Bailout gone wrong! A listed lighting company is embroiled in a 38.07-million-yuan factoring dispute.

On the evening of September 16, Xiaosong Co., Ltd. issued an announcement disclosing a factoring contract dispute case, in which the company was named as a defendant due to its guarantee obligations related to its equity‑held affiliate, Guohai Construction Co., Ltd.

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The company has received legal documents including a “Summons” and a “Notice of Response.” The court has accepted the factoring contract dispute case between Plaintiff Jiangxi Guokong Commercial Factoring Co., Ltd. (hereinafter referred to as “Jiangxi Guokong Factoring”) and Defendants Guohai Construction Co., Ltd. (hereinafter referred to as “Guohai Construction”), Guangdong Xiaosong Technology Co., Ltd., Jiang Xu, and others. The amount in dispute is RMB 38.0733 million, and the company, as Defendant No. 3, is required to assume joint and several liability for repayment.

According to the announcement, in September 2025, Xiaosong Co., Ltd. entered into a “Guarantee Agreement” with Jiangxi Guokong Factoring, providing a guarantee for the debts under the master agreement signed between Guohai Construction and Jiangxi Guokong Factoring, with a maximum guarantee amount of RMB 35 million. Following the loan’s maturity, Guohai Construction failed to repay on time, prompting the creditor to initiate legal proceedings.

Notably, the announcement revealed a key development: Guohai Construction and Jiangxi Guokong Factoring signed a “Repayment Agreement” on September 11, 2026, under which Guohai Construction has already paid the first installment of RMB 3 million as agreed. According to the terms of the agreement, upon receipt of this full payment, Jiangxi Guokong Factoring is obligated to file a motion with the court within three business days to withdraw the lawsuit against Xiaosong Co., Ltd.

This means that if the repayment agreement is successfully fulfilled, the company stands to be released from this litigation.

In addition, the company issued another announcement disclosing overall overdue guarantee matters. As of the date of disclosure, the cumulative amount of overdue guarantees by the company and its controlled subsidiaries reached RMB 231 million, accounting for 30.41% of the company’s most recent audited net assets, all stemming from overdue loans extended to Guohai Construction.

The company stated that it is actively urging Guohai Construction to expedite the confirmation of outstanding receivables, pursue litigation for debt collection, and dispose of assets, aiming to accelerate the recovery of funds to settle both overdue liabilities and guaranteed obligations. Furthermore, the company will promptly implement recovery measures and enforce counter‑guarantee obligations to minimize losses to the listed company.

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It is worth noting that in December 2025, Xiaosong Co., Ltd. announced its intention to sell a 51% stake in its wholly owned subsidiary, Guohai Construction, to Nanchang Xinjuyao Technology Co., Ltd. for RMB 150 million. Upon completion of this transaction, Xiaosong Co., Ltd. will retain a 49% stake in Guohai Construction, and Guohai Construction will no longer be included in the company’s consolidated financial statements.

In terms of performance, Guohai Construction’s business scope encompasses construction project execution, intelligent building system design, and installation, modification, and repair of special equipment. In fiscal year 2024 and during the first three quarters of 2025, the company reported net losses of RMB 47.169 million and RMB 31.1615 million, respectively.

According to available information, Xiaosong Co., Ltd. was founded in 2000 and listed on the Shenzhen Stock Exchange in January 2014. It is a specialized manufacturer in the fields of emergency lighting and electrical appliances, focusing on the research, production, and sales of rechargeable emergency lighting fixtures and rechargeable AC/DC dual‑mode fans.

In July this year, the board of directors of Xiaosong Co., Ltd. approved the election of Mr. Liu Lingshuang as Chairman of the company’s seventh board of directors, who also serves as the company’s actual controller. Notably, Mr. Liu Lingshuang was born in 1992 and previously had no background in the LED lighting industry; he additionally controls an XR matrix ecosystem technology application and digital content service provider that has participated in producing numerous short- and medium-length dramas.

In the first half of 2026, Xiaosong Co., Ltd. reported operating revenue of RMB 425 million, down 24.6% year over year. Net profit attributable to shareholders widened from a loss of RMB 34.93 million in the same period last year to a loss of RMB 58.80 million, further expanding the deficit.

Among these results, the home appliance segment was particularly affected by intensifying market competition, generating RMB 293 million in revenue, a 34.41% year-over-year decline. Revenue from rechargeable lighting fixtures stood at RMB 72.72 million, down 30.75%, while revenue from rechargeable AC/DC fans totaled RMB 124 million, a 45.91% drop. These businesses faced reduced orders due to macroeconomic conditions, climate factors, and competitive pressures.

Furthermore, in September 2025, the company increased capital in Songguo Culture to expand into the film and television sector. During the reporting period, the film and television business generated RMB 132 million in revenue, accounting for 31.02% of total revenue.