Xiwang Foodstuffs Co., Ltd. (000639.SZ), known as the first corn oil stock listed on the A-share market, experienced a limit-down drop on March 30, closing at 2.88 yuan with a market capitalization of 3.109 billion yuan.

The sharp decline was triggered by recently disclosed audit risks. The company’s auditor, Beijing Zhongming Guocheng Accounting Firm, indicated that insufficient audit evidence could lead to a non-unqualified audit opinion for the 2025 financial reports. It also plans to issue a negative opinion on the effectiveness of the company’s internal controls.

Under relevant listing rules, if the internal control audit report receives a negative opinion, the company’s stock will be placed under special treatment (ST) after the annual report is released. Should the audit report result in a disclaimer or adverse opinion, the stock would face delisting risk warnings (*ST), leaving Xiwang Foodstuffs with limited time to resolve the crisis.

Adding to the uncertainty, the company’s controlling shareholder faces a major stake reduction. A judicial auction conducted by the Jinan Intermediate People’s Court in Shandong Province offered 207 million shares held by Xiwang Group Co., Ltd., representing 99.01% of its holdings and 18.53% of the listed company’s total equity. The auction took place from 10:00 AM on March 30 to 10:00 AM on March 31 via the JD.com judicial auction platform.

If the auction proceeds successfully, the combined stake of Xiwang Group and its acting-in-concert parties would plummet to just 1.87%, leading to a substantial change in control. The auction stems from a equity pledge dispute between Xiwang Group and Binzhou Key Enterprise Development Fund Partnership, involving financing worth 2.072 billion yuan.

This reflects Xiwang Group’s ongoing debt troubles since 2019, when it faced a chain reaction due to guarantees provided to Qixing Group. Public records show that, as of March 2026, the group has been subject to enforcement actions totaling 2.598 billion yuan and is listed as a失信被执行人 (discredited entity).

Beyond the parent company’s debt issues, Xiwang Foodstuffs’ own operations are under pressure. The company’s 2025 performance forecast estimates a net loss attributable to shareholders of 880 million to 1.32 billion yuan. Combined with losses from 2022 to 2024, cumulative losses over the past four years would exceed 1.96 billion yuan.

Management attributes the persistent losses to the underperformance of Iovate, a North American sports nutrition business acquired in 2016 for 4.875 billion yuan. Rising raw material costs for whey protein and intense industry competition have led to significant underperformance in this segment. The company expects to record intangible asset impairment losses of 950 million to 1.5 billion yuan in 2025. Meanwhile, its core edible oil business has also stagnated, with revenue declining for three consecutive years from 2022 to 2024.

The edible oil industry is undergoing significant changes. In January 2026, China’s State Administration for Market Regulation issued updated national standards for peanut oil, soybean oil, sunflower seed oil, and corn oil, which will take effect on August 1, 2026. Industry analysts suggest the new standards will push the market toward standardization, premiumization, and differentiation. While companies may face short-term cost pressures from process upgrades and compliance, the standards are expected to phase out outdated capacity in the long run.

For Xiwang Foodstuffs, navigating both ownership transition and persistent losses, adapting to these industry shifts will be critical for its future survival.