Investment Rating - The report does not explicitly provide an investment rating for the company Core Insights - The company, Bohui Co., has experienced a drastic decline in profitability, with a cumulative loss of 5.1 billion in just two years, erasing nearly 80% of its ten-year accumulated profits of 6.5 billion [15][35] - The significant losses are attributed to changes in tax policies that have imposed new consumption taxes on its main product, heavy aromatic hydrocarbons, which previously benefited from tax exemptions [19][35] - The company has attempted to pivot by producing derivative products to circumvent the new tax regulations, but this strategy has raised concerns with tax authorities [36][44] Summary by Sections Company Background - Bohui Co. has been in the fuel oil deep processing industry for 20 years, primarily producing heavy aromatic hydrocarbons, which are essential for asphalt and rubber [10] - The company saw substantial revenue and profit growth from 2013 to 2022, peaking in 2022 with revenues of 2.97 billion and profits of 152 million [12] Recent Developments - In early 2025, the company announced a change in control, with state-owned Wuxi Guozi acquiring a significant stake [3][5] - The acquisition process involves multiple stages, including share transfer and capital increase, with the original owner set to exit with 263 million [5][7] Financial Performance - In 2023, the company reported a 6.32% decline in revenue to 2.78 billion, with a notable shift to losses due to reduced trade income and increased tax burdens [15] - The new consumption tax policy introduced in June 2023 has drastically affected the company's profitability, leading to a situation where selling its main product results in losses [21][35] Tax Policy Impact - The new tax policy requires the company to pay approximately 2200 per ton in taxes for heavy aromatic hydrocarbons, which significantly exceeds its profit margins [21][22] - The company has attempted to adapt by producing derivative products that are not explicitly covered by the new tax regulations, but this has led to scrutiny from tax authorities [36][44] Strategic Responses - Bohui Co. has reduced production and announced plans to stop producing aromatic series products, citing operational difficulties while simultaneously managing idle funds [29][30] - Despite these challenges, the company has resumed production of its aromatic products, indicating a struggle to maintain operations amid financial pressures [34]

Core Viewpoint - The article discusses the recent acquisition of Bohui Co., Ltd. by Wuxi State-owned Assets, highlighting the company's significant financial struggles and the impact of tax policy changes on its profitability [3][10][32]. Group 1: Acquisition Details - Wuxi State-owned Assets plans to invest 680 million yuan to acquire Bohui Co., Ltd., which has been a topic of public discussion [3]. - The acquisition process involves three stages: transfer of shares, capital increase subscription, and relinquishment of voting rights by the previous owner [8]. - As of May 20, 2025, the first stage of the acquisition has been completed, with the second stage underway [9]. Group 2: Financial Performance - Bohui Co., Ltd. experienced a significant increase in revenue and profit from 2013 to 2022, reaching peak figures of 2.97 billion yuan in revenue and 152 million yuan in profit in 2022 [12][13]. - However, in 2023, the company reported a 6.32% decline in revenue to 2.78 billion yuan and incurred losses of 510 million yuan over two years, erasing 80% of its ten-year accumulated profits [16][32]. Group 3: Tax Policy Impact - The introduction of a new tax policy in June 2023 required Bohui Co., Ltd. to pay consumption tax on its main product, heavy aromatic hydrocarbons, which previously enjoyed tax exemptions [20]. - The new tax burden resulted in a loss of approximately 1,800 yuan for every ton of heavy aromatic hydrocarbons sold, leading to severe financial distress for the company [21][32]. - The company's previous profitability was largely dependent on government tax incentives, raising concerns about its competitive position in the market [26]. Group 4: Strategic Responses - In response to the tax changes, Bohui Co., Ltd. attempted to pivot by producing derivative products of heavy aromatic hydrocarbons, which were not subject to the same tax [33][36]. - Despite these efforts, the company faced scrutiny from tax authorities, leading to a significant tax liability of nearly 500 million yuan for the period from July 2023 to March 2024 [41][42]. - The ongoing financial challenges and strategic missteps have raised questions about the company's long-term viability and operational focus [43].