Xiwang Food Co., Ltd. Faces Judicial Auction: Control of the "Number One Corn Oil Brand" May Change Hands

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Jingjing News reporter Yan Na, Sun Jizheng, reporting from Chengdu

“The first corn oil stock,” Xiwang Food (000639.SZ), is about to undergo a major equity change. According to a notice it disclosed recently, the 200,065,333 shares of the company held by its controlling shareholder, Xiwang Group Co., Ltd. (hereinafter “Xiwang Group”), will be publicly auctioned in late March on JD’s judicial auction platform. This tranche of shares accounts for 99.01% of Xiwang Group’s total holdings and 18.53% of the company’s total share capital. If this auction is completed successfully, the shareholding proportion of Xiwang Group and its parties acting in concert will fall to 1.87%, and the listed company’s actual control will undergo a substantive change.

The immediate trigger for this judicial auction is that Xiwang Group’s 2019 equity-pledge financing of CNY 2.072 billion has not been repaid upon maturity. The financing was provided by a locally state-owned enterprise–backed fund and had been viewed as a key debt-relief source to alleviate the group’s liquidity crisis. From the history of equity changes, the shares held by Xiwang Group and its parties acting in concert have been judicially disposed of multiple times over the past several years, gradually weakening their ability to control the listed company.

In an interview request letter sent by Jingying News’s reporter to Xiwang Food regarding this auction, the company’s future development direction, and other issues, no response had been received as of the time of publication. Many industry experts believe that after the change in control, the strategic choices and resource-integration capability of the new controlling party will directly determine the future direction of this corn oil sub-sector leader.

A debt crisis behind the auction

Xiwang Group’s debt crisis can be traced back to the 2017 debt default incident involving Qixing Group. As a private enterprise based in Zouping County-level city, Shandong, Xiwang Group had large mutual-guarantee arrangements with Qixing Group, involving guarantee amounts ranging from CNY 2.464 billion to CNY 2.907 billion. Although, with coordination from the local government, Xiwang Group only assumed responsibility at 10% of the guarantee amount, financial institutions’ confidence in its credit declined significantly; its issuer credit rating was downgraded, and its direct financing channels were substantially narrowed.

Financial statement data show that as of the end of the third quarter of 2019, Xiwang Group’s total liabilities were about CNY 30.9 billion, of which current liabilities were CNY 16.369 billion, while cash and cash equivalents were only CNY 1.373 billion, leaving its cash-flow chain under severe strain. In July 2019, Shandong Financial Asset Management Co., Ltd., Binzhou Caijin Investment Group, and Zouping Guotou Group jointly established a CNY 3.0 billion key enterprise development fund to provide debt-relief support to Xiwang Group. In August of the same year, Xiwang Group pledged its shares in Xiwang Food to this fund to obtain CNY 2.072 billion in financing, with a maturity date set for August 2022; both sides agreed that this pledge would have neither an early-warning line nor a margin call line.

This debt-relief funding did not fundamentally reverse Xiwang Group’s operating situation; the relevant debt went overdue in August 2022. In 2020, Xiwang Group applied to the court for judicial restructuring on the grounds that it could not repay the debts due, extending the debt-deleveraging cycle through methods such as installment repayment and debt-to-equity conversion. However, debt risk continued to be exposed. According to Tianyancha data, as of March 15, 2026, Xiwang Group still had 4 information records as a judgment debtor/defendant, with a total executed amount of CNY 2.598 billion. In addition, the company also had 50 equity freezing records, of which 24 equity freezes occurred in 2025.

In recent years, shares held by Xiwang Group and its parties acting in concert, Yonghua Investment, have been put up for judicial auction multiple times. As disclosed in this announcement, the shares cumulatively auctioned totaled 546.63 million shares, representing 50.64% of the company’s total share capital. The third-quarter report shows that Xiwang Group became the largest shareholder with a 18.72% shareholding ratio, but 99.01% of the shares it holds are pledged. If this 200 million-share auction is completed, the combined shareholding ratio of Xiwang Group, Yonghua Investment, and the actual controller Wang Di will drop from 52.51% suddenly to 1.87%, and the structure of the company’s top ten shareholders will face major adjustments.

As of the end of September 2025, the company’s top ten shareholders collectively held 38.35%, and the equity structure is dispersed. The second-largest shareholder, Juneng Capital, has a background in Shandong’s state-owned assets; it holds 4%. Multiple individual shareholders—including Li Songfeng, Fang Lei, Zhong Ge, and others who are active in the judicial auction market—have entered the top ten shareholders list through judicial auctions.

Sun Haoxun, a senior partner at Shanghai Haihua Yingtai Law Firm, stated that the auction target amount is large and the shares have a high proportion of pledges, along with consecutive losses by the listed company. Therefore, the likelihood of the first auction being unsuccessful in the open auction is relatively high; later it may enter a process of asset-for-sale or debt-for-asset settlement. The take-over party is likely to be a local state-owned entity or an industrial capital player with industrial synergy, and strict fulfillment of information disclosure and compliant acquisition procedures will be required.

Sun Haoxun further noted that a clearing-out style exit by the controlling shareholder will directly trigger the election or replacement of members of the board of directors and the board of supervisors. The stability of the existing management will face a test. At the same time, it may also trigger cross-default provisions in bank credit agreements, creating phased pressure on the company’s operating cash flows and channel cooperation; the relevant legal and operating risks need to be handled properly and promptly by the new controlling shareholder.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said that on the channel level, Xiwang Group has long provided financing guarantees and related-transaction support to Xiwang Food. After a clearing-out exit, this funding support chain will be cut off. Distributor account receivable periods may tighten, and small and medium channel distributors may see losses. On the brand level, the “Xiwang” brand is deeply tied to the group; after the change in control, there is uncertainty regarding brand authorization. In the short term, it may lead to consumer confusion. The brand ownership needs to be clarified as soon as possible. On management stability, many of the current executives are old hands from the Xiwang system. After the new controlling shareholder moves in, management reshuffling will very likely be launched. There is a risk of losing core technology and sales teams, and performance fluctuations during the transition period will further intensify.

Two business lines lose momentum

This equity auction is not only a concentrated release of long-term debt risk for Xiwang Group, but also brings the operating pressure faced by Xiwang Food itself to the forefront. After reviewing the company’s financial reports, the reporter found that Xiwang Food has been loss-making for multiple consecutive years. The 2025 performance forecast shows that the net profit attributable to the parent company is expected to be a loss of CNY 880 million to CNY 1.32 billion. From 2022 to 2024, it has recorded three consecutive years of losses: net profit attributable to the parent company was -CNY 619 million, -CNY 17 million, and -CNY 444 million, respectively. Based on the lower bound of losses, the cumulative losses over four years will exceed CNY 1.96 billion.

For the 2025 loss, the company explains that it is mainly affected by two factors: first, the continuous rise in the price of raw materials, whey protein, combined with intensifying industry competition, caused the performance of the sports nutrition segment to fall short of expectations; second, during the reporting period, impairment losses on intangible assets were accrued in accordance with accounting standards, totaling CNY 950 million to CNY 1.5 billion, further dragging down net profit performance.

In 2011, Xiwang Food listed on the main board of the Shenzhen Stock Exchange via a backdoor listing, becoming the A-share market’s “first corn oil stock.” According to Nielsen data, backed by the full industrial chain of corn deep processing, Xiwang Food’s corn oil market share once exceeded 30%. To break free from reliance on a single business, in 2016 the company, together with Chunhua Capital, acquired Kerr, a Canadian sports nutrition company, for CNY 4.875 billion, attempting to build a “edible oils + nutrition” dual-main-business pattern. At that time, Xiwang Food’s total assets were only CNY 2.218 billion; the deal was viewed by the market as a “dragon swallowing an elephant” acquisition. The 2025 interim report shows that during the reporting period, the revenue share from the plant oils business and nutrition supplementation products business was 44.47% and 44.83%, respectively; the scale of the two business segments is nearly the same.

This merger did not bring the expected growth; instead, it became a burden that continued to drag down performance. In 2019, Kerr recorded a net loss of CNY 1.116 billion due to goodwill impairment. From 2022 to 2024, revenue in the sports nutrition segment fell from CNY 2.54 billion to CNY 2.248 billion. In the first half of 2025, revenue fell year over year by 21.65% to CNY 950 million. The gross margin of this segment also fell from 42.84% in 2018 to 30.50% in the first half of 2025.

Chinese food industry analyst Zhu Danpeng believes that edible oils and sports nutrition have fundamental differences in sales channels, operating models, and consumer groups; it is difficult to achieve synergy by leveraging existing resources. In addition, the food oils industry itself faces intense homogenous competition with limited profit margins, so companies should focus on their core business for innovation and upgrades.

The edible oils business, as the core base, also faces growth pressure. From 2022 to 2024, revenue from the plant oils business declined consecutively from CNY 2.853 billion to CNY 2.253 billion. In the first half of 2025, revenue was CNY 942 million, down 11.84% year over year.

Data from the Huajing Industrial Research Institute show that China’s edible oils industry’s leading companies hold a relatively large share of the market, and the industry overall exhibits the characteristics of “one superpower and multiple strong players,” with a stable market pattern. CR3 is 60.4%; Yihai Kerry, COFCO, and Luhua dominate. Industry insiders believe that, as a leader in a single product category, Xiwang Food cannot compete with leading companies in terms of full industrial-chain layout, scale effects, and channel coverage. With the dividends from the single corn oil category gradually fading, Xiwang Food’s future development will face challenges.

Yuan Shuai, an expert in the China Jingjing Media Think Tank, said that the decline in Xiwang Food’s corn oil business stems from a double squeeze: fluctuations in raw-material costs and “dimensionality reduction” attacks from leading enterprises. At the same time, insufficient brand marketing investment has continuously weakened its terminal pricing power. When all-category giants such as Yihai Kerry and Luhua use scale effects to wage price wars and push channels downward, Xiwang, as a single-category leader, is at a disadvantage in terms of terminal pricing authority and supply-chain coordination, leading to the loss of its core consumer base.

“To return to growth, Xiwang must get out of the mud of price-game competition, and leverage its professional credentials in the corn oil sub-sector to compete through differentiation. It can raise gross margin by upgrading products, such as developing non-GMO and high-nutrient-content differentiated products. At the same time, by leveraging the new shareholders’ channel resources to deepen efforts in vertical e-commerce and community group-buying channels, it can tighten and consolidate its core profit regions,” Yuan Shuai added.

Bai Wenxi suggests that the company should implement a strategy of “differentiation + channel deepening.” On the one hand, strengthen differentiated selling points such as “non-GMO” and “freshness,” avoiding direct price wars with Yihai Kerry. On the other hand, leverage resources from the newly appointed controlling shareholder to deepen efforts in third- and fourth-tier cities and county-level markets. In addition, by selling assets or introducing strategic investors to spin off the sports nutrition business, it can recover cash to repay debts and replenish working capital for its corn oil core business.

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