For many people, the phrase "Huiyuan is the Spring Festival" is not just an advertising slogan, it represents the standard New year's Eve dinner for many Chinese families over the past few years, belonging to "childhood memories". But I don't know when Huiyuan juice was replaced with fruit orange, Coke Sprite or Assam milk tea. as a generation grows up, the world is changing with each passing day.

It is the end of the year and the beginning of the year, but Huiyuan Juice (01886) is no longer what it used to be.

"Juice King" becomes "restricted population"

On December 11, China referee Writing Network disclosed a civil order involving China Merchants Bank Co., Ltd. (hereinafter referred to as "China Merchants Bank") and China Deyuan Capital (Hong Kong) Co., Ltd. (hereinafter referred to as "Deyuan Capital").

According to the ruling, China Merchants Bank applied to the court for pre-litigation property preservation on September 20, 2019, requesting to seal up, seize and freeze the equity, bank deposits and other assets held by Deyuan Capital totaling 4.103 billion yuan.

The authorized representative behind Deyuan Capital is Zhu Xinli, the founder of Huiyuan Group.

Zhitong Financial APP learned that in addition to the freezing of the assets of its Deyuan Capital, this is the fourth time that Zhu Xinli has been listed as an executor since 2018, restricting high consumption, according to the Chinese executive information public website. From the "juice king" to the "restricted crowd", the ups and downs of Zhu Xinli and his "Huiyuan" brand are very sad.

Suspension of trading due to tens of billions of debts

The reason for the suspension of Huiyuan Juice since April 3, 2018 involves a large amount of loan.

On March 29, 2018, Huiyuan Juice announced that the company would provide short-term loans to Beijing Huiyuan Beverage from August 15, 2017 to March 29, 2018, so that Beijing Huiyuan Beverage could meet temporary working capital needs and repay debts.

According to the agreement reached between the two sides, Huiyuan Juice provides a short-term loan of about 4.282 billion yuan to Beijing Huiyuan Beverage with an annualized interest rate of 10%. Beijing Huiyuan Beverage is a company owned by Zhu Xinli, there is a relationship between the two, the above transactions are related transactions.

However, on April 3 of that year, Huiyuan announced againWithout the approval of the board of directors, without signing an agreement and disclosing to the public, it lent more than 4 billion short-term loans to Beijing Huiyuan Beverage, a subsidiary of Huiyuan Group. The move violates the provisions of the Hong Kong listing rules on the declaration, shareholder approval and disclosure of related party transactions, which is also a prelude to Huiyuan's suspension.

(photo Source: Huiyuan Juice announcement)

In response, Huiyuan issued a statement: since August 2018, there are a large number of cash deposits in domestic accounts but there are no suitable investment opportunities, while on the other hand, the company needs to continue to repay bank loans and bond interest, the cost of capital is not low.

In January, Huiyuan announced that it had recently received a redemption notice from bondholders requiring the company to redeem all convertible bonds of HK $1.2 billion at the principal amount of 120% of convertible bonds on or before January 24, 2019. However, Huiyuan did not pay the redemption amount or the redemption amount due to the bondholders within the agreed time limit, resulting in a default.

What is even more frightening is that the total debt disclosed by Huiyuan in 2017 exceeded 11 billion. At that time, its annual interest expenses accounted for 400% of its net profit, and its profitability was rapidly deteriorated by high interest payments.Since the suspension of trading, 2017, 2018 results, 2019 interim results have not been disclosed, the current financial situation of the company is not known.

In order to deal with the debt crisis, Huiyuan Juice announced the establishment of a joint venture with Tiandi No.1 on April 26, 2019. But the plan failed after only three months of progress. On the evening of July 16, Huiyuan Juice and Tiandi No.1 simultaneously issued an announcement announcing the termination of their plan to set up a joint venture company.

It has been nearly 20 months since the suspension of trading, and the crisis of Huiyuan Juice has not been properly resolved. According to the regulations of the Hong Kong Stock Exchange, Huiyuan Juice will face delisting if the company fails to meet all the resumption conditions by January 31, 2020. On December 2, the winding-up petition of Huiyuan Juice and the application of provisional liquidator were heard in the High Court of the Hong Kong Special Administrative region. The High Court of the Hong Kong Special Administrative region ordered that the hearing be postponed to 13 March 2020.

However, judging from a series of events so far this year, such as the failure of mergers and acquisitions, delisting, breaking promises of the chairman, freezing assets, and so on, unless the "White Samurai" can fall from the sky in just a few months, Huiyuan is almost certain to bid farewell to the capital market.

Net profit loss year by year

Despite the debt crisis, Huiyuan did not get a "chance" in the fruit juice market, which is good at it.

Huiyuan has grown from a small factory to a "national juice" thanks to the fact that Zhu Xinli won the five-second advertising right of CCTV News broadcast in 1997 at a cost of 70 million yuan in 1996. This CCTV strategy is very effective when the high concentration of fruit juice is still in the blank market, directly pushing Huiyuan juice to the leading position of Chinese fruit juice, and the CCTV advertising target king makes Huiyuan advance by leaps and bounds.

Until September 2008, Coca-Cola Company also bought all shares in Huiyuan for a total price of HK $17.92 billion. At that time, Huiyuan's total income of 2.8197 billion yuan can be said to be the peak of Huiyuan. However, the acquisition did not pass the review of the China Anti-monopoly Bureau in March 2009. As a result, the Coca-Cola Company acquisition case became a turning point in the development of Huiyuan.

As the conditions for Coca-Cola Company's acquisition of Huiyuan are very harsh, it is necessary to completely abolish its sales channels. To this end, in the preparatory stage before the merger, the provincial managers of Huiyuan in 21 sales regions across the country had basically left. After the failure of the acquisition, Huiyuan had to rebuild its sales channel, which was a fatal blow to Huiyuan.

From listing in 2007 to 2016, Huiyuan's revenue increased from 2.65 billion yuan to 5.741 billion yuan, lower than the average growth rate of the beverage industry. Huiyuan had experienced four consecutive years of net profit loss before it turned a profit in 2016. In fact, Huiyuan made a small turnaround by selling the assets of its subsidiaries in 2016.

According to the unaudited management accounts released by the company on April 19, 2018, the company's revenue of 5.382 billion yuan fell 6.25% year-on-year, net profit 135 million yuan, an increase of 10.35 times over the same period last year, and the net cash flow generated by operating activities was 1.667 billion yuan. Profitability has improved to some extent.But for Huiyuan, which is burdened with huge debts, 135 million yuan is a drop in the bucket.

Personnel changes are still ongoing.

Since the beginning of this year, the personnel changes of Huiyuan Juice have also continued.

On the evening of January 13, Huiyuan Juice announced that Cui Xianguo resigned as executive director because of his retirement from the company. In addition, the company received Xu Qingliu's resignation letter on January 10, requesting his resignation as a non-executive director, which will take effect on the same day.

On 29 January, Huiyuan Juice announced that Liang Minjie resigned as an independent non-executive director, a member of the nomination and Remuneration Committee and the Chairman of the Financial Management and Audit Committee for personal reasons, effective January 25, 2019.

The resignation of the two executives within three days is just a microcosm of the intensive personnel changes in Huiyuan. According to media reports, the position of head coach of Huiyuan has been changing since 2013. Since the resignation of founder Zhu Xinli, five people have served as Huiyuan's chief executive, each for a short period of time, rarely for more than two years.

Changing presidents so frequently also makes the company's strategies and measures unsustainable. "everyone's prediction and operation style of the market are different, especially the parachuted executives may not know enough about the products and the market, and it is easy to miss those products that are prone to popularity." Some market participants said.

In October, another senior executive of Huiyuan left, and Li Guohui announced his resignation as company secretary.

So far, it is only more than a month before it is delisted by the Hong Kong Stock Exchange, but Huiyuan seems to have accumulated over a long period of time. The only thing that can be confirmed is that the capital story of National Juice in the past, which has been on the HKEx for a decade, may really be coming to an end this time. And the childhood taste in the memory also stays in the memory.