---
title: "Beingmate Faces Challenges Both Internally and Externally"
description: "Due to the controlling shareholder Beingmate Group's debt changing hands again, Beingmate's stock forum is abuzz. Over more than four years, Beingmate Group has neither repaid nor extended this debt, leading to multiple changes of ownership. Notably, the second creditor, Great Wall Guorong, even incurred a loss of nearly 100 million yuan to auction off the claim publicly for peace of mind. In recent years, the milk powder industry has entered an adjustment period, which coincides with Beingmate's development trough. The company's core business has been declining year by year, dimming the halo of the 'First Milk Powder Stock.' Returning to the top tier of milk powder seems highly unlikely..."
author: "陈晓京"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-04-28"
language: "en"
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---

# Beingmate Faces Challenges Both Internally and Externally

> Due to the controlling shareholder Beingmate Group's debt changing hands again, Beingmate's stock forum is abuzz. Over more than four years, Beingmate Group has neither repaid nor extended this debt, leading to multiple changes of ownership. Notably, the second creditor, Great Wall Guorong, even incurred a loss of nearly 100 million yuan to auction off the claim publicly for peace of mind. In recent years, the milk powder industry has entered an adjustment period, which coincides with Beingmate's development trough. The company's core business has been declining year by year, dimming the halo of the 'First Milk Powder Stock.' Returning to the top tier of milk powder seems highly unlikely...

Due to the controlling shareholder Beingmate Group's debt changing hands again, Beingmate's stock forum is abuzz.

Over more than four years, Beingmate Group has neither repaid nor extended this debt, leading to multiple changes of ownership. Notably, the second creditor, Great Wall Guorong, even incurred a loss of nearly 100 million yuan to auction off the claim publicly for peace of mind.

In recent years, **the milk powder industry has entered an adjustment period, which coincides with Beingmate's development trough**. The company's core business has been declining year by year, dimming the halo of the 'First Milk Powder Stock.'

Returning to the top tier of milk powder seems highly unlikely. As the founder and actual controller, how will Xie Hong lead the company out of the trough?

**Debt Changes Hands Twice**

Beingmate (002570.SZ), which had been quiet for a long time, recently attracted the attention of small and medium investors again due to a debt of the controlling shareholder being transferred.

Last Friday, the company announced that Beingmate Group and its actual controller Xie Hong received a notice of claim transfer from related party Great Wall Guorong, stating that a claim of 342 million yuan had been auctioned off.

This debt has a long history.

In December 2018, Beingmate Group pledged 48 million shares of Beingmate stock to AVIC Trust to obtain a loan of approximately 233 million yuan, with a pledge period from December 11, 2018, to January 10, 2022. Xie Hong and Yuan Fang, the legal representative of Beingmate Group, provided joint guarantees.

However, this loan was not repaid on time. In April 2022, AVIC Trust transferred the claim to Great Wall Guorong.

Great Wall Guorong was not so patient. Because Beingmate Group failed to fulfill its repayment obligations, it applied to the Hangzhou Intermediate Court for compulsory execution, which was filed in January last year, with the execution target being 316 million yuan plus interest.

On December 7, 2023, Great Wall Guorong publicly auctioned this claim of 342 million yuan on the JD platform, and Ningbo Weibei won the bid for approximately 233 million yuan. On April 9, Great Wall Guorong issued a "Notice of Claim Transfer" to Beingmate Group, Xie Hong, and their related parties, announcing that the claim had changed hands again.

The above case still requires an execution ruling from the Hangzhou Intermediate Court. Once executed, it will involve 53 million shares of the listed company held by Beingmate Group (accounting for 4.91% of the company's total share capital). In addition to the above shares, the group also holds 11.82% of Beingmate's shares, nearly all of which have been pledged or frozen.

Despite such difficulties, Beingmate Group still stated that it has prepared for stock price fluctuations and **there will be no risk of change in control.**

Does Beingmate Group really have the ability to cope with risks? Data shows that the group's debt-to-asset ratio is as high as over 90%, and it continues to suffer operating losses. As of February this year, Beingmate Group's total borrowings amounted to 714 million yuan, with 481 million yuan due within the next six months.

**Milk Powder Is Hard to Sell**

While the controlling shareholder is in a difficult situation, Beingmate finally showed a glimmer of joy.

According to the performance forecast, in 2023, the company finally emerged from huge losses, expecting to achieve net profit attributable to the parent of 40 million to 60 million yuan; non-GAAP net profit is between 2 million and 22 million yuan.

The company stated that the improvement in performance mainly comes from strengthening accounts receivable collection and inventory management, with credit impairment losses and inventory write-down losses significantly improved compared to the previous year.

However, upon careful analysis, **Beingmate's cash-generating ability has not fundamentally improved.**

The milk powder business has always been the company's core, contributing 90% of revenue. With the milk powder industry entering a deep adjustment period in recent years and the infant formula market shrinking, Beingmate's main business has faced severe challenges, dimming the halo of the 'First Domestic Milk Powder Stock.'

Data shows that the company's milk powder business revenue fell from 2.508 billion yuan in 2019 to 2.276 billion yuan in 2022. In the first half of 2023, it further declined slightly by 0.76% to 1.181 billion yuan, with milk powder sales volume of 10,000 tons in the period, down 3.75% year-on-year.

Beingmate's milk powder is hard to sell, and distributors feel it more deeply. In the first half of 2023, the company added 267 new distributors, but the average revenue per distributor was only 145,400 yuan, halved year-on-year.

This has led to another consequence: severe underutilization of production capacity. As of the end of June last year, the company's designed annual production capacity totaled 122,300 tons, with actual annual production capacity of 68,000 tons. Under such circumstances, Beingmate is still expanding 20,000 tons of capacity at its Tianjin plant, expected to reach a usable state before April 30.

**Xie Hong Is Also in a Difficult Position**

Beingmate was once hailed as the king of domestic infant formula, ranking among the top three in the market amid competition from many domestic and foreign brands.

In 2011, the company listed on the capital market. Shortly after, Xie Hong handed over the company to professional managers and retreated behind the scenes to focus on scientific research.

In 2013, the company stood at its performance peak, achieving operating revenue of 6.12 billion yuan and net profit attributable to the parent of 720 million yuan, enjoying a moment of glory.

But then it went downhill, suffering consecutive losses in 2016-2017 and being labeled with ST. In 2018, it managed to turn the corner by disposing of assets.

At this time, the second shareholder Fonterra lost confidence in the company's development and began to reduce its stake in Beingmate without regard to cost from September 2019, **losing as much as 2.2 billion yuan in six years of investment.**

Following Fonterra's example, the strategic investor Changhong Fund, which was introduced by the company in the past, also gradually reduced its stake and left.

Executives also fled. In 2018, Beingmate hired professional manager Bao Xiufei at a high price to serve as general manager, but he failed to lead the company out of trouble. In January 2021, Bao Xiufei announced his departure before his term ended.

Xie Hong had to return to the company, taking on both chairman and president roles, facing a situation of internal and external troubles.

Xie Hong himself is also in trouble. According to Qichacha, he has 12 judicial cases as a defendant, involving a total amount of 873 million yuan. In February last year, the total amount of execution targets was 43.2913 million yuan, with 100% unfulfilled.

**Recommended Reading**


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