HUAKANG(SH:605077) Chang Jiang Shang Bao·2025-08-18 05:02Core Viewpoint - Huakang Co., Ltd. (605077.SH), known as the "first stock of xylitol," is facing scrutiny over its significant acquisition of Henan Yuxin Xylitol Co., Ltd. for 1.098 billion yuan, which raises questions about the valuation and financial health of both companies [1][2][6]. Financial Overview - As of the end of Q1 2025, Huakang's interest-bearing debt is approximately 2.8 billion yuan, while its cash and transferable large-denomination certificates total around 1.4 billion yuan [1][9]. - The company's revenue has doubled from 2020 to 2024, with figures of 1.32 billion yuan, 1.594 billion yuan, 2.2 billion yuan, 2.783 billion yuan, and 2.808 billion yuan, but net profit has fluctuated around 300 million yuan [9]. Acquisition Details - The acquisition involves a payment structure of two-thirds in shares and one-third in cash, with a total transaction price of 1.098 billion yuan, reflecting a valuation increase of about 100% [1][6]. - The target company, Yuxin Xylitol, reported a net loss in 2023 but is projected to turn a profit exceeding 100 million yuan in 2024, raising concerns about the sudden change in financial performance [1][7][8]. Market Position and Strategy - Huakang aims to strengthen its position as a leading player in the domestic and international xylitol market through this acquisition, leveraging synergies between the two companies [1][8]. - The company is recognized as a major producer of functional sugars and aims to enhance its production capabilities and market competitiveness through this strategic move [8]. Client and Revenue Concerns - Yuxin Xylitol's major client, Futen Pharmaceutical, is currently facing a debt crisis, which casts doubt on the stability of Yuxin's revenue streams [7]. - The financial performance of Yuxin Xylitol shows a significant revenue increase from 717 million yuan in 2023 to 919 million yuan in 2024, but the legitimacy of this turnaround is questioned [7][8].