Core Viewpoint - Hong Jiu Fruit Products, known as the "first fruit stock," is facing delisting risks after failing to meet the resumption guidelines set by the Hong Kong Stock Exchange, with a delisting decision expected by October 3, 2025 [1][2]. Group 1: Company Background - Hong Jiu Fruit Products was established in 2002 and is a leading multi-brand fresh fruit group in China, focusing on high-end imported and high-quality domestic fruits through an advanced digital supply chain [3]. - The company went public on the Hong Kong Stock Exchange on September 5, 2022, and initially reported impressive financial results, with revenue of 15.081 billion yuan in 2022, a year-on-year increase of 46.7%, and a net profit of 1.452 billion yuan, up 405.55% [3]. Group 2: Financial Issues - Despite initial success, the company has faced significant financial irregularities, with cumulative negative operating cash flow of 4.06 billion yuan from 2019 to 2022, and an additional 314 million yuan deficit in the first half of 2023 [3]. - As of mid-2023, the company's trade receivables reached 10.151 billion yuan, accounting for 92.4% of current assets, with a cash balance of only 557 million yuan and bank loans increasing to 2.776 billion yuan, resulting in a debt-to-asset ratio that has doubled since its IPO [4]. Group 3: Audit and Delisting Risks - The immediate cause for the stock suspension in March 2024 was an audit firm's concerns regarding the company's financial practices, including a 3.42 billion yuan prepayment to new suppliers, many of which were identified as "shell companies" with insufficient capital [4]. - The stock price plummeted over 95% from a peak of 41.80 HKD in January 2023 to 1.74 HKD at the time of suspension, leading to a market capitalization drop from 63 billion HKD to 2.79 billion HKD [4]. - Since the suspension, the company has only released one annual report and one semi-annual report, and has not disclosed its full-year 2023 results, with the founder facing legal issues related to loan fraud [6].

Core Viewpoint - Chongqing Hongjiu Fruit Co., Ltd. has faced severe operational challenges following the announcement of criminal charges against its chairman and several executives for loan fraud and/or issuing false VAT invoices, leading to significant disruptions in its business operations [1][3][12]. Company Overview - Founded in 2002 by Deng Hongjiu and his wife Jiang Zongying, Hongjiu Fruit was positioned as a multi-brand fresh fruit group, focusing on the full supply chain of high-quality fruits from China, Thailand, and Vietnam [7][8]. - The company was once celebrated as "China's first fruit stock" and successfully listed on the Hong Kong Stock Exchange in September 2022, achieving a market capitalization of HKD 124.21 billion at its debut [9]. Recent Developments - As of January 6, 2025, Hongjiu Fruit's main office in Chongqing has been restricted by law enforcement, resulting in the company being unable to operate normally [3]. - Following the announcement of financial irregularities, including a suspicious increase in prepayments, the auditing firm KPMG resigned, leading to the company's suspension from trading on the Hong Kong Stock Exchange [9][10]. Financial Situation - Despite the ongoing issues, multiple financial institutions provided substantial loans to Hongjiu Fruit between April 22 and July 29, 2024, totaling over CNY 650 million through stock pledge financing [11]. - The company and its executives have been listed as untrustworthy and restricted from high consumption, indicating severe financial distress [12]. Industry Context - The fruit retail industry is facing significant challenges, as evidenced by the struggles of other companies like Baiguoyuan, which reported a 9.8% decline in revenue and a shift from profit to loss in 2024 [18]. - The overall market for fruit retail has been impacted by rising e-commerce competition and changing consumer behaviors, leading to a decline in physical store sales [17].