On October 11, China Tourism And Culture Investment Group Co.,Ltd. (hereinafter referred to as "China Tourism And Culture Investment Group", 600358.SH) announced that the company has transferred 100% equity of its wholly-owned subsidiary Jiangxi Guogui Tourism Development Co., Ltd. (hereinafter referred to as "Guogui Tourism") through a non-public agreement transfer.
This transaction is viewed by some market participants as one of China Tourism And Culture Investment Group's moves to accelerate the divestment of its tourism business.
Previously, China Tourism And Culture Investment Group announced it would acquire Jiangxi Runtian Industrial Co., Ltd. (hereinafter referred to as "Runtian Industrial") for 3.009 billion yuan, with packaged drinking water to become its leading business in the future. However, the current mineral water market is highly competitive, with over 70% of Runtian Industrial's revenue coming from Jiangxi province, and its nationwide expansion still in early stages.
**Accelerating Divestment of Tourism Business to Focus on Packaged Drinking Water and Other Business Layouts**
Yesterday, China Tourism And Culture Investment Group announced that the company has transferred 100% equity of its wholly-owned subsidiary Guogui Tourism to Jiangxi Changlu Scenic Area Management Group Co., Ltd. for 13.5988 million yuan through a non-public agreement transfer. This transaction is viewed by some market participants as one of China Tourism And Culture Investment Group's moves to accelerate the divestment of its tourism business.
Currently, China Tourism And Culture Investment Group's main revenue source is internet marketing business. According to the company's latest semi-annual report, the company's revenue in the first half of the year was 194 million yuan, down 2.97% year-on-year, with a loss of 15.3627 million yuan. The company's main businesses include internet digital marketing, cross-border e-commerce import and export, and tourism. Among these, internet marketing business achieved operating revenue of 154 million yuan in the first half of the year, accounting for 79.48% of the company's operating revenue.
In the first half of this year, China Tourism And Culture Investment Group disclosed plans to purchase 100% of Runtian Industrial's shares held by three counterparties - Jiangxi Maitong, Runtian Investment, and Jinkai Capital - through share issuance and cash payment, while raising supporting funds. The company stated that after completion of this transaction, China Tourism And Culture Investment Group will form a business layout with packaged drinking water as the leader, and internet digital marketing business and cross-border e-commerce business as two wings.
On September 20, China Tourism And Culture Investment Group released an evaluation report stating that the market value of all shareholders' equity of Runtian Industrial as of the evaluation base date was 3.009 billion yuan, with an evaluation appreciation rate of 153.83%.
On October 11, Lin Yue, chief consultant at Lingyan Management Consulting and food and beverage industry analyst, told the media that "high-priced acquisition" can quite accurately summarize the key point of this transaction. Essentially, this is a resource integration led by Jiangxi provincial state-owned assets, aimed at simultaneously solving China Tourism And Culture Investment Group's "shell preservation" and Runtian's listing difficulties. For China Tourism And Culture Investment Group, the transaction can achieve revenue growth and turn losses into profits after completion, while Runtian can achieve its listing goal, which can be described as "killing two birds with one stone." However, whether Runtian can subsequently support the current valuation remains an unknown.
**Runtian Industrial Had Revenue of 12.6 Billion Yuan Last Year, with Over 70% of Revenue from Jiangxi**
Public information shows that Runtian Industrial is mainly engaged in the production and sales of packaged drinking water and is one of the earliest participants in China's packaged drinking water industry. Its main products are drinking purified water, drinking natural mineral water, and healthy beverages. Financial data shows that in 2024, Runtian Industrial's total assets were 1.635 billion yuan, operating revenue was 12.60 billion yuan, and total profit was 233 million yuan.
According to China Tourism And Culture Investment Group's announcement, Runtian Industrial's drinking water product production and sales volume in 2024 was 1.9 million tons, ranking eighth among national drinking water enterprises in terms of production volume, with products holding approximately 58.5% market share in the Jiangxi market in 2024. However, currently more than 70% of Runtian Industrial's revenue comes from Jiangxi, and its nationwide expansion is still in early stages.
"Runtian is undoubtedly the 'packaged water leader' in Jiangxi province, with nearly 60% provincial market share and good public reputation. However, its brand influence in other national markets is very weak, with a large gap compared to national leading brands," Lin Yue said on October 11. He believes that the current packaged water market competition is already a brutal red ocean, and it would be very difficult for Runtian to compete for market share in other cities, as the 1 yuan low price is no longer an advantage.
Renowned strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, stated that if Runtian can leverage China Tourism And Culture Investment Group's resources to accelerate national layout and strengthen its brand through the backdoor listing, it may open up new opportunities. However, it needs to break through regional limitations and enhance product competitiveness, otherwise the synergistic effects of the backdoor listing may be difficult to realize, and long-term development still faces challenges.
According to China Tourism And Culture Investment Group's disclosure, based on 2024 simulation calculations, if the transaction is completed, China Tourism And Culture Investment Group's 2024 revenue will increase from 365 million yuan to 1.625 billion yuan, an increase of 345%; net profit attributable to the parent company will turn from a loss of 64 million yuan to a profit of 112 million yuan; and the asset-liability ratio will decrease from 78.3% to 34.9%.
On October 11, when contacted by phone as an investor, a China Tourism And Culture Investment Group staff member stated that the acquisition is currently under review, and detailed information and subsequent arrangements should refer to company announcements. Subsequently, when calling Runtian Industrial's public phone number, no one answered as of press time.
This transaction still requires approval from the Shanghai Stock Exchange and registration consent from the China Securities Regulatory Commission. However, both China Tourism And Culture Investment Group and Runtian Industrial have faced continuous issues this year.
In March this year, China Tourism And Culture Investment Group announced that it was fined 2 million yuan by the Jiangxi Securities Regulatory Bureau for suspected violations of information disclosure regulations. In July this year, it was reported that Wei Miaomiao, the wife of Jiangxi Runtian mineral water founder Huang Angen, posted a series of videos on social networks that attracted attention. However, Huang Angen had already left Runtian ten years ago. At that time, Runtian Industrial responded that Huang Angen and his spouse Wei Miaomiao have no relationship with the company.
Comments