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Recently, there has been a craze for "opening durian blind boxes" on the Internet. "Durian for gratitude", "hand-torn dry package", "8 empty rooms"... Netizens said that buying durian is a gamble for adults and a scratch card for young people.

While durian is dominating the fruit circle with its unique taste and rich nutritional value, it has also entered the dessert circle. A variety of durian-flavored products such as durian mille-feuille, durian daifuku, durian pastry, durian pudding, and durian ice cream have helped China become the world's largest importer and consumer of durian.

According to Chinese customs data, the import volume of fresh durian will be 1.426 million tons in 2023, compared with only 605,000 tons in 2019.

In June this year, the General Administration of Customs issued an announcement that the import of fresh Malaysian durian that met the relevant requirements would be allowed; on July 11, China Customs and the Malaysian Ministry of Agriculture conducted an inspection with Honghui Fruit and Vegetable Malaysia Durian Base as the representative of Pahang State to review the export qualifications of Honghui Fruit and Vegetable Base.

After the news spread, Honghui Fruit and Vegetable's stock price rose by 10CM for three consecutive days. Honghui Fruit and Vegetable said that it is currently paying close attention to further instructions from relevant departments and will actively strive to become one of the first Chinese companies to introduce fresh durian to the Chinese market.

Get the rhythm of durian consumption right?

As a professional agricultural product service provider integrating fruit and vegetable planting management, post-harvest procurement, pre-cooling at the origin, frozen warehousing, pre-selection and grading, processing and packaging, and cold chain distribution, Honghui Fruits and Vegetables was listed in 2016 and is known as the "No. 1 fruit and vegetable stock."

To some extent, Honghui Fruits and Vegetables' three consecutive board-ups are related to durian. According to reports, Honghui Fruits and Vegetables registered its overseas investment with the Guangdong Provincial Department of Commerce in 2019 to implement the construction project of a tropical fruit planting base in Malaysia. So far, Honghui Fruits and Vegetables' Malaysian durian base has harvested fruit on a small scale, and the output is expected to increase year by year.

As the king of fruits, China's durian imports have exceeded cherries since 2019. Even in 2020, which was shrouded by the new coronavirus pandemic, China's durian imports increased instead of decreased, reaching 575,900 tons and worth US$2.305 billion. In 2021, China's durian imports reached 821,600 tons and worth US$4.205 billion. Both the import volume and the import amount doubled, and the average annual growth rate of consumption exceeded 16%.

It can be predicted that, except for a small amount produced in Hainan Island, the durian on the Chinese market is basically dependent on imports. In 2023, of the 1.426 million tons of fresh durian imported by my country, 929,000 tons came from Thailand, 490,000 tons from Vietnam, and 3,763 tons from Vietnam.

The huge demand, coupled with the fact that durian has no substitute, has caused the price of durian in Thailand, Vietnam and other places to continue to rise. According to Chinese customs data, the unit price of durian imports has risen from 11.8 yuan in 2015 to 33.1 yuan per kilogram in 2021, a three-fold increase in six years. This has also led to the high price of imported durian in the market, especially in Northeast China and North China. The average price of good quality Musang King and Golden Pillow durian is about 200 yuan each.

In terms of Malaysia's exports, in fact, China began importing Malaysian durian pulp and jam in 2011; in 2018, the import scope was further expanded to frozen whole durian.

Industry insiders said that with the approval of the import of fresh durian from Malaysia and the concentrated arrival of durian from Thailand and Vietnam, the supply of durian in the Chinese market will be more sufficient, and the price of durian is predicted to drop further and become more affordable.

The overall market is sluggish and performance has declined significantly

It is also because of the price that many consumers are reluctant to buy durian.

Singapore's Lianhe Zaobao reported earlier that official data showed that Malaysia's annual durian production is 330,000 tons, while Chinese consumers' annual durian consumption capacity has reached 350,000 tons. Among China's 1.4 billion people, only less than 1% have tasted durian, which shows China's huge market potential.

Based on this, Honghui Fruits and Vegetables continues to make efforts in its main fruit and vegetable business. The total investment of its Malaysia tropical fruit planting base construction project is estimated to be 280 million yuan. As of June 2023, the project has invested 77 million yuan. The acquired durian base has completed infrastructure construction and is equipped with management and planting personnel. The planting base has no less than 5,000 durian trees, and the main variety is Musang King.

According to the 2023 financial report, the main business of Honghui Fruits and Vegetables' wholly-owned subsidiary, Malaysia Honghui, is the processing and sales of fruits and vegetables, the planting and sales of durian, and the import and export of goods. It has total assets of 69.9336 million yuan and net assets of 69.8787 million yuan. It has no revenue yet, and its net profit is -338,200 yuan. The assets of immature fruit trees transferred to mature fruit trees are 142,000 yuan. It is expected that the import output and profits will increase year by year in the future.

The future trend of the durian market is still unknown, but the performance of Honghui Fruits and Vegetables in recent years has been far from satisfactory.

Financial report data shows that since 2020, Honghui Fruits and Vegetables' net profit has been in a state of decline, with the most severe declines in 2021 and 2023, down 35.78% and 49.48% year-on-year respectively. Net profit in the first quarter of 2024 was 8.1 million yuan, down 19.25% year-on-year.

In this regard, Honghui Fruits and Vegetables explained that the impact of the epidemic and the overall environment have caused people to downgrade their consumption, and the demand for more expensive fruits such as durian and cherries has decreased, and the unit price of fruit and vegetable sales has dropped, resulting in a decrease in operating income from the fruit and vegetable business. In 2023, the fruit and vegetable business achieved operating income of 911 million yuan, a year-on-year decrease of 6.55%.

In addition, Honghui Fruits and Vegetables is also involved in the frozen meat trading business, but in recent years this business has been affected by the sluggish market, with sales prices falling and even negative gross profits. In 2023, the revenue from the meat trading business was 97.3442 million yuan, a year-on-year decrease of 8.81%.

The above-mentioned industry insiders believe that the fruit and vegetable industry is a traditional industry with a low threshold, but it is highly homogenized, with fierce competition among enterprises and limited profit margins. In the fierce market competition, Honghui Fruits and Vegetables was inevitably affected by factors such as price wars, resulting in a decline in net profit.

What is the main reason for the rise in stock prices due to short-term speculation?

As far as Honghui Fruit and Vegetable's stock is concerned, can a durian move the stock price? Some stockholders are skeptical about this, believing that Honghui Fruit and Vegetable's three consecutive boards are a common "three-board group" operation.

The operations of the "three-board group" can often attract market attention and follow-up effects, driving up the share prices of related stocks. However, due to its relatively radical and speculative nature, it also involves greater market risks and uncertainties.

On July 17, Honghui Fruits and Vegetables saw a net inflow of 18.4603 million yuan, an increase of 9.97%, accounting for 23.91% of the total transaction volume. The main force has significantly increased the stock price and is the main force driving the stock price up.

Data from the Dragon and Tiger List showed that the top five buying seats bought a total of 27.0457 million yuan, and the top five selling seats sold a total of 21.7455 million yuan, with a net purchase and sale amount of 5.3002 million yuan.

The top five buying seats were: Buy one, Huatai Securities Co., Ltd. headquarters, buying 8.9064 million; Buy two, Southwest Securities Co., Ltd. Hunan Branch, buying 5.6918 million; Buy three, CITIC Securities Co., Ltd. Shanghai Branch, buying 4.2948 million; Buy four, Northeast Securities Co., Ltd. Changchun Satellite Road Securities Sales Department, buying 4.2330 million; Buy five, Huaxin Securities Co., Ltd. Foshan Nanhai Haiwu Road Securities Sales Department, buying 3.9196 million.

Buy three and buy four were also sold on July 17, selling two and three respectively, with sales of 4.6083 million and 4.5759 million.

As of the close of July 18, Honghui Fruits and Vegetables closed at 3.88 yuan, achieving a 10CM daily limit, with a trading volume of 115,700 lots and a turnover of 44.8933 million yuan.