is that MiRui must publish the audited annual report, and the auditors must no longer issue a qualified opinion or a disclaimer of opinion on the prepayment matters; it must show that the prepayment items have commercial substance, are recoverable, and that internal control remediation has been completed. If there are any funds occupation or related-party transactions involved, recovery and rectification disclosures must be completed.” Bai Wenxi emphasized that whether these conditions are met will become the core variable determining whether MiRui can resume trading in the short term.

Regarding the above issues, the reporter of Huaxia Times attempted to contact MiRui for an interview, but as of the time of this release, no response had been received.

Editor-in-charge: Jiang Yuqing Chief editor: Chen Yanpeng