Image credit: Visual China

On November 22, a report from Blue Whale News stated (Reporter Wang Xiaonan) that with the shares held by the actual controller being judicially auctioned, the former "soy sauce king" Yang Zhen's family may lose control of ST jia jia (002650.SZ).

On November 20, the national team asset company Dongfang Asset and a subsidiary of Lianhua Holdings acquired 0.269 billion shares and 937,600 shares of ST jia jia for 1.066 billion yuan and 4.4337 million yuan respectively. If the transfer is completed, Dongfang Asset will become the largest shareholder of the company with a 23.42% shareholding ratio, leading to a potential change in the controlling shareholder and actual controller of ST jia jia.

With the entry of Dongfang Asset, the previously anticipated restructuring that led to 18 consecutive trading limit increases for ST jia jia's stock has already begun to cool down.

"The first stock of soy sauce" will change hands? The national team Dongfang Asset and Lianhua Holdings purchased the equity.

On November 21, ST jia jia announced that on November 20, the company learned through an inquiry on Taobao's judicial auction network platform of the auction results that the 0.117 billion shares, 70.56 million shares, and 82.44 million shares held by the actual controllers Yang Zhen, Xiao Saiping, and Yang Zijiang, respectively accounting for 10.22%, 6.12%, and 7.16% of the total share capital, have ended their judicial auction.

This auction involved the above-mentioned 0.271 billion shares divided into two parts for auction, namely 0.27 billion shares and 937,700 shares. Among them, the bidder China Dongfang Asset Management Co., Ltd. (hereinafter referred to as "Dongfang Asset") acquired 0.269 billion shares of ST jia jia at a price of 1.066 billion yuan, equivalent to 3.95 yuan/share; the bidder Huangshan Lianhua Water Co., Ltd. (hereinafter referred to as "Lianhua Water") acquired 937,600 shares of ST jia jia at a price of 4.4337 million yuan, equivalent to 4.73 yuan/share, which is already higher than the closing price of 4.18 yuan/share on November 22.

Before the auction, the controlling shareholder of ST Jiajia was Hunan Zhuoyue Investment Co., Ltd. (hereinafter referred to as "Zhuoyue Investment"), holding 0.216 billion shares of the company, accounting for 18.79% of the total shares. Yang Zhen, Xiao Saiping, and Yang Zijang, along with their concerted party Zhuoyue Investment, collectively held 42.29% of the equity in ST Jiajia.

According to the results of the judicial auction bidding mentioned above, if the transfer of ownership from this judicial auction is completed, Dongfang Assets will hold 0.269 billion shares of ST Jiajia, accounting for 23.42% of the company's total shares, becoming the largest shareholder; Yang Zhen, Xiao Saiping, and Yang Zijang hold 0.216 billion shares of the company through Zhuoyue Investment, accounting for 18.79% of the company's total shares.

The announcement shows that the current members of the company's board of directors are all nominated by the current board of directors and elected by the shareholders' meeting, and there may be changes in the controlling shareholder and actual controller of ST Jiajia in the future.

Dongfang Assets and Lianhua Water Industry, which are participating in the auction of ST Jiajia, also have notable backgrounds; one is a national team while the other has a background in listed companies.

According to the official website, Dongfang Assets is a central financial enterprise established with the approval of the State Council, initiated jointly by the Ministry of Finance and the National Social Security Fund Council. Dongfang Assets was formerly known as China Dongfang Asset Management Company, established in October 1999, and restructured into a joint-stock company in September 2016. Its business encompasses non-performing asset operation, insurance, banks, securities, funds, trusts, credit rating, and overseas business. As of the end of 2023, the group's total assets reached 1,272 billion yuan.

According to the Tianyancha APP, Lianhua Water Industry is a subsidiary of the condiment listed company Lianhua Holdings (600186.SH), which was founded in 1983, formerly known as Henan Lianhua Monosodium Glutamate Co., Ltd., and was listed on the Shanghai Stock Exchange in 1998. At its peak, Lianhua Monosodium Glutamate was the largest production and export base of monosodium glutamate in the country, with the highest output in the world, and was hailed as one of the four major industrial brands of Henan Province.

The actual controller of Lianhua Holdings, Li Houwen, is also a master of capital operation. His other identity is the head of Anhui AMC Guohou Assets, with a very broad capital layout. As one of the first local AMCs in the country, Guohou Assets once exceeded a scale of over one trillion yuan; as of the end of December 2021, Guohou Assets had a net asset of 5.27 billion yuan; it had acquired non-performing assets totaling over 150 billion yuan, including multiple listed companies such as *ST Zhongtian, Jiangyin Zhongnan Heavy Industries, Anhui Xinke New Materials, and *ST Kangmei; it manages over 100 various funds, with a scale reaching 100 billion yuan. However, at the beginning of this year, the situation of Guohou Assets took a sharp turn downward, with consecutive debt defaults.

After three consecutive years of losses, hovering on the edge of being delisted, the expectation of restructuring has led to a surge of 18 consecutive boards.

ST jia jia was established in 1996 and successfully listed on the A-shares in 2012. In the year of its listing, ST jia jia's revenue was 1.657 billion yuan, and its net income attributable to shareholders was 0.176 billion yuan. In June 2015, ST jia jia's market cap once exceeded 10 billion yuan, and the founder Yang Zhen's family was known as the "Soy Sauce King."

Distinct from traditional soy sauce, ST jia jia was initially branded with a "high-end" positioning. After listing, the company launched original brewed soy sauce priced around 25 yuan and raw soy sauce priced around 10 yuan. However, ST jia jia did not continue to focus on the high-end soy sauce market. To compete for market share, the company began to lower prices, with some products priced as low as 2.5 yuan per bottle. The results were not significant; during 2012-2015, the revenue from soy sauce products, which accounted for over 50% of total revenue, grew only between 2%-4.6% year-on-year. Faced with weak growth in its main business, ST jia jia began diversifying in 2015 but repeatedly faced setbacks.

In May 2015, to extend its layout in the e-commerce sector, ST jia jia invested 50 million yuan into YunChu e-commerce to gain 51% equity. However, by October 31, 2017, YunChu e-commerce's revenue was only 2.5056 million yuan, with a net loss of 7.4898 million yuan, total assets of 1.5091 million yuan, and total liabilities of 34.0023 million yuan, which resulted in severe insolvency. ST jia jia quickly undertook asset divestiture, and in December 2017, transferred 51% equity of YunChu e-commerce for 0 yuan.

ST jia jia did not give up on finding new growth points. In 2017, the company planned to acquire 100% equity of Spicy Girl Food, which is engaged in canned goods, soybean products, and food-grade plastics packaging containers. However, the transaction was terminated due to a lack of agreement on some core terms with the trading partner. Nevertheless, ST jia jia still hoped to find profit growth points through external mergers and acquisitions. In 2018, ST jia jia intended to acquire 100% equity of Tuna Fishing Company, which is involved in ocean fishing and sales of tuna, but this transaction also ultimately failed.

During these years, while ST jia jia struggled with its transformation with little effect, the market pattern in the soy sauce industry was also being reshaped, with Foshan Haitian Flavouring and Food, Jonjee Hi-Tech Industrial and Commercial Holding, and Qianhe Condiment and Food gradually establishing their positions in the top three within the industry. As market competition intensified, the insufficient brand influence of food companies was detrimental to performance, and ST jia jia's results visibly declined. In 2020, ST jia jia's revenue reached as high as 2.073 billion yuan, with a net income attributable to shareholders of 0.176 billion yuan, but thereafter its performance plummeted, with revenue falling from 1.755 billion yuan in 2021 to 1.454 billion yuan in 2023. Its net income also suffered losses for three consecutive years, with cumulative losses of 0.351 billion yuan from 2021 to 2023.

In the first three quarters of 2024, ST jia jia's performance continued to face pressure, with revenue of 1.036 billion yuan, a year-on-year decline of 14.92%; and a net loss attributable to shareholders of 67.6514 million yuan, a year-on-year decrease of 166.58%. For ST jia jia, which has had three consecutive years of losses, it has been lingering on the edge of being delisted.

While performance remains weak, ST jia jia's controlling shareholder is also stuck in difficulties.

On June 14, 2023, after verifying with Excellent Investment, ST jia jia reported that the applicant, Wanxiang Trust Co., Ltd., applied to the court for bankruptcy review against Excellent Investment. On November 11, ST jia jia stated that this matter is still under court review, and it is uncertain whether the court will accept the application.

One year after the controlling shareholder was applied for bankruptcy, on June 24, 2024, ST Jiajia announced that the company's controlling shareholder Zhuoyue Investment and actual controllers Yang Zhen, Yang Zijiang, and Xiao Saiping were listed as dishonest judgment persons by the People's Court of Tianxin District in Changsha due to personal debt disputes, with an execution symbol of about 32.3137 million yuan.

With the delisting risk compounded by unstable control, ST Jiajia's stock price has long been in a downward trend. In June of this year, ST Jiajia's stock price had dropped to 1.58 yuan per share, hitting a new low since its listing.

On October 21, ST Jiajia disclosed an announcement that the shares held by the actual controller would be auctioned. Perhaps the equity auction is expected to generate more restructuring expectations, since October 21, ST Jiajia has continuously reached 18 trading limits, but currently the stock price has gradually cooled, on November 22, ST Jiajia closed at 4.18 yuan per share, a decline of 4.57%, with a market cap of only 4.8 billion yuan.