Core Viewpoint - The company is divesting its wholly-owned subsidiary, Zhalaihe Company, to optimize its asset structure amid weak profitability in traditional businesses and sluggish growth in new ventures [1][2]. Group 1: Company Actions - On October 17, the company announced the sale of 100% equity in Zhalaihe Company, which previously supported its beet sugar business, along with a significant debt waiver arrangement [1][2]. - The total debt waiver could reach up to 197 million yuan, indicating the company's effort to remove a financially distressed subsidiary from its balance sheet [1][2]. Group 2: Financial Performance - Zhalaihe Company reported total assets of 239.02 million yuan and total liabilities of 377.95 million yuan, resulting in negative equity of 138.94 million yuan [2]. - The company faced significant challenges, with 10 investment projects failing to meet expected returns in the first half of the year, reflecting ongoing issues with sales not keeping pace with capacity expansion [3][4]. Group 3: Market Conditions - The company is experiencing severe underutilization of capacity, with oil extraction and refining rates at 56.94% and 49.97%, respectively, which could exacerbate the existing overcapacity issues [3]. - The revenue growth for the company was 5.67% in the first half of the year, with net profit increasing by 60.07%, but growth in kitchen food was only 2.69%, indicating a reliance on feed raw materials for growth [4][5]. Group 4: Challenges and Outlook - The company is grappling with low profitability and high debt levels, with a net profit margin of around 0.5% in 2023 and 1.2% in the first half of 2024, primarily due to declining raw material costs [5]. - The company's asset-liability ratio stood at 56% in the first half of the year, with short-term interest-bearing liabilities reaching 831.9 billion yuan, highlighting financial strain [5].

Core Viewpoint - The company, Jinlongyu, has announced the sale of its wholly-owned subsidiary, Zhalai Teqi Hefeng Agricultural Co., Ltd., to optimize its asset structure amid ongoing losses and financial difficulties [1][2]. Group 1: Asset Sale and Financial Implications - Jinlongyu's subsidiary, which previously handled its beet sugar business, has been sold due to continuous losses and insolvency, reflecting the company's need to streamline operations [1][2]. - The sale includes a significant debt waiver arrangement, with Jinlongyu potentially waiving up to 197 million RMB in debts to facilitate the transaction [2][3]. - As of the announcement date, Zhalai Company reported total assets of 239.02 million RMB, total liabilities of 377.95 million RMB, and a net loss of 34.65 million RMB [3]. Group 2: Project Delays and Performance Issues - Jinlongyu has faced multiple delays in its fundraising projects, with ten projects failing to meet expected returns in the first half of the year [4]. - The company has been struggling with underutilized production capacity, with oil extraction and refining capacity utilization rates at 56.94% and 49.97%, respectively, indicating a significant overcapacity issue [4]. - The company’s revenue growth has been modest, with a 5.67% increase in revenue and a 60.07% increase in net profit in the first half of the year, primarily driven by improvements in the feed raw materials segment [5][6]. Group 3: Market Position and Competitive Landscape - Jinlongyu holds a leading market share in edible oils and has a strong presence in packaged rice and flour, but faces challenges in a shrinking consumer demand environment [6]. - The company has been attempting to pivot towards high-end products and expand its product lines into new categories, but these efforts have had limited impact on overall performance [6]. - The competitive landscape in the flour processing industry is intensifying, with larger players increasing capacity, leading to lower-than-expected project returns for Jinlongyu [4][5]. Group 4: Financial Health and Risks - Jinlongyu's financial health is concerning, with a debt ratio of 56% and significant short-term and long-term interest-bearing liabilities, raising liquidity risk [7]. - The company’s cash-to-short-term debt ratio is only 0.53, indicating potential challenges in meeting short-term obligations [7]. - The net profit margin remains low, with projections of around 0.5% for 2023 and 2024, despite a slight recovery in the first half of the year [6][7].