Core Viewpoint - Hongjiu Fruit, known as the "first fruit stock," is facing delisting from the Hong Kong Stock Exchange after a series of financial and governance issues, including failure to disclose financial reports, stock suspension, and investigations into its executives [3][5]. Group 1: Company Background and Financial Performance - Hongjiu Fruit was founded in 2002 by Deng Hongjiu and Jiang Zongying, and it quickly rose to prominence in the high-end fruit market, becoming the largest fruit distributor in China by sales revenue in 2022 [3][4]. - The company went public on September 5, 2022, with an initial share price of HKD 40, achieving a market capitalization of nearly HKD 19 billion on its first trading day. In 2022, it reported a revenue increase of 46.7% to CNY 15.081 billion and a net profit surge of 397.95% to CNY 1.452 billion [3][4]. Group 2: Financial Troubles and Governance Issues - The turning point for Hongjiu Fruit occurred on March 20, 2024, when it was suspended from trading due to its inability to disclose the 2023 financial report, which was questioned by its auditing firm, KPMG. The firm raised concerns about a prepayment balance of approximately CNY 4.47 billion, with CNY 3.42 billion paid to new suppliers in Q4 2023, many of whom had low registered capital and no social insurance contributors [4][5]. - Following the suspension, the company failed to release its 2023 annual report and subsequent periodic reports. As of the suspension date, its stock price had dropped over 95% to HKD 1.74, with a market capitalization of approximately HKD 2.795 billion [4][5]. Group 3: Legal and Operational Challenges - In April 2025, Hongjiu Fruit announced that several executives, including Chairman Deng Hongjiu, were under investigation for alleged loan fraud and issuing false VAT invoices, leading to various criminal measures against them [5][6]. - The company has faced ongoing financial pressure, leading it to apply for restructuring and consider bringing in strategic investors to support its recovery plan. The resignation of three independent non-executive directors in May 2025 left the company without independent oversight [6][7]. Group 4: Expert Analysis and Future Outlook - Experts suggest that the core issues leading to Hongjiu Fruit's delisting stem from a flawed business model and ineffective corporate governance. The company's cash flow issues, family-style management, and compliance crises contributed to its inability to disclose financial reports, ultimately resulting in its delisting [7]. - To recover post-delisting, Hongjiu Fruit must address challenges such as a broken cash flow, lack of core management, and loss of market trust. Strategies may include optimizing the supply chain, reducing costs, embracing e-commerce, and restructuring corporate governance to rebuild market confidence [7].
洪九果品迎来退市终局