Huiyuan Juice, this national juice giant, was once a formidable force in the domestic FMCG market. But now, it is deeply mired in a debt crisis of over 10 billion yuan and faces the risk of delisting. What has happened to Huiyuan over the years? The Plunging Huiyuan Until its suspension last year, Huiyuan Juice's closing price was HKD 2.02 per share, with a market value of 5.4 billion yuan. Compared to its peak of HKD 11.05 per share, it has fallen 81.72%, and it now faces the crisis of delisting. Public data shows that in 2017, Huiyuan's revenue was 5.382 billion yuan, a year-on-year decrease of 6.26%. As of the end of 2017, the company's total liabilities had reached as high as 11.402 billion yuan, with a debt-to-asset ratio of 51.8%. By 2017, Huiyuan Juice's interest expenses had reached 546 million yuan, more than four times its net profit of 135 million yuan. We can't help but wonder: can this former juice king still get out of this quagmire? Let's turn the clock back more than 20 years. The Former Juice King In June 1992, Zhu Xinli, born into a peasant family, established Zibo Huiyuan Co., Ltd. on the basis of the Yiyuan County Fruit Canned Food Factory. Thus, the national juice brand Huiyuan began its glorious journey. In 1993, Zhu Xinli attended a food exhibition in Munich, Germany. Thanks to the excellent product quality, Huiyuan secured its "first pot of gold": an export order for concentrated juice worth $5 million from a Swiss company. It was this "first pot of gold" that provided the "provisions" for Huiyuan's subsequent expansion. From then on, Huiyuan was unstoppable, exporting to more than 30 countries and regions. In 1997, a "sky-high" advertisement aired on CCTV's News Broadcast, and from then on, "Drink Huiyuan juice, walk the road to health" made the Huiyuan brand a household name. With the rise of health-conscious consumption, Huiyuan's product category hit the consumer market right on target. Unlike carbonated drinks, Huiyuan offered 100% concentrated juice, which also gave it an absolute position in the fiercely competitive beverage market. In 2005, Huiyuan joined forces with Uni-President to establish a joint venture, "China Huiyuan Juice Holdings," with Uni-President holding 5% of the joint venture's equity. Through this partnership, the valuation of Huiyuan's juice bottling business soared by 400%. In 2006, Huiyuan sold 35% of its shares for $220 million, bringing in investors such as France's Danone. This financing raised Huiyuan's valuation to $628 million. After that, Huiyuan Juice reached its peak! In 2007, it was successfully listed on the Hong Kong Stock Exchange, with its share price surging 66% on the first day of listing. At that time, Zhu Xinli and Huiyuan were basking in glory. Huiyuan had held the number one market share in the juice industry for ten consecutive years, with no one able to shake its dominance. At that time, Huiyuan was truly China's "Juice King." However, starting in 2011, Huiyuan's performance began to decline. Its market value evaporated by nearly 12 billion yuan. All of this has now come to a head. The Crisis Erupts In September 2008, Coca-Cola announced its intention to acquire all shares of Huiyuan Juice for a total of approximately HKD 17.92 billion. At that time, domestic investors were in a frenzy. Huiyuan Juice's share price rose from HKD 4.05 to around HKD 11 on September 3, 2008. However, the celebration was short-lived. In March 2009, the deal fell through because it did not pass antitrust approval. Zhu Xinli still regrets it to this day: "We missed an opportunity for Huiyuan to become a company worth 100 billion yuan." But public opinion was unanimous: everyone had saved a national brand. The failed merger may have left Huiyuan somewhat deflated. By 2014 and 2015, Huiyuan Juice's net profit was even negative. But the real crisis that engulfed Huiyuan erupted in 2018. An "illegal loan" completely overwhelmed Huiyuan. The loan was provided between August 15, 2017, and March 29, 2018, when Huiyuan Juice Company extended short-term loans totaling 4.275 billion yuan to Beijing Huiyuan Beverage. However, Huiyuan Juice only announced the loans after they matured. Because the amount exceeded 8% of Huiyuan's assets, it was deemed an "illegal loan." In April 2018, Huiyuan Juice announced a trading suspension, and it has not resumed trading to this day. Time Is Running Out Over the past year, Huiyuan has been striving to resume trading, but that is easier said than done. Huiyuan must meet the conditions set by the Hong Kong Stock Exchange for resumption. And there is a ticking time bomb: If Huiyuan fails to resume trading by January 31, 2020, its listing status will be revoked. From this perspective, time is indeed running out for Huiyuan. But on the other hand, we should still have confidence in national brands. Because from the juice market perspective, Huiyuan still holds an absolute advantage. According to Nielsen data, in 2018, the total sales volume of 100% juice, medium-concentration juice, and low-concentration juice in China was 2.931 billion liters, with sales revenue of 21.464 billion yuan. Huiyuan's juice sales continued to lead over the past year. Data shows that in 2018, Huiyuan's market share in 100% juice and medium-concentration juice remained firmly in first place in the industry, with volume shares of 43.7% and 31.5%, respectively, representing increases of 0.9% and 6.9% compared to 2017. Huiyuan still has very strong competitiveness in the 100% juice and medium-concentration juice segments. Market feedback may be the remedy for Huiyuan. Here, we hope to see Chinese national brands stand up again. Source: Retail Business Review (ID: lssync) -END-