Core Insight: As the parent company faces a debt crisis, why are Xiangyuan Group’s listed companies being dumped by the market? Can their clarification announcements fully isolate risks from the parent company? Could these risks spill over to the subsidiaries? Notably, just before the crisis, Xiangyuan spent nearly HKD 2.3 billion to acquire HAICHANG HLDG—will this prove a boost or a burden? It’s worth noting that HAICHANG HLDG itself faces significant liquidity pressure.
Recently, Xiangyuan Holdings triggered a stock plunge across its listed companies after failing to repay multiple financial products issued through Zhejiang Financial Asset Exchange.
Public records show rumors of Xiangyuan’s crisis emerged in late November when 2–3 of its financial products (with 4%–5% expected yields) defaulted, involving over RMB 10 billion. The guarantors were Xiangyuan Holdings and its founder Yu Faxiang.
As the situation escalated, Xiangyuan’s listed subsidiaries—Jiaotong Construction, Xiangyuan Culture & Tourism, and HAICHANG HLDG—rushed to issue clarifications.
All three firms stated they had verified with Xiangyuan Holdings and confirmed: 1. Certain financial products tied to Xiangyuan’s real estate projects were overdue, with Xiangyuan and its founder as guarantors. Negotiations are ongoing. 2. The products are unrelated to the listed companies or their subsidiaries. 3. The firms bear no repayment or guarantee obligations and provided no credit enhancement.
Despite the clarifications, investors fled. By December 11, Jiaotong Construction’s shares had dropped nearly 30%, HAICHANG HLDG over 15%, and Xiangyuan Culture & Tourism over 10%.
Key questions remain: Why did the market reject these stocks? Can the parent’s risks truly be quarantined? Might they still infect the subsidiaries?
**HKD 2.3B Acquisition Before the Crisis** On June 2, HAICHANG HLDG announced a deal with Xiangyuan’s offshore subsidiary to issue 5.1 billion new shares at HKD 0.45 apiece (total: HKD 2.295 billion). Upon completion, Xiangyuan would hold 38.6%, becoming the controlling shareholder.
Xiangyuan planned to fund the deal internally, except for RMB 1.4 billion from partnerships, with the remaining RMB 800 million via bank loans.
HAICHANG HLDG cited sluggish post-pandemic recovery, operational losses, and liquidity pressure. The acquisition, it argued, would bring strategic resources, working capital, and lower financing costs.
The two parties pledged synergies in theme parks, OAAS, and IP operations, leveraging HAICHANG’s marine assets and Xiangyuan’s tourism clusters. The transaction closed on October 17, making Xiangyuan the new controlling shareholder.
**HAICHANG HLDG’s Losses Deepen** HAICHANG HLDG’s H1 2025 report showed revenue down 14.19% YoY to RMB 686 million, with net losses widening 250.41% to RMB -295 million. The company blamed fewer visitors and weaker consumer spending.
Its Fuzhou project, under negotiation with local state-owned partners, is slated for a 2026 launch. However, with RMB 1.648 billion in short-term debt and just RMB 98 million in cash, liquidity remains a hurdle.
As Xiangyuan’s crisis unfolds, can HAICHANG HLDG escape its liquidity trap? Will Xiangyuan’s involvement help or hurt? The market watches closely.
Notably, Xiangyuan’s other listed units—Jiaotong Construction and Xiangyuan Culture & Tourism—have over 80% of shares pledged by their parent. Falling stock prices now raise risks of margin calls.
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