Net profit plummeted by 70%, Happy Family is no longer joyful

Text ｜ Zebra Consumption Chen Xiaojing

After handing over its 2025 annual report, Huanlejia really can’t stay joyful anymore.

With the parent-attributable net profit dropping by 70%, its core product categories going downhill across the board, and distributors pulling out, this fruit-canning industry leader has reached a fateful crossroads.

This also sends another clear signal: in today’s fiercely competitive fast-moving consumer goods market, fruit canned products’ non-discretionary characteristics and coconut-based beverage products’ high sugar and high-energy traits are no longer considered the preferred choice.

When sugar-free and health-focused approaches have become the mainstream development trend in the beverage industry, and channel changes no longer rely on distributors and the like, Huanlejia’s response appears to be a bit lagging.

What’s even harder for investors to understand is that, at a time when performance continues to slide sharply, the company’s actual controller has been reducing holdings frequently, which naturally makes the market even more concerned about the company’s development.

Performance plunges

In 2025, Huanlejia (300997.SZ) continued to suffer and turned in a fairly bleak set of results.

On the evening of March 25, the company disclosed its 2025 annual report. For the full year, it achieved operating revenue of about RMB 1.500 billion, and parent-attributable net profit of about RMB 0.44 billion. Year on year, operating revenue and parent-attributable net profit fell by 19.11% and 70.03%, respectively. Non-recurring profit net profit was about RMB 0.41 billion, down 71.75% year on year. Its gross margin was 29.59%, down 4.41 percentage points from the prior year.

The company’s performance decline is not the first time. In 2024, its parent-attributable net profit fell 47.06% year on year, to about RMB 147 million.

Regarding the large further drop in last year’s performance, the company said that it was mainly due to the market, channels, and raw materials—each factor directly hurt its core concerns.

In terms of the market, weak consumer demand and intensified industry competition led to a year-on-year decline of 26.95% in revenue from its distribution channels. The newly expanded channels—snack wholesale retail and the initial processing business for coconut-based raw materials—were still in the cultivation stage and had not yet formed scale, thereby affecting overall profitability.

In fact, the most direct impact on Huanlejia comes from rising upstream raw material procurement costs. Last year, due to changes in weather, procurement unit prices for items such as yellow peaches and coconut meat juice increased by more than 30% year on year, which increased the company’s production costs by about RMB 0.39 billion.

To cope with the rise in upstream costs, the company raised prices by 1%-8% for some coconut juice products last year, attempting to pass the pressure to the terminal end. However, the price increase was far lower than the raw material price hikes, resulting in a decline in gross margin.

In 2025, Huanlejia’s coconut-juice beverage products generated revenue of about RMB 0.756 billion, down 21.51% year on year; fruit-canned food revenue was about RMB 0.502 billion, down 19.96% year on year. The gross margins for its two major business segments were 36.39% and 24.97%, respectively, down 3.79 and 3.93 percentage points year on year.

Faced with this situation, Huanlejia tried to stabilize market confidence with high cash dividends. For fiscal year 2025, it proposed to pay cash dividends of RMB 2.0 per 10 shares to all shareholders (including tax), totaling about RMB 84 million, accounting for 189.34% of the net profit for the period.

Product and channel aging

In 2023, Huanlejia was at its peak since listing, achieving operating revenue of RMB 1.923 billion and parent-attributable net profit of RMB 278 million. After that, as market competition intensified, performance continued to decline. The fundamental reasons lie in the aging of product structure and the imbalance of channels.

The company’s two main products—fruit canned foods and coconut-based beverages—are clearly “showing age.” After the development of fresh supply chains became mature, fewer and fewer people were eating fruit canned products; coconut-based beverages, because they are high in sugar and high in calories, also run counter to the health trend toward sugar-free products.

From 2023 to 2024, the company’s fruit canned product revenue fell from RMB 0.709 billion to RMB 0.627 billion, and last year barely held at the RMB 0.5 billion level. Over these three years, the gross margin of fruit canned products declined from 30.52% to 24.97%, while the revenue contribution ratio fell from 36.86% to 33.45%.

Sensing the outlook for fruit canned foods, since 2014, Huanlejia has focused on cultivating coconut-based beverage products such as coconut juice. By relying on its layout in lower-tier markets, the business’s revenue scale has grown year by year, and at one point it was hoped to become the second “Coconut Tree” (Yashu).

In 2023, revenue from the coconut juice beverage business first surpassed RMB 1.0 billion, accounting for 52.02% of the company’s total revenue, but then it turned and declined sharply.

Huanlejia’s product sales still rely on traditional distribution channels. From 2023 to 2025, distribution channel sales revenue fell from RMB 1.818 billion to RMB 1.103 billion, and the share of total company revenue declined from 94.56% to 73.54%. Last year, the number of distributors decreased by 274.

The channel structure gap was filled by channels such as snack wholesale retail and e-commerce. In 2025, revenue from the snack wholesale retail channel reached RMB 175 million, up 52.06% year on year; however, because the revenue scale is still small, it has not yet driven an increase in overall revenue.

Due to weak product sales, the company’s production capacity has large areas left idle. In 2025, the company’s designed production capacity for beverages and canned goods was 5,746,000 tons and 1,636,000 tons, respectively. Actual production was 1,572,000 tons and 528,000 tons, respectively.

Major shareholders frequently reduce holdings

On one side is pressure on the company’s operations; on the other side are consecutive reductions by the actual controller and persons acting in concert, which has triggered strong doubts in the market.

In July 2025, Huanlejia’s shareholder and chairman Li Xing initiated a reduction in holdings. Through a price inquiry method, he reduced 13.1242 million shares, with a transaction amount of about RMB 179 million;

In December last year, controlling shareholder Haoxing Investment and Li Xing and Zhu Wenzhen reduced 9.3760 million shares via the price inquiry method, raising about RMB 182 million.

This is not yet over. This March 10, Li Xing continued to transfer a total of about 10.9368 million shares held by him to 17 institutions through the price inquiry method, cashing out about RMB 190 million in one move.

Li Xing’s status is special. He is not only a company shareholder and chairman, but also one of the actual controllers. Why would he reduce holdings when performance is soft? The outside world finds it hard to understand.

The reasons he gave for the three rounds of reduction were all his own need for funds. This is actually not hard to understand: as of March 12 this year, the personal share pledge ratio of Li Xing had already reached as high as 86.97%.

In fact, it’s not only Li Xing personally. The company’s stock held by family members, the controlling shareholder, and others is also pledged at high proportions. As of March 12 this year, the combined pledge ratio of Haoxing Investment, Li Xing, Zhu Wenzhen, and Li Kangrong had reached 69.28%. Haoxing Investment and its persons acting in concert have 77.98 million pledged shares maturing within the next 1 year, accounting for 25.76% of the shares they hold, 17.83% of the company’s total share capital, and corresponding financing balance of about RMB 522 million. Among them, pledged shares totaling 58.70 million that mature within the next six months correspond to a financing balance of RMB 387.4 million.

The company disclosed that Haoxing Investment and its persons acting in concert have sound financial conditions, and have the corresponding ability to repay the relevant funds. The repayment funding sources include self-owned funds or self-raised funds.

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