HUAKANG(SH:605077) Bei Ke Cai Jing·2025-12-03 06:05Core Viewpoint - The acquisition of Henan Yuxin Sugar Alcohol Co., Ltd. by Huakang Co., Ltd. has been terminated after more than a year of efforts, highlighting the company's challenges in maintaining profitability amid a changing market environment [1][2][4]. Acquisition Termination - Huakang Co. announced the termination of the acquisition of Yuxin Sugar Alcohol, which was initially planned through a combination of share issuance and cash payment [2]. - The acquisition aimed to enhance Huakang's competitive position in the domestic and international xylitol market, leveraging synergies in raw material supply, production, and sales channels [3]. - The decision to terminate the acquisition was influenced by significant changes in the market environment, including regulatory adjustments and increased competition, which diminished the expected benefits of the acquisition [4][5]. Financial Performance - Huakang's revenue showed a slight increase of 0.9%, rising from 2.783 billion to 2.808 billion yuan from 2023 to 2024, while net profit plummeted by 27.82% to only 268 million yuan [5]. - In the first three quarters of 2025, the company reported revenue of 2.959 billion yuan, but net profit decreased by 9.91% to 168 million yuan, indicating a situation of "increased revenue without increased profit" [5]. Future Development Path - Following the acquisition failure, Huakang is advised to focus on core business development, optimizing existing products, and enhancing cost control [6]. - The company is advancing a significant project in Zhoushan, aiming to produce 200 million tons of corn deep-processing health food ingredients, which is expected to drive revenue growth despite initial profit erosion due to high fixed costs and underutilization [6][7]. - Long-term success will depend on the ability to align new production capacity with health consumption trends and effectively manage costs to achieve economies of scale [7].