On January 7, Blue Whale News reported (journalist Zhu Xinyue) that returning to state-owned assets, Hainan Yedao is still facing tremendous operational pressure.

On January 7, Hainan Yedao (600238.SH) officially disclosed a list of personnel who have left the business system from July 2023 to December 31, 2024, totaling 67 people.

The positions of the departing employees on the list are diverse, covering several subsidiaries and different levels of management. Notably, some of these departing personnel include employees of Guizhou Renhuai Yedao Muddled Liquor Co., Ltd. (hereinafter referred to as "Yedao Muddled Liquor"), which holds an important position in the Hainan Yedao sauce liquor sector and was once highly anticipated.

Hainan Yedao, once known as the "first stock of health liquor," is now facing significant challenges.

Public list.

The reason for publishing this list, according to Hainan Yedao, is that feedback from dealers indicated that business personnel had left without timely notification, which led to obstacles in business connection. Therefore, to avoid the occurrence of the aforementioned situation, it has been decided to regularly organize and release information about departing employees and those who no longer bear the sales business functions of Yedao through official channels starting today, ensuring that industry peers and partners can accurately identify personnel identity dynamics and effectively mitigate the risk of misleading information.

In this list, the departing employees are from multiple companies, including Yedao Confused Liquor Industry, Hainan Yedao Liquor Sales Co., Ltd., Shenzhen Yedao Sales Co., Ltd., Hainan Yedao Life Family Business Operation Management Co., Ltd., and Hainan Yedao (Group) Co., Ltd. Liquor Branch. The positions that left were diverse, involving regional managers, sales managers, investment managers, and vice general managers.

It is worth noting that Yedao Confused Liquor Industry has become the "hard-hit area" of this wave of departures, and this company was once one of Hainan Yedao's important developments.

In 2021, under the leadership of the then actual controller Feng Biao, Hainan Yedao's wholly-owned subsidiary Hainan Yedao Liquor Development Co., Ltd. (hereinafter referred to as: Yedao Company) co-invested with Guizhou Province Renhuai City Maotai Town Confused Liquor Industry (Group) Co., Ltd. (hereinafter referred to as: Confused Company) to establish Yedao Confused Liquor Industry, with Yedao Company investing 0.24 billion yuan in cash, holding 80% of the registered capital, and Confused Company contributing 0.06 billion yuan worth of Daqu Kunsa sauce liquor in kind, holding 20% of the registered capital. Together they launched Guizhou Sauce Liquor. Hainan Yedao ambitiously stated a plan to invest 5 billion yuan within five years to make Yedao Confused Liquor Industry the second-largest sauce liquor production base in Guizhou Renhuai.

However, reality has turned out to be vastly different from expectations. According to the earnings reports, in 2023, Yedao Confused Liquor Industry's revenue was only 34.0715 million yuan, yet it incurred a net loss of 6.7653 million yuan. Furthermore, the lawsuits involving Yedao Confused Liquor Industry and Confused Group have approached 30 million yuan.

State-owned assets take back control.

Hainan Yedao originated from Hainan Province's first modern factory, a soft drink factory established by the Japanese. After being nationalized in 1950, it was officially renamed the State-owned Haikou Beverage Factory in 1954. In 1963, it was registered under the name State-owned Haikou Liquor Factory, and in March 1992, it was unified under the name Haikou Yedao Beverage Company and underwent a shareholding reform.

In 1996, with the approval of the Haikou Municipal State-owned Assets Supervision and Administration Commission, Hainan Yedao's national shares were adjusted to 46.39 million shares. Yedao was listed in 2000, becoming the first stock in the health liquor sector.

After Hainan Yedao went public, the market cap of its state-owned shares once exceeded 2 billion, more than 40 times the initial investment, leading industry insiders to remark that this is the most lucrative and successful case of Haikou's state-owned assets to date.

In 2015, the state-owned enterprise intended to transfer the equity in its hands. In March of that year, the state-owned enterprise signed a share transfer agreement with Hainan Jiantong Investment Management Co., Ltd. and submitted an application to the Haikou State-owned Assets Supervision and Administration Commission regarding the transfer of 78.73 million shares held by the state-owned enterprise to Hainan Jiantong.

However, this matter dragged on for four long years, remaining unresolved. During this period, the Eastern Group, represented by Feng Biao, gradually increased its shareholding through Dongfang Junsheng and took control of Hainan Yedao, marking the beginning of the seven-year dominance by retail investors over Hainan Yedao.

However, Hainan Yedao faced extremely turbulent circumstances under Feng Biao's management.

From 2017 to 2022, Hainan Yedao's revenue dropped from 1.1 billion to over 0.4 billion yuan, experiencing losses four times in six years, with the highest net income not exceeding 40 million yuan, and a loss of 0.118 billion yuan in 2022.

"In order to protect its shell, Yedao sold land, buildings, and equity, selling off nearly all of its quality assets; Yedao Coconut Juice was doing quite well before, and now cooperates with Hunan Yufan Luko Dairy Industry Co., Ltd. in an exclusive distribution model, which is equivalent to 'contracting out'; in terms of channels, the once-major distributor went to work with Guangliang Liquor Industry, and the channel system basically collapsed; now the sauce-flavored liquor cooperation with Hutu Liquor Industry has seen no significant improvement. The most important thing is that the market environment has changed; besides Jingjiu, the health wine industry is barren, and Yedao failed to keep up with the times, missing the best development opportunity," a person familiar with Hainan Yedao told reporters from Blue Whale Finance.

Not until February 2023 did the equity held by Dongfang Junsheng in Yedao go up for public auction. Since the bidders were not the same entity, the shares held by Dongfang Junsheng were fragmented, and Hainan Yedao's largest shareholder changed to the state-owned enterprise, thus returning to the embrace of Haikou State-owned Assets.

The Delisting Test.

Time has passed, and what was once referred to as Haikou State-owned Assets' "most successful case" is now deeply trapped in difficulties, bearing tremendous operational pressure.

According to the Earnings Reports, from 2021 to 2023, Hainan Yedao's revenue was 0.833 billion yuan, 0.416 billion yuan, and 2.25 billion yuan respectively, with net income showing losses of 60.1409 million yuan, 0.118 billion yuan, and 1.49 billion yuan. In the first three quarters of 2024, Hainan Yedao's revenue was 0.163 billion yuan, a year-on-year increase of 0.15%, with a loss of 10.1093 million yuan. Among these, the revenue in the third quarter was 41.7546 million yuan, a year-on-year decline of 7.71%; the loss was 14.7376 million yuan, a year-on-year decrease of 3.06%.

This series of poor performance results has pushed Hainan Yedao to the edge of being delisted. According to the delisting rules of the Shanghai and Shenzhen markets, the revenue threshold for loss-making companies on the Main Board has been raised to 0.3 billion yuan. If Hainan Yedao fails to meet this standard, it will face the risk of being delisted. Despite this in 2024, Hainan Yedao still claimed in August 2024 that the company currently does not face any delisting risks. The company focuses on brand building and market promotion, and will choose the most suitable marketing and promotion methods based on actual conditions and market environment factors, continuously advancing brand value creation and market channel development.

In the semi-annual report, Hainan Yedao further pointed out that the company will rely on its deep foundation in the health liquor and brand fields to restructure its three major product lines: health liquor, core production area Baijiu, and herbal sauce-flavored health liquor, gradually eliminating inefficient and outdated products.

At a recent performance briefing, Hainan Yedao's General Manager Ma He disclosed that currently, the company's Baijiu sector business focuses on herbal sauce liquor, which began cooperative operations in the second quarter of this year, with business development and publicity efforts progressing steadily.

It's noteworthy that in the field of herbal sauce liquor, Hainan Yedao has made new investments this year in Hainan Yedao (Group) Guizhou Wine Industry Co., Ltd., holding 45% of the shares. Related Baijiu products have been launched and are currently being promoted for sales. In September this year, an article published by the public account "Jinsha Release", managed by the publicity department of the Jinsha County Committee, showed that Hainan Yedao (Group) Guizhou Wine Industry Co., Ltd. is a project in cooperation with Guizhou Guoma Brewing Group, using local sauce-flavored Baijiu as the base to create herbal sauce-flavored Baijiu.

Some investors have raised concerns that recently the herbal sauce liquor of Yedao has been launched with huge advertising expenditures. Whether the company's financial situation supports such substantial advertisement investments. In response, Hainan Yedao stated that the promotional activities for Yedao herbal sauce liquor are operated jointly by Yedao Ecological Liquor Company and Yedao Guizhou Wine Industry Company, while the listed company does not participate in providing the needed funds. Yedao Ecological Liquor Company and Yedao Guizhou Wine Industry Company are equity holding enterprises of the listed company, which does not directly participate in operation and management; they are not included in the consolidated scope of the listed company.