Shanxi Xinghuacun Fen Wine Factory Co.,Ltd. (600809.SH) announced on September 22 that its second-largest shareholder, Huachuang Xinrui (Hong Kong) Limited ("Huachuang Xinrui"), plans to reduce its holdings in the listed company.
Huachuang Xinrui was established in December 2017 as a company specifically created by China Resources Group to invest in Shanxi Xinghuacun Fen Wine Factory. At its inception, China Resources Venture Limited ("China Resources Venture") held an 80.62% stake, while the China Resources Venture Union Fund Phase I (Limited Partnership) ("Union Fund"), established by China Resources Venture, held 19.38%.
In February 2018, Fen Wine Group transferred an 11.45% stake in Shanxi Xinghuacun Fen Wine Factory to Huachuang Xinrui, making Huachuang Xinrui the second-largest shareholder as a strategic investor. This marked China Resources' first investment in Shanxi Xinghuacun Fen Wine Factory. Over the subsequent six years, Huachuang Xinrui's shareholding percentage in Shanxi Xinghuacun Fen Wine Factory remained unchanged.
Huachuang Xinrui's share reduction activities began in May 2024, when it planned to reduce holdings by 8 million shares through block trading, actually reducing 1.702 million shares during the implementation period. In November last year, Shanxi Xinghuacun Fen Wine Factory announced that Huachuang Xinrui planned to reduce holdings by no more than 6.3 million shares through block trading, with the reduction plan implemented between December 23, 2024, and February 19, 2025, actually reducing 6.3 million shares.
Regarding the newly disclosed reduction plan, Shanxi Xinghuacun Fen Wine Factory stated: "According to the relevant cooperation agreement of the Union Fund, the fund faces expiration and exit arrangements and needs to reduce all Shanxi Xinghuacun Fen Wine Factory shares it indirectly holds. Therefore, Huachuang Xinrui plans to reduce holdings by no more than 16.2006 million shares through block trading. After the reduction is completed, the Union Fund will be liquidated and will no longer hold shares in Huachuang Xinrui."
The announcement shows that as of September 22, Huachuang Xinrui held 128.1143 million shares of Shanxi Xinghuacun Fen Wine Factory, accounting for 10.50% of the total share capital. China Resources Venture and Union Fund hold 87.36% and 12.64% of Huachuang Xinrui's shares, respectively. Apart from Shanxi Xinghuacun Fen Wine Factory, Huachuang Xinrui currently has no other external investments.
Shanxi Xinghuacun Fen Wine Factory stated in the announcement that this reduction plan will not change China Resources Venture's firm confidence in the company's future development prospects and high recognition of the company's long-term value. China Resources Venture will continue to hold company shares through Huachuang Xinrui and has no plans to reduce company shareholdings.
As China's leading fragrant-type liquor company, Shanxi Xinghuacun Fen Wine Factory has experienced rapid growth in the liquor industry in recent years, but also faced continuous deceleration in revenue growth from 2022 to 2024.
In the first half of 2025, Shanxi Xinghuacun Fen Wine Factory achieved operating revenue of 23.964 billion yuan, a year-over-year increase of 5.35%, with growth rate decreasing by 14.3 percentage points compared to the same period last year. Net profit reached 8.523 billion yuan, a year-over-year increase of only 1.18%, with growth rate decreasing by 22.85 percentage points compared to the same period last year. Net profit growth rate fell to single digits for the first time in 10 years.
Notably, in the first half of 2025, Shanxi Xinghuacun Fen Wine Factory's inventory increased by 13.76% year-over-year to 13.198 billion yuan, while warehousing expenses in selling expenses increased by 46.33% year-over-year to 109 million yuan. Regarding why warehousing expense growth far exceeded inventory growth and whether the company underestimated inventory, inquiries were sent to Shanxi Xinghuacun Fen Wine Factory, but no response was received by press time.
Additionally, it was noted that Shanxi Xinghuacun Fen Wine Factory's net cash flow from operating activities in the first half was only 5.98 billion yuan, significantly lower than net profit for the same period. Report notes show this was due to "other cash related to operating activities" for advertising and promotional expenses totaling 583 million yuan, compared to only 284 million yuan in the same period of 2024, representing a 105% year-over-year increase. Regarding the reason for this sudden substantial increase in cash payments, Shanxi Xinghuacun Fen Wine Factory also did not respond to inquiries.