5-Day Lightning War: From 100 Million Disappearing to CSRC Filing, Xilinxmen's Major Shareholder ATM Dream Shattered

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Topic: April A-shares "Slow Bull Accumulation" Geopolitical Fluctuations Do Not Change the Mid-term Outlook

On April 1st, Xilinmen Health Sleep Technology Co., Ltd. (hereinafter referred to as “Xilinmen”) released four heavy announcements in succession, thoroughly exposing the internal crisis hidden within this mattress industry leader under the spotlight of the capital market.

The company is under investigation by the China Securities Regulatory Commission (CSRC). The actual controller is under investigation by the CSRC. Shares held by the controlling shareholder and its concerted parties are judicially frozen. As the plaintiff, Xilinmen filed a lawsuit against the controlling shareholder and its concerted parties, claiming nearly 480 million yuan in damages.

Each of the four announcements is enough to cause investors to be alarmed.

The trigger for all this can be traced back to March 27. On that day, Xilinmen disclosed that 100 million yuan of funds from its subsidiary had been illegally transferred by internal personnel. On the same day the announcement was issued, the Shanghai Stock Exchange swiftly issued a regulatory work letter, requiring the company to conduct a comprehensive self-examination.

Once the regulatory “radar” was activated, it precisely pinpointed the problem. Under strong regulatory pressure, Xilinmen launched an internal self-check, and within just a few days, a more shocking truth surfaced: the controlling shareholder was suspected of using complex methods such as loan transfers and factoring financing to treat the listed company as their personal “cash machine.” Non-operating funds occupied reached 190 million yuan, far exceeding the regulatory red line.

From the Shanghai Stock Exchange’s issuance of the regulatory work letter on March 27 to the CSRC’s formal investigation on April 1, only five days passed. From discovering the problem to urging self-examination, from revealing the truth to initiating accountability, the regulatory authorities tore open this company’s internal control black hole with lightning speed.

This company, once marketed with the slogan “Protecting the Spine,” now finds itself pushed to the brink of a risk warning cliff due to internal governance “collapse.”

Lawsuits, investigations, and freezes: the “5-day lightning campaign” from work letter to investigation

The announcement on April 1st was like an open “trial” for Xilinmen.

The information disclosed that day showed that both the company and its actual controller, Chen Ayu, received “Notice of Investigation” from the CSRC, both pointing to “suspected information disclosure violations.” This means that the regulatory authorities had already obtained clues sufficient to initiate investigation—this is not a simple inquiry letter but a formal “knock on the door” for investigation.

But what is truly remarkable is the astonishing efficiency behind this.

Rewinding to March 27. On that day, Xilinmen announced that 100 million yuan of funds from its subsidiary Xitu Technology had been illegally transferred. Almost simultaneously, the Shanghai Stock Exchange’s regulatory work letter had already been delivered to the company, requiring a comprehensive self-examination. There was hardly any time gap between problem exposure and regulatory intervention. The SSE’s quick response was like a stone thrown into a calm lake, triggering a series of chain reactions.

Under strong regulatory urging, Xilinmen was forced to conduct an internal self-check. Within just a few days, the hidden issue of controlling shareholder funds occupation behind complex transactions was uncovered layer by layer. From loan transfers to factoring financing, a multi-billion-yuan利益输送链 gradually became clear.

And the CSRC’s action was even more of a “lightning strike.” On March 27, the SSE issued a work letter, and by April 1, the CSRC officially launched an investigation—only five days apart.

What’s more eye-catching is that the investigation and Xilinmen’s lawsuit against the controlling shareholder happened on the same day. On April 1, Xilinmen, as the plaintiff, sued the controlling shareholder Zhejiang Huayi Intelligent Manufacturing Co., Ltd., the concerted party Huahan Investment, and the actual controller Chen Ayu, in court. The total involved amount reached 478 million yuan—this figure is 1.48 times the company’s net profit attributable to shareholders in 2024.

Details disclosed in the complaint are even more shocking. The controlling shareholder and related parties are suspected of encroaching on company interests through two modes: one is loan transfer, where the controlling shareholder used company loans for transfer business, occupying 72 million yuan of Xilinmen’s funds that have not been repaid; the other is factoring financing, where the controlling shareholder applied for financing from banks under the guise of suppliers, with funds ultimately flowing to the controlling shareholder and designated accounts, totaling over 406 million yuan. These funds, actually obtained by the controlling shareholder, impose payment obligations on Xilinmen. Due to some accounts payable maturing, Xilinmen has already paid over 63 million yuan to banks, and its subsidiary Shunxi has paid more than 54 million yuan.

Behind these figures lies an unsettling fact: the controlling shareholder may regard the listed company as their personal “cash dispenser,” and the “surgical knife” for draining the company’s assets is hidden within complex financing arrangements and related-party transactions. These operations likely bypassed proper approval procedures and failed to fulfill disclosure obligations—precisely the reason for the CSRC’s investigation for “suspected information disclosure violations.” The swift regulatory intervention exposed these hidden operations within days.

Meanwhile, the shares held by the controlling shareholder and its concerted parties were also judicially frozen. The actual controller Chen Ayu’s 8.107 million shares were fully frozen, accounting for 100% of his holdings; Zhejiang Huayi was frozen for 8.11M shares, Huahan Investment for 8.4 million shares. Although these frozen shares account for only about 14.69% of the total holdings of the controlling shareholder and its concerted parties, the fact that the actual controller’s shares are “completely frozen” sends a clear signal: this crisis is no longer just a matter of accounts but a serious legal dispute.

1 billion yuan mysteriously missing: the first domino under regulatory radar

On March 27, a notice became the key “first domino” to topple this crisis.

That day, Xilinmen disclosed a baffling piece of news: its subsidiary, Xitu Technology, had its bank account funds illegally transferred by internal personnel, with a total amount of up to 100 million yuan.

Note, this is not embezzlement or occupation, but “illegal transfer”—in simple terms, someone directly “moved” the company’s money away. Xilinmen had applied for criminal investigation with the police on March 26, meaning this was no longer an internal dispute but a case entering criminal investigation.

It is worth noting that Xilinmen froze related bank accounts, protecting approximately 900 million yuan. The 100 million yuan transferred, plus the 900 million yuan frozen, means over 3.16M yuan involved or frozen. What does this number imply? It accounts for 26.54% of Xilinmen’s latest audited net assets and 42.69% of its cash and cash equivalents—meaning over 40% of the company’s cash on hand has either disappeared or been locked.

This seemingly isolated incident of subsidiary funds being transferred could have been treated as an “isolated case.” But the regulatory radar was far more sensitive than imagined. On the same day the announcement was made, the SSE’s regulatory work letter had already been sent to Xilinmen, involving the company itself, directors, senior executives, controlling shareholders, and the actual controller.

This regulatory work letter became the “fuse” that ignited subsequent events. Under strong regulatory pressure, Xilinmen had to conduct an internal self-examination. As the investigation deepened, the long-term occupation of funds by the controlling shareholder gradually surfaced. From March 27 to April 1, in just a few days, a network involving nearly 500 million yuan of利益侵占 was uncovered layer by layer.

The CSRC’s follow-up speed further demonstrated its “zero tolerance” stance. While Xilinmen was conducting internal checks, the CSRC had already initiated investigation procedures. On March 27, the SSE issued a work letter, and by April 1, the CSRC officially launched an investigation—forming a seamless regulatory chain. The rapid coordination between the exchange’s daily supervision and the CSRC’s investigation within five days is extremely rare in previous A-share regulatory practice.

Beneath the iceberg: external exposure under high-pressure regulation

If the transfer of subsidiary funds was an “accident,” then the occupation of funds by the controlling shareholder is a “long-standing problem.” The push to make these issues public was driven by the regulatory high-pressure mechanism.

Under the supervision of the work letter, Xilinmen finally disclosed these “family secrets.” As of the announcement date on April 1, the non-operating funds occupied by the controlling shareholder and related parties totaled 190 million yuan. This amount exceeded 5% of Xilinmen’s latest audited net assets, triggering a mandatory “Special Treatment” (ST) warning.

Rules are clear: if the controlling shareholder and related parties fail to settle or rectify within one month, the company’s stock will be subject to other risk warnings. The one-month countdown has begun, and Xilinmen’s time is limited. The exposure of this issue is a direct result of the strong regulatory intervention forcing the company to “self-diagnose.” Without the regulatory work letter, these fund occupation problems might have continued to hide behind complex transactions indefinitely.

But that’s not all. The announcement also included an “unsaid” part: besides non-operating funds occupation, the controlling shareholder and related parties also have unapproved guarantees provided without review. The specific amount is not disclosed, only noting “subject to further investigation and final determination by regulatory authorities.” This suggests that the 190 million yuan occupation might not be the full extent, and the actual figure could change.

Audit risks are also present. The announcement explicitly warns that if the audit firm, due to this incident, issues a non-unqualified opinion on the company’s internal control over financial reporting as of December 31, 2025, or on the 2025 audit report itself, the company’s stock could be subject to other risk warnings or delisting risk warnings after the 2025 annual report is disclosed. In other words, besides the one-month ST risk, there is a heavier “Damocles sword” hanging over Xilinmen.

Looking back at Xilinmen’s recent performance, in 2024, the company’s revenue was 1.25B yuan, a slight increase of 0.59%, but net profit attributable to shareholders was only 322 million yuan, a sharp decline of 24.84%. Operating cash flow also dropped from 1.253 billion yuan to 787 million yuan, a decrease of 37.23%. While core business remains steady, internal governance cracks have already affected financial results. Now, with controlling shareholder draining assets, CSRC investigation, judicial freezes, and other negative factors, the challenges are formidable.

From a broader perspective, Xilinmen’s experience is not unique, but the speed of regulatory response has set a new record. The 2024 new “National Nine Articles” and supporting measures explicitly call for “enhancing the investment value of listed companies,” strengthen cash dividend regulation, link dividends with share reductions, and introduce ST arrangements for underperforming dividends. Meanwhile, the crackdown on capital occupation, illegal guarantees, and disclosure violations continues to intensify. Since the beginning of the year, several listed companies have been warned or investigated for controlling shareholder capital occupation. But cases like Xilinmen, where the problem was exposed and investigated within just five days, are still extremely rare.

The “tightening” of regulatory constraints is accelerating at an unprecedented pace. Any attempt to encroach on listed company interests through complex arrangements will face increasingly severe accountability. The regulatory “combination punch” formed by the March 27 work letter and April 1 investigation sends a clear signal: there will be no delay in cracking down on behaviors harming listed companies’ interests.

For Xilinmen, this crisis triggered by the regulatory work letter and escalated by investigation is both a painful “family shame” and a survival test. The company’s decision to sue its controlling shareholder is rare in A-share history and, to some extent, reflects management’s determination to cut ties with problematic shareholders and protect the company’s interests under regulatory pressure. But the reality remains: repaying 190 million yuan of occupation within a month is no easy feat. Whether the audit risk can be mitigated remains an open question.

（Source: 21st Century Business Herald）