A penny stock on the Hong Kong market, priced at just HK$0.06, surged 127% after associating with the liquor industry. The peculiar story of a regional liquor company's "backdoor listing" is, in essence, a capital game skirting regulatory edges.
Public records show that Sichuan Dufu Liquor Group Co., Ltd. (DF Liquor) is based in Mianzhu City, Sichuan Province, formerly known as Mianzhu County Second Distillery. In 2013, Wang Zhonglin, Wang Jia, and Wang Haoran established the current DF Liquor, which produces products under brands like "DF Core" and "DF Culture." The company is now controlled by Peng Zuoquan, a former media professional who later ventured into liquor business planning. After joining DF Liquor in 2018, Peng became its chairman and CEO, holding a 45.56% stake.
Under Peng's leadership, DF Liquor has persistently pursued a capital market listing. In 2018, it listed on the Tianfu Equity Exchange's "Belt and Road" board. In 2021, its subsidiary DF Brewing listed on the Nasdaq, and the "DF Liquor" trademark was listed on the Hong Kong United International Intellectual Property Exchange. Despite two rounds of strategic financing in 2020 and 2022, DF Liquor made no further progress toward a Hong Kong listing until February this year, when it signed a sales agency agreement with Hong Kong-listed jewelry firm China Environmental Energy (00986.HK). The agreement allowed China Environmental Energy to rebrand as "DF Liquor Group" on May 13, triggering a 127% stock surge over six trading days.
However, this arrangement is far from a traditional backdoor listing. Unlike standard reverse mergers, DF Liquor did not inject equity or assets into China Environmental Energy. Instead, the two parties signed a three-year sales target of RMB 150 million, with China Environmental Energy gaining exclusive distribution rights in 14 markets, including Greater China, Japan, South Korea, and Southeast Asia. If the target is met, China Environmental Energy earns an additional 1% profit share—but faces no penalties if it fails. Notably, China Environmental Energy's ownership structure remains unchanged, with major shareholders Guo Sha and Dong Qian retaining their stakes.
Industry experts argue this is not a true backdoor listing. Shen Miao, director of Chanson & Co., noted that without a change in ownership, DF Liquor's move does not qualify. Similarly, Dai Guanchun, a senior partner at Jingtian & Gongcheng, dismissed it as merely a rebranding exercise. Skeptics also question the feasibility of the RMB 150 million sales target, given China Environmental Energy's lack of experience in liquor distribution and its history of losses—seven out of the past ten fiscal years.
Meanwhile, DF Liquor's own financial health is shaky. Court records show multiple lawsuits totaling RMB 6.07 million, along with tax arrears and frozen shares. Despite claims of a 30% revenue growth in early 2024, its products remain obscure, with minimal online sales and limited brand recognition.
Peng Zuoquan has focused heavily on capital markets and cultural IP, registering 949 trademarks since 2018, including names tied to poets like Li Bai and historical figures like Zhuge Liang. The company also launched tourism initiatives like the "DF Culture Tour" and proposed projects like the "DF Poetry & Liquor Town." Yet, five years on, these ambitious plans—including a 2021 goal of RMB 10 billion in output—have yielded little tangible progress.
Analysts caution that without solid products and distribution channels, cultural branding alone won’t sustain growth. For DF Liquor, the real challenge post-"listing" is to refocus on its core business and leverage this capital maneuver for stable development.
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