Zoneco Group Co.,Ltd. recently announced that its third-largest shareholder, the Hedao No.1 Fund, has unveiled another reduction plan, intending to sell up to 7.5377 million shares, representing 1.06% of the total share capital. Since the start of 2025, the fund has executed two consecutive rounds of reductions, cashing out approximately 56 million yuan in total. With this latest reduction plan added, the signal of institutional investors continuously exiting is significant. Despite the company setting a full-year turnaround target after the Dalian municipal state-owned assets took control, significant hidden risks remain in the company's operations from the perspectives of shareholder actions, core business profitability, and financial structure, making the full-year profit target difficult to achieve.
01 Persistent Institutional Cash-Outs Weigh on Market Confidence
The Hedao No.1 Fund became a shareholder of Zoneco Group Co.,Ltd. in 2016 through a share transfer, with a peak holding of 8.32%. It has now entered a phase of continuous reduction. From August to September 2025, the fund reduced its holdings by 7.08 million shares, cashing out nearly 30 million yuan. From January to April 2026, it further reduced holdings by 7.0827 million shares, cashing out over 26 million yuan, for a total cash-out of 56 million yuan across the two rounds. Just three months after the previous reduction period ended, the fund disclosed another reduction plan, covering the period from August to November 2026, citing fund liquidation and the capital needs of its holders.
From a market perspective, the concentrated and continuous reductions by a major institutional shareholder convey a cautious outlook on the company's medium-to-long-term development, directly impacting sentiment in the secondary market. So far this year, Zoneco Group Co.,Ltd.'s stock price has fallen by over 15%, and the share price has been persistently low. Even though the company states that the reduction will not change actual control, the continuous selling pressure will continue to suppress the stock's valuation. If the reduction is implemented, it could further trigger risk-averse capital outflows from retail investors.
02 Weak Core Business Cash Generation, Lack of Sustainable Profitability
Persistent losses in its core business are the most crucial operational pain point for Zoneco Group Co.,Ltd. Over the 12 years from 2014 to 2025, the company reported only two years (2018 and 2023) of slight profitability in non-recurring net profit, while the core business remained loss-making for the other ten years. In 2024 and 2025, non-recurring losses were 113 million yuan and 62.1048 million yuan, respectively, indicating persistently weak profitability in its core aquaculture and processing businesses.
Revenue has also been shrinking continuously. From 2022 to 2025, revenue declined for four consecutive years, falling from a peak of 3.2 billion yuan to 1.278 billion yuan in 2025. In the first quarter of 2026, revenue was 317 million yuan, a year-on-year decrease of 22.61%. While the book net profit attributable to the parent company turned slightly positive in the first quarter to 2.5585 million yuan, the non-recurring net profit still showed a loss of 463,700 yuan. Short-term profitability relies on one-time gains from the disposal of non-core assets, not an improvement in the fundamental business operations.
The company has set targets for 2026 of no less than 1.7 billion yuan in revenue and a return to positive full-year net profit. However, with the current dual weakness in revenue growth and profitability from its main business, combined with uncontrollable natural risks in marine farming such as climate and sea area conditions, the annual turnaround target carries significant uncertainty.
03 Crushing High Debt, Deteriorating Cash Flow, and Elevated Funding Chain Risks
The deterioration of the financial structure is a key weakness constraining Zoneco Group Co.,Ltd.'s development. Since 2019, the company's asset-liability ratio has consistently exceeded 90%, reaching 96.83% at the end of 2025 and further climbing to 97.24% in the first quarter of 2026, teetering on the brink of insolvency. As of the end of the first quarter, the company had short-term borrowings of 1.181 billion yuan and long-term borrowings of 713 million yuan. This high level of interest-bearing debt continuously generates financial expenses, eroding profits.
Cash flow risks are also emerging simultaneously. In the first quarter, net cash flow from operating activities was negative 40.2122 million yuan, meaning operational cash inflows cannot cover outflows. The book cash balance of 500 million yuan is insufficient to cover the nearly 1.9 billion yuan in interest-bearing debt. The company recently planned to invest over 64 million yuan in total for projects like deep-sea farming and island monitoring, funded by its own or self-raised capital, which will further intensify capital turnover pressure.
The company had previously launched a 500 million yuan private placement plan to repay debts and supplement working capital. However, progress has been slow since the plan was announced over a year ago. Management stated that "the pace is subject to needs," and the timing for the final implementation of the placement cannot be determined. If the placement is significantly delayed, the company will have to rely on continuous borrowing to maintain operations, which will further increase the debt ratio and amplify risks of debt default and liquidity strain.
In summary, while Zoneco Group Co.,Ltd. has the backing of state-owned assets and is laying out plans for upgrading its aquaculture, the triple combination of continuous institutional shareholder reductions, long-term core business losses, and extremely high debt levels makes it difficult to fundamentally reverse its operational difficulties in the short term. Investors need to be wary of multiple investment risks, including performance falling short of expectations, intensified debt pressure, and a persistently weakening stock price.
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