(Yicai) March 18 -- Shares in Qinghai Spring Medicinal Resources Technology plunged by the exchange-imposed limit today after the traditional Chinese medicine maker was exposed on state broadcaster CCTV’s annual name-and-shame 315 show of illegally touting its pricey rice wine as having medical properties, prompting the securities watchdog to launch a probe.

Qinghai Spring’s share price [SHA:600381] plummeted 10 percent to end the day at CNY5.91 (USD82 cents). The stock has lost 23 percent of its value since the start of the year.

Qinghai Spring exaggerated the health benefits of its Tinghua liquor in advertisements, claiming that the alcohol can boost immunity and prevent aging, CCTV said during its special TV program broadcast on World Consumer Rights Day. In China, it is illegal to advertise that alcoholic drinks have medical properties.

The country’s securities watchdog has dispatched a special team to investigate Qinghai Spring and the Xining-based company could be penalized, Qinghai Spring said on March 16.

Bottles of Tinghua have since been pulled from major e-commerce platforms Taobao and JD.com.

Tinghua, rolled out by Qinghai Spring in 2020, costs CNY5,860 (USD814) per bottle for the standard edition and CNY58,600 (USD8,141) for the deluxe version. This is several times more expensive than Moutai, the country’s most famous baijiu.

And the company, whose main product is herbal supplements, has been reaping the dividends from its new product. Its revenue from booze nearly quadrupled in 2022 from the year before to CNY93.6 million (USD13 million), accounting for 58 percent of total revenue.

But the firm is still loss-making. Qinghai Spring is bracing for net losses of between CNY222 million (USD30.8 million) and CNY287 million last year, which is an improvement on 2022’s CNY288 million deficit, but is still the company’s fourth straight year of losses.

Editors: Dou Shicong, Kim Taylor