Shanghai Hi-Road Food Technology Co.,Ltd. (300915.SZ) announced on the evening of July 30 its plan to use 130 million yuan of its own funds to acquire a 55% stake in Tanghe Food (Kunshan) Co., Ltd. (the "Target Company") from Shanghai Tangdou Technology Co., Ltd. ("Tangdou Technology"). The transaction will make Tanghe Food a subsidiary of Shanghai Hi-Road Food Technology Co.,Ltd.
Unlike typical acquisitions, this deal includes a critical prerequisite: Hema (China) must simultaneously sign a long-term strategic cooperation agreement with Shanghai Hi-Road Food Technology Co.,Ltd. and Tangdou Technology's Tanghe Food. Under this agreement, Hema commits to purchasing at least 210 million yuan annually from Tanghe Food between 2026 and 2030, totaling at least 1.05 billion yuan over five years. However, the acquisition premium is approximately 691.2%, and the target company's revenue heavily relies on related-party transactions, posing significant risks of goodwill impairment if the target company's performance falls short of expectations.
The target company's related-party transactions exceed 90% of revenue
Tangdou Technology, the seller, is an industrial internet company controlled by the Hema Group, focusing on Hema's bakery brand operations and supply chain development. Tianyancha shows Hema (China) holds 80%, while Cao Guoliang, founder of the bakery brand "Dad's Bread," owns 20%. In 2022, the company established Tanghe Food, which specializes in bakery product R&D, production, and supply. In April 2023, Tanghe Food's first factory in Kunshan, located within the Yihai Kerry Industrial Park, began operations with three production lines covering white toast, Hokkaido toast, large croissants, and frozen dough.
The announcement states that the target company has vertically integrated upstream bakery suppliers and downstream manufacturers, cooperating with Yihai Kerry upstream and Hema downstream to secure stable orders. For Shanghai Hi-Road Food Technology Co.,Ltd., acquiring a downstream bakery finished product company means extending from "selling raw materials to bakeries" to "directly supplying finished products."
The most notable aspect of the acquisition is its prerequisite. Under the long-term strategic cooperation agreement signed by Shanghai Hi-Road Food Technology Co.,Ltd., Hema (China), and Tanghe Food, Hema and its affiliates must place purchase orders totaling at least 210 million yuan annually, contingent on Tanghe Food's full performance, through 2030. This commitment provides a baseline performance guarantee for the target company over the next five years, revealing the acquisition's essence as "equity in exchange for channels."
To secure Hema's new retail bakery supply chain cooperation, Shanghai Hi-Road Food Technology Co.,Ltd. has incurred significant costs. The announcement shows that as of March 31, 2026, the target company's net assets were only 29.8739 million yuan, with the 55% stake corresponding to about 16.43 million yuan. The transaction price of 130 million yuan implies an acquisition premium of approximately 691%.
The high premium carries risks. First, Tanghe Food's current business scale is small. Audited data shows that in 2025, Tanghe Food's revenue was 209 million yuan, with net profit of 18.3945 million yuan. In the first quarter of this year, its revenue and net profit were 56.1527 million yuan and 5.7956 million yuan, respectively. Further analysis of the target company's revenue structure reveals heavy reliance on related parties. In 2025, Tanghe Food sold about 183 million yuan to Hema, about 5.859 million yuan to Cao Guoliang's Gu Baifen Food and Dad's Bread Food, and about 2.5035 million yuan to Tangdou Technology, totaling related-party transactions of about 192 million yuan, accounting for over 90% of annual revenue. In the first quarter of 2026, related-party transactions reached 51.8322 million yuan, with sales to Hema amounting to 49.1904 million yuan, or 94.9%.
Shanghai Hi-Road Food Technology Co.,Ltd. acknowledged in the announcement that the target company's client concentration is high. If the core client relationship experiences significant adverse changes or new client expansion falls short, future performance faces substantial uncertainty.
Last year, the cream main business faced growth pressure
Shanghai Hi-Road Food Technology Co.,Ltd. is a domestic supplier of bakery raw materials, including cream, catering products, jams, and chocolate. In 2025, the company's performance hit a "sharp brake," with revenue falling below the 1 billion yuan mark, down 8.18% year-on-year. Net profit attributable to the parent company recorded its first loss since listing, totaling a net loss of 18.1281 million yuan.
Rising raw material costs are a primary factor dragging down Shanghai Hi-Road Food Technology Co.,Ltd.'s profitability. In 2025, the company's operating costs increased by 6.8% year-on-year to 754 million yuan, a record high, with the core cream product's operating costs rising by 7.83%. The industry also faces cost pressures: in 2025, Ligao Food's cream product operating costs increased by 24.73% year-on-year, while Nanciao Food's light cream operating costs rose by 10.96%.
Against the backdrop of rigid raw material cost increases, revenue performance becomes a key variable determining profitability. In 2025, Shanghai Hi-Road Food Technology Co.,Ltd.'s cream product revenue was 928 million yuan, down 7.89% year-on-year. Since cream revenue accounts for over 90% of total revenue, this single-product structure makes the company highly vulnerable to raw material price fluctuations and changes in downstream demand. The company attributed the decline in core product revenue to deep adjustments in market demand and channel structure. In comparison, Ligao Food's cream product revenue reached 1.232 billion yuan, up 16.41% year-on-year.
Facing intense competition in traditional bakery channels and product homogenization, Shanghai Hi-Road Food Technology Co.,Ltd. is increasing its investment in new retail channels. The acquisition of the target company is a key step in accelerating its new retail strategy in the bakery sector. The company stated that this transaction will help build a comprehensive global bakery supply system.
Notably, although Hema has committed to annual purchases of at least 210 million yuan, this commitment is conditional on Tanghe Food fully fulfilling obligations, including R&D commitments, priority guarantee of production capacity, and open recipe processes. Additionally, if market demand falls by more than 20% compared to 2025, Hema (China) and/or its affiliates have the right to unilaterally reduce purchase amounts without liability for breach of contract. For Shanghai Hi-Road Food Technology Co.,Ltd., securing a "ticket" from Hema is only the first step; whether it can truly open up new retail growth space remains to be tested over time.
(This article was first published on Securities Star, by Wu Fan)
Comments