EASTROC (Group) Co., Ltd. officially commenced trading on the main board of the Hong Kong Stock Exchange on February 3, with an issue price set at HKD 248. The listing raised approximately HKD 10.1 billion, establishing the company as the first functional beverage firm in China to achieve a dual listing on both the A-share and H-share markets.
However, the listing has been accompanied by several controversies. Firstly, despite being a rapidly growing beverage company with substantial accumulated cash on its books, EASTROC also carries significant debt, presenting a notable case of high deposits alongside high loans.
Secondly, ownership of EASTROC has historically been highly concentrated, with multiple family members of the controlling shareholder holding stakes exceeding 5%. The Hong Kong listing has reduced their shareholding percentages to below 5%, leading some analysts to suggest that this move conveniently paves the way for future share减持.
Passive dilution of equity facilitates减持 by controlling shareholder's family members? A direct impact of EASTROC's Hong Kong listing on its ownership structure is the reduction of stakes held by several family members of the controlling shareholder to below 5%.
The controlling shareholder and actual controller of EASTROC is Lin Muqin, who directly held 49.74% of the shares as of the first half of 2025. His brother, Lin Mugang, directly held 5.22%, and his nephew, Lin Daiqin, directly held 5.22%. Ruichang City Kunpeng Venture Capital Partnership (Limited Partnership) held 5.06% (within the limited partnership, Lin Muqin's son Lin Yupeng held a 54.05% interest, and Lin Muqin held a 9.01% interest). It is worth noting that these shareholders do not have any acting-in-concert arrangements amongst themselves.
Following the Hong Kong listing, Lin Mugang's stake decreased to 4.84%, Lin Daiqin's stake decreased to 4.84%, and Kunpeng Investment's stake decreased to 4.69%.
According to A-share market regulations, shareholders holding more than 5% of shares must pre-disclose their减持 plans 15 trading days in advance if they intend to reduce their holdings. Furthermore, within any three-month period, the number of shares sold through centralized bidding cannot exceed 1% of the company's total share capital. These rules significantly restrict the flexibility of major shareholders'减持. Shareholders holding less than 5% are not subject to these pre-disclosure requirements or sales volume limits, granting them significantly greater freedom to reduce their holdings. Consequently, some analysis views this listing move as effectively paving the way for future shareholder减持.
In fact, Kunpeng Investment conducted a round of减持 between March and May 2025, reducing its stake by a total of 1.3784% and realizing proceeds of approximately 1.908 billion yuan. On the other hand, due to the high shareholding concentration within the controlling shareholder's family, substantial cash dividends in recent years have already served as a form of partial "cashing out." From 2021 to the end of the third quarter of 2025, EASTROC's total dividend distributions reached 6.6 billion yuan, accounting for 56% of its net profit attributable to the parent company during that period.
Adequate cash on the books, so why maintain high deposits and high loans? Another major controversy surrounding EASTROC's Hong Kong listing revolves around its simultaneous high levels of cash deposits and loans.
EASTROC is not short of funds. From 2021 to 2024, the company's revenue grew from 6.978 billion yuan to 15.839 billion yuan, while its net profit attributable to the parent company increased from 1.193 billion yuan to 3.33 billion yuan. Alongside this high growth, the company accumulated a large cash balance. By the end of the third quarter of 2025, EASTROC held 5.72 billion yuan in cash, with an additional 3.477 billion yuan in financial assets at fair value through profit or loss, bringing the total to 9.197 billion yuan.
Conversely, EASTROC's short-term interest-bearing debt reached 6.988 billion yuan, exceeding its cash on hand. Furthermore, its asset-liability ratio stood at 63.24% as of the end of the third quarter of 2025.
This situation of high deposits and high loans essentially reflects EASTROC's carry trade strategy involving "accounts receivable bill discounting + wealth management investments."
As a fast-moving consumer goods company with numerous downstream distributors, its daily operations generate a significant volume of receivables in the form of bills. To obtain funds earlier, the company discounts these bills with banks, paying a discount interest rate to receive cash upfront. According to public information, EASTROC's short-term borrowings primarily consist of bank advances against discounted bills receivable and discounted letters of credit.
The interest on borrowings tied to discounted bills receivable and letters of credit is relatively low. After obtaining this low-cost funding, EASTROC primarily invests it in low-risk wealth management products such as bank structured deposits. These structured deposits are typically linked to low-risk assets like government bonds or options, offering relatively stable returns. Through this operation, EASTROC generates stable net interest income. The company has previously disclosed that it uses low-cost funds obtained through letter of credit and bill discounting to purchase higher-yielding products like bank wealth management products and large-denomination certificates of deposit, with the income from these investments significantly exceeding the discount interest expenses during the same periods.
In 2024, the company's financial expenses were approximately -191 million yuan, indicating that interest income substantially surpassed interest expenses and began contributing to profits. Net investment income was 95.3159 million yuan, and net gains from changes in fair value were 32.9486 million yuan. For the first three quarters of 2025, these figures were -73.6906 million yuan, 90.6573 million yuan, and 200 million yuan, respectively. This suggests that EASTROC's investment activities are entering a harvest period.
Nevertheless, this "high deposit, high loan" model has drawn market skepticism. Firstly, against the backdrop of slowing economic growth, the sustainability and safety of wealth management returns warrant attention. Secondly, the substantial wealth management investments, high cash reserves, and significant dividend payouts also raise questions about the necessity of the recent fundraising exercise.
EASTROC is currently in an expansion phase. As of the end of the third quarter of 2025, its fixed assets reached a new high, and construction in progress stood at 1.782 billion yuan, with 10 ongoing projects on its books as of the first half of 2025. According to its prospectus, the funds raised from the Hong Kong listing are intended primarily to support national expansion and overseas supply chain construction.
In 2024, energy drinks still contributed a high proportion of EASTROC's revenue at 84%. Although revenue from its diversified product portfolio is growing rapidly, these products require time to mature. Regarding its international expansion strategy, the company has established subsidiaries in Indonesia and Vietnam since 2022, focusing on developing the Southeast Asian market.
The critical question remains whether the company's substantial investments in domestic and international markets will ultimately yield the expected returns.