An eye-stinging, advanced version of draining dividends.
The global nutraceutical industry has been expanding rapidly in recent years, fueled by rising health consciousness. Fish oil, as a key subcategory, is gaining popularity as a nutritional supplement due to its health benefits for all age groups.
Rich in Omega-3 polyunsaturated fatty acids, fish oil helps reduce cardiovascular risks in the elderly and alleviates rheumatoid arthritis. The DHA it contains is a crucial nutrient for brain development; adequate supplementation during pregnancy can enhance infants' early learning abilities and visual acuity, help delay brain aging, and has potential for intervening in Alzheimer's disease in older adults.
These widely recognized nutritional benefits are driving sustained growth in fish oil demand. The global market size for human-grade fish oil is projected to grow at a compound annual growth rate of 8.89% from 2025 to 2029, reaching $990 million by 2029.
Recently, a fish oil company, YuWang Bio Nutrition Limited, submitted a listing application to the Hong Kong Stock Exchange. What is the quality of this company? Can it successfully list?
On the eve of its listing, YuWang Bio executed a sudden dividend payout, distributing all profits earned over three and a half years. Opening YuWang Bio's prospectus, while the intended fundraising amount is not explicitly disclosed, it meticulously lists several "urgent" funding gaps—factory expansion, R&D upgrades, market promotion, and working capital supplementation—painting a picture of a company desperately in need of a capital infusion.
However, just before submitting the prospectus, on December 16, 2024, the operating entity YuWang Pharmaceutical (which had not yet been incorporated into the listing structure at the time) quietly executed a major move—a dividend payout! The amount was a staggering 320 million yuan!
At that time, YuWang Pharmaceutical was wholly controlled by the Liu Rucui family. This means that, just before the IPO, the controlling shareholders pocketed 320 million yuan in cash for themselves.
It is crucial to note that the company's total profits for the three years from 2022 to 2024 amounted to only 294 million yuan. This massive 320 million yuan dividend effectively drained all the profits earned over more than three years.
On one hand, the prospectus meticulously details various funding shortfalls, portraying a company struggling to survive without listing; on the other hand, just before submitting the application, it withdraws almost all profits from the past three and a half years. This sequence of actions, this complete "liquidation" tactic—seems to say: the company's money must be spent sparingly, but the family's money must be taken quickly. Getting rich is just that simple~ The question arises: did the company truly have the capacity to support this dividend payment?
With a debt-to-asset ratio exceeding 80%, irregular financing has become the norm. As of the end of 2023, the company had only 53.29 million yuan in cash on its books. Even adding the entire net profit for 2024 (free cash flow of 181 million yuan in 2024), the total would only be 234 million yuan, far insufficient to cover the 320 million yuan dividend payment.
Consequently, as of the end of 2024, the company still had 122 million yuan in unpaid dividends, recorded as debt. By the end of June 2025, this debt had decreased to 106 million yuan. And as of now, 55.8 million yuan in dividends remain unpaid. Well then, earn a little, pay a little. A perfectly sound company ends up owing its major shareholder a debt before even listing, to be repaid slowly in the future. Even the well-experienced analysts at Fengyun had to express astonishment: There's a master at work! We've seen many cases of draining dividends, but this is an advanced version:透支ing the company's future cash flow to fill the major shareholder's pockets first! Where is the shame? It appears the company is banking heavily on a successful IPO to raise capital, expecting retail investors to help fill the hole, relying on fundraising proceeds to repay this "pre-consumption" debt! As of the end of June 2025, the company had 123 million yuan in cash on its books. After deducting the unpaid dividends, only 67 million yuan remains, creating a significant gap compared to its 120 million yuan in short-term and long-term borrowings. Furthermore, during 2022-2023, YuWang Pharmaceutical improperly diverted 242 million yuan in loans through four banks, with the funds ultimately used for "working capital." During the same period, it also engaged in 223 million yuan of "fictitious bill financing" with two banks in Shandong province.
Although the company subsequently claimed this was due to "improper advice from the financial manager" and "unfamiliarity with relevant regulatory restrictions on bank borrowing," this series of consecutive financing irregularities still exposes underlying liquidity constraints within the company.
Number one in the industry? The claim lacks substance as performance suddenly "turns sour." Returning to the business side, YuWang Bio's story began in 1989. At that time, Liu Xiqian, known as the "Father of Non-GMO Soybeans in China," jointly established Shandong YuWang Pharmaceutical Co., Ltd. with an American natural medicine company, thereby entering the fish oil health products sector.
After over three decades of development, YuWang Bio has become the "world's largest supplier of food-grade refined fish oil and its products." Based on 2024 sales volume of food-grade refined fish oil and its products, YuWang Bio ranks first with a market share of 8.12%.
However, the overall industry concentration is not high, with the CR5 being 32.37%. The difference between the first and fifth players is merely 3 percentage points. Coupled with the inherently low technical barriers and significant product homogenization in the fish oil industry, YuWang Bio's claimed "number one" position does not represent a substantial lead over competitors, and market competition remains intense.
Furthermore, the global market size mentioned at the beginning of the article is currently just over $800 million, equivalent to approximately 5.6 billion yuan, and is only expected to grow to $1 billion by 2029, indicating a relatively low industry ceiling. How compelling a story can YuWang Bio tell in a limited market space and a fiercely competitive landscape? More critically, the company's performance suddenly plummeted in the first half of this year. From 2022 to 2024, YuWang Bio's revenue grew steadily from 534 million yuan to 832 million yuan, with a compound annual growth rate of 24.8%. Net profit attributable to shareholders grew from 67 million yuan to 125 million yuan, with a CAGR of 36.6%, representing a reasonably solid overall growth rate.
But in the first half of 2025, YuWang Bio's performance took a sharp downturn. Revenue fell 27% year-on-year to 343 million yuan, and profit plunged 74% year-on-year to just 23 million yuan.
Simultaneously, the company's profitability also showed a significant decline. The gross profit margin for H1 2025 dropped to 20.74%, down nearly 9 percentage points compared to the same period last year.
Behind this reversal lies multiple pressures: high raw material costs coupled with volatility in both prices and sales volume. The company's product portfolio is highly dependent on the fish oil series, contributing over 98% of revenue, while raw material costs have consistently accounted for over 85% of total costs. The primary raw material is crude fish oil, mostly sourced from Peru. The Peruvian government's annual fishing quotas vary, and the quotas obtained by the company's suppliers differ each year. Tighter annual quotas inevitably lead to price increases. Additionally, factors like weather, fishing seasons, and catch quality affect supply, making it somewhat dependent on "favorable conditions."
From 2018 to 2021, the unit cost of crude fish oil remained relatively stable. However, by 2023, influenced by tightened fishing quotas in South America and increased demand for health products, crude fish oil prices soared, peaking at 69.56 yuan per kilogram. In anticipation of further price rises, the company increased its inventory, leading to a year-end inventory increase of over 40% compared to the previous year. Yet, starting in 2024, crude fish oil prices fell significantly. This decline was passed on to downstream product prices, which also showed a marked drop. In H1 2025, the average selling price of high-purity fish oil fell by nearly 40% compared to the full year 2024. This created a situation of "buying high and selling low," severely squeezing profit margins and causing the gross profit margin to plummet sharply. On the other hand, price increases for fish oil products driven by rising upstream raw material costs also affect sales volume. Taking high-purity fish oil as an example, from 2022 to 2024, the average price per ton increased from 128,000 yuan to 221,000 yuan, while sales volume dropped from 197 tons to 140 tons. In the first half of this year, even though product prices were significantly reduced, market response remained tepid. Product sales volume did not recover; in fact, sales of high-purity fish oil and other fish oil products declined further, further dragging down the company's performance.
In summary, although YuWang Bio claims the top industry spot, its position is precarious. The market itself is not large, competitors are close behind, and profitability is heavily dependent on the "mood" of fish oil raw material prices. The sharp performance decline in the first half of this year is a direct manifestation of this vulnerability.
The path to building a brand is not easy, and customer attrition is significant. If the company wishes to avoid being perpetually at the mercy of raw material prices, it must build more solid competitive advantages, such as establishing a strong brand. The company initially pursued this path. Its proprietary brand "Wangbuliao" gained nationwide popularity with the advertising slogan "Take it and you won't forget, your memory will get better."
However, entering the 21st century, Liu Xiqian's son, Liu Rucui, gradually took over the company. Unlike his father's focus on brand building, Liu Rucui chose the path of contract manufacturing for overseas brands, leveraging production capacity and cost advantages to secure orders from major international dietary supplement brands. In 2024, overseas revenue accounted for over 60% of the total.
Additionally, although the company serves end customers like dietary supplement brand owners, it mostly relies on third-party trading companies to do so. From 2022 to H1 2025, revenue generated through trading companies consistently accounted for 52% to 62% of total revenue. This model weakens the company's bargaining power and compresses its profit margins. Moreover, the company does not have long-term contracts with its customers. Its sales volume heavily depends on the promotional efforts of the trading companies. If a partner's promotion is ineffective or they switch to competitors, the company's sales suffer directly.
In recent years, the company has gradually recognized the importance of its own brand and increased marketing efforts. From 2022 to 2024, advertising and marketing expenses increased from 1.575 million yuan to 3.551 million yuan. However, the results have been limited. In 2024, consumer-facing sales revenue was only 17.3 million yuan, accounting for a mere 2.1% of total revenue.
While sales channels are singular and the proprietary brand remains niche, YuWang Bio is also experiencing customer attrition. In H1 2025, the number of domestic customers decreased from 310 at the end of 2024 to 190, and overseas customers dropped from 240 to 190. Combined, the company lost 170 customers domestically and internationally.
YuWang Bio's listing story is like a bottle of shaken fish oil—on the surface, it gleams with the golden sheen of "global sales leader," but underneath lies a reality of dividend draining and performance collapse. Reaching out to the market for money with one hand, while siphoning off three and a half years of profits with the other—can this "have your cake and eat it too" calculation truly win over the hearts of investors?
Disclaimer: This report (article) is independent third-party research based primarily on the public disclosures (including but not limited to interim announcements, periodic reports, and official interactive platforms) made by the listed company in fulfillment of its statutory obligations, given its public company attribute. Fengyun strives for objectivity and fairness in the content and viewpoints presented but does not guarantee their accuracy, completeness, or timeliness. The information or opinions expressed in this report (article) do not constitute any investment advice. Fengyun accepts no liability for any actions taken based on this report.
Massive information, precise interpretation, all in the Sina Finance App.
Comments