One of the "three giants of marinated food," Jiangxi Huangshanghuang Group Food Co.,Ltd. (002695.SZ), has released its third-quarter financial results, presenting its worst revenue performance in five years.
On October 20, Jiangxi Huangshanghuang disclosed its Q3 report, revealing that the company achieved revenue of 1.379 billion yuan in the first three quarters, a year-on-year decline of 5.08%. In comparison, the company's revenues from 2021 to 2024 for the same period were 1.933 billion yuan, 1.618 billion yuan, 1.581 billion yuan, and 1.452 billion yuan, indicating a continuous decline in revenue over four consecutive years. The revenue of 1.379 billion yuan recorded in the first three quarters of 2025 is only 71% of the amount during the same period in 2021, indicating a significant contraction in its core marinated food business.
Contrasting with the revenue decline, profits showed signs of recovery. In the first three quarters, the company reported a net profit attributable to shareholders of 101 million yuan, reflecting a year-on-year increase of 28.59%, returning to the level seen in the same period in 2023. This growth can be attributed to effective cost control measures. Jiangxi Huangshanghuang's selling expenses amounted to 163 million yuan, down 26.39% year-on-year; management expenses were 125 million yuan, a 5.7% decrease; and R&D expenses totaled 44.18 million yuan, a decline of 16.62%. The reduction in expenses has directly enhanced profit margins, with a net profit margin of 7.57%, an increase from 5.35% in the same period of 2024.
It is important to note that the marinated food market has been facing dual pressures from slowing growth and intensified competition in recent years. In light of the continuing performance decline, Jiangxi Huangshanghuang aims to explore a secondary growth avenue through cross-industry acquisitions. In the third quarter, the company completed an acquisition worth nearly 500 million yuan, which has drawn significant public attention.
In August, the company announced its plan to acquire 51% equity in leading freeze-dried food company Lixing Foods for approximately 495 million yuan, with the acquisition price appreciating by around 250% against its valuation. Following the announcement, Jiangxi Huangshanghuang's stock price hit its daily limit down in the first trading session. This is not the company's first attempt at cross-industry acquisition; last year, it planned to acquire a snack food company in Guangdong but ultimately failed to finalize the deal.
Currently, Lixing Foods has completed the equity change procedures and was incorporated into Jiangxi Huangshanghuang's consolidated financial statements in September. After the Q3 report was released, investors inquired about the profit brought by the acquisition of Lixing Foods. In response, the company secretary stated that Lixing Foods generated a total profit before tax of 9.302 million yuan in September, with a profit attributable to the listed company before tax of 4.7431 million yuan. This indicates that Lixing Foods' monthly profit contribution accounted for approximately 20% of Jiangxi Huangshanghuang's net profit attributable to shareholders for Q3 (24.1079 million yuan), becoming an important part of the company's earnings.
Based on acquisition data, Lixing Foods recorded revenue of 251 million yuan and a net profit of 42 million yuan in the first half of 2025, with a net profit margin of 16.68%, more than double that of Jiangxi Huangshanghuang (7.79%) during the same period, positioning Lixing Foods as a "profit cash cow" for Jiangxi Huangshanghuang.
This acquisition has significantly impacted several of Jiangxi Huangshanghuang's financial indicators. As of the end of September, the company's accounts receivable stood at 128 million yuan, up more than six-fold from the beginning of the year; prepayments increased by 64.43% to 6.5 million yuan; short-term borrowings doubled to 9.2 million yuan; and accounts payable surged 47.24% to 204 million yuan. The company attributed these changes to the incorporation of its newly acquired subsidiary, Fujian Lixing, into the consolidated reports.
However, there are heightened concerns regarding goodwill risks. The company's goodwill surged from 22.42 million yuan at mid-year to 335 million yuan in the third quarter, an increase of nearly 14-fold, primarily due to the acquisition. Concurrently, the debt-to-asset ratio also spiked, reaching a near ten-year high of 24.08% in Q3.
Market participants are worried that if Lixing Foods' future profits do not meet expectations, the high goodwill may require impairment, thereby directly eroding net profits and becoming a potential "landmine" on the income statement.
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