On October 21, Nanjing Wondux Environmental Protection Technology Corp., Ltd. (688178.SH) announced that it had received a subpoena from the People's Court of Caofeidian District in Tangshan City. The lawsuit, filed by Dongjiang Environmental Company Limited (002672.SZ), concerns the performance of a counter-guarantee obligation, with an amount in dispute of approximately 17.78 million yuan. The central issue of the case revolves around the disposal of the 16% equity stake held by Nanjing Wondux in a joint-stock company, raising concerns in the capital market regarding the guarantee chain risks within the environmental protection industry. An insider from Nanjing Wondux stated during an interview that the lawsuit would not impact the company's overall financial operations or normal functioning, and the current matters are mainly being addressed at the equity level of the joint-stock company.

Public information indicates that the dispute stems from financing guarantee arrangements related to Nanjing Wondux's joint-stock company. Nanjing Wondux (Caofeidian) Environmental Technology Co., Ltd. (hereinafter referred to as "Caofeidian Environmental") is primarily engaged in hazardous waste management, with an equity structure of 80% held by Dongjiang Environmental, 16% by Nanjing Wondux, and 4% by Guantuo Technology (Hebei) Co., Ltd. In December 2021, Caofeidian Environmental applied for a loan of 200 million yuan from the Tangshan branch of HSBC, of which Dongjiang provided a joint liability guarantee for 160 million yuan, while Nanjing Wondux provided a pledged counter-guarantee against its 16% equity in Caofeidian Environmental, corresponding to a guarantee ratio of 16%. This proposal had previously been approved by the board of directors of Nanjing Wondux.

After the loan matured, Caofeidian Environmental struggled to repay the entire amount due to operational difficulties. Affected by intensified competition in the hazardous waste industry, the company's scale of collection and transport since production fell short of expectations, leading to a decline in disposal prices and cash flow issues. To date, Caofeidian Environmental has drawn a total of 147 million yuan from the loan but has only repaid approximately 36.54 million yuan, leaving a principal amount of 110 million yuan and related interest unpaid.

Financial data shows that Caofeidian Environmental incurred a loss of 22.25 million yuan in 2024, with a continued loss of 6.29 million yuan in the first quarter of 2025. As the guarantor, Dongjiang Environmental has fulfilled its compensation obligation, having paid 111 million yuan to HSBC, covering all remaining principal and 746,800 yuan in interest. Subsequently, Dongjiang sent a letter to Nanjing Wondux, requesting that it assume the counter-guarantee responsibility of 16%, amounting to 17.78 million yuan, but Nanjing Wondux failed to make the payment on time. In this lawsuit, Dongjiang explicitly requests that the court order the auction or sale of the 16% and 4% equity stakes in Caofeidian Environmental pledged by Nanjing Wondux and Guantuo Technology, with priority for their claims on the proceeds, while also requiring the defendant to bear the litigation costs.

A related person from Dongjiang stated: "Caofeidian Environmental is currently operating normally, and the litigation dispute with Nanjing Wondux has not caused any disruption to the daily operations of the joint-stock company." Nanjing Wondux expressed that it would actively prepare for the defense. If Nanjing Wondux fulfills its counter-guarantee obligation and Dongjiang realizes its pledge rights, any surplus would belong to Nanjing Wondux, and in case of a shortfall, Nanjing Wondux would not have to bear additional counter-guarantee responsibilities. After fulfilling the counter-guarantee obligation, Nanjing Wondux would establish receivables against Caofeidian Environmental and actively seek recovery from it. Previously, Nanjing Wondux had made adequate provisions for impairment loss on its long-term equity investment in Caofeidian Environmental following prudence principles.