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A sewage treatment company is going to sell beverages. This is a very subversive cross-border move. In the stock bar of the listed company Guozhong Water Group, 100,000 shareholders were completely excited and even thought of a name: "Guozhong Huiyuan".

That’s right, Guozhong Water plans to acquire the once-popular Huiyuan Juice. Since the announcement of the acquisition, Guozhong Water has achieved multiple daily limit increases in a row.

Some people say that it was Huiyuan Juice that saved Guozhong Water. Since June this year, the share price of Guozhong Water has plummeted, falling to a low of 1.3 yuan. If it hadn't been for Huiyuan's rescue, the share price would have been close to 1 yuan.

But looking at it from another angle, it was Guozhong Water that saved Huiyuan Juice.

Huiyuan was delisted from the Hong Kong Stock Exchange in 2021, and was forced into bankruptcy reorganization in 2022 due to its net debt exceeding 10 billion yuan. Reorganization is actually the postponement of debt repayment, and it ultimately needs a listing platform to fulfill its promise.

Today, Guozhong Water Group is this platform, and Huiyuan is moving towards the A-share market with tens of billions of old debts.

1

The story of Huiyuan Juice can be divided into three parts. Before its listing, it was a legend of rural entrepreneurship and wealth creation. After its listing, it was the fall of the actual controller who failed to sell the company. After its delisting, it was its rebirth as a capital operator.

In the 1980s, a lot of apples were planted in the Yimeng Mountain area of ​​Shandong. In fact, it was not just the Yimeng Mountain area that planted a lot of apples. In the end, no one could sell them.

However, Shandong is close to the sea after all, and its information is more developed than inland areas. It is able to think of using canning factories, juice factories and other deep processing methods to digest and deal with unsold apples. Huiyuan Juice is actually one of many juice factories.

Why only Huiyuan Juice has come out of this? It may be because it has a boss named Zhu Xinli who used to be a village director.

According to reports online, Zhu Xinli's family was already a millionaire in the late 1970s, and it was precisely because of his outstanding wealth-creating skills that he was elected village director.

After Zhu Xinli became the village director, he was unstoppable. In a few years, he set up more than 20 village-run factories and made every villager earn ten thousand yuan per capita.

Such an outstanding leader was considered a waste of talent in the village, so he was sent to study at the Cadre College and the Party School. After completing his studies, he was directly promoted to deputy director of the County Foreign Economic and Trade Commission.

Of course, the Foreign Economic and Trade Commission is in charge of foreign economic and trade. Not long after Zhu Xinli started working there, he discovered a huge business opportunity: foreign talents are the biggest consumers of fruit juice.

In 1992, when the economy was in a recession, Zhu Xinli gave up the opportunity to become deputy county magistrate. He contracted a canning factory in the county that was on the verge of bankruptcy, introduced an advanced juice production line from Germany, and started producing juice.

After the juice was produced, the first thing they did was to look for a market in Germany. Soon they received a large order of 5 million US dollars at an international food and beverage exhibition in Germany, and Huiyuan Juice began to take off.

Then there was the CCTV advertisement that said “Drink Huiyuan juice, and take the road to health”, and Huiyuan’s name began to become famous in China.

2

No matter how big the domestic competition is, it cannot change the greater reality of the European and American juice markets. Zhu Xinli has always wanted to become the "Huiyuan of the world", and in 2004 he introduced strategic investors from France's Danone.

With the joining of Danone, Huiyuan Juice took on the guise of a Sino-foreign joint venture. In 2007, Huiyuan Juice was listed on the Hong Kong Stock Exchange, and Zhu Xinli was one step closer to his dream of "World Huiyuan".

However, after going public, people will inevitably become restless and quickly forget who they are, where they came from, and where they are going.

In the second year after its listing, Coca-Cola approached Zhu Xinli and expressed its willingness to acquire Huiyuan Juice for HK$18 billion, which was twice Huiyuan's market value at the time.

Isn’t this exactly what Zhu Xinli wanted? Huiyuan Juice suddenly became an international brand under a multinational beverage giant, realizing the goal of “Huiyuan of the World” in one step.

Of course, there is another important point. With a 2-fold premium, Zhu Xinli can personally cash out HK$7.4 billion.

Facing media questions, Zhu Xinli also had his own reasons:

"Enterprises really need to raise them like sons and sell them like pigs. Why? This is a market behavior. If you can make the calculations, you should do it. If you can't make the calculations, you shouldn't do it."

He was right, everything was a market behavior. However, this marriage was rejected because Coca-Cola's acquisition was suspected of monopoly, and Huiyuan Juice failed to "marry" the multinational giant as it wished.

Perhaps due to excessive sadness, two years later, Huiyuan Juice "fell ill" and began to suffer continuous losses.

As the company continued to lose money, its debt also snowballed. By 2017, the debt had exceeded 11.5 billion.

Zhu Xinli had thought of ways to break the loss-making curse of Huiyuan Juice, but none of them worked. He also wanted to sell it to Guangdong beverage giant Tiandi No. 1 in 2019, but was unsuccessful.

By 2021, the huge debt could no longer be sustained and Huiyuan Juice was officially delisted from the Hong Kong Stock Exchange.

3

What was once unwanted Hong Kong stocks suddenly became popular in A-shares three years later. Zhu Xinli certainly had not expected this change. The problem that he had not been able to solve for 10 years was suddenly solved by the company that was disposing of its non-performing assets.

After delisting, Huiyuan Juice immediately initiated bankruptcy reorganization. The appraisal company calculated that it had debts of 12.5 billion yuan, unpledged net assets of only 1.1 billion yuan, and net liabilities of 11.4 billion yuan.

In other words, no one would want such a company even if it was given away for free, because what it gave away were all debts. However, this type of target is a favorite of asset management companies that specialize in disposing of non-performing assets.

In 2022, Wensheng Asset, known as the largest private AMC (asset management company) in China, invested 1.6 billion yuan to resolve all debts of Huiyuan Juice.

The "Debt Repayment Method" is divided into three steps.

The first step is for the original investors to give up their investment. After all, the investment corresponds to debt, making room for Wensheng Assets and creditors.

The second step was to pay off debts below 1 million in cash as a sign of sincerity, and approximately 160 million was repaid.

The third step is to convert all debts above 1 million into equity, and promise to go public in 3-5 years, which will be fulfilled through the listing platform.

Counting on my fingers, this year is only the second year, and Wensheng Asset’s promise is about to be fulfilled so soon.

4

The listed company Guozhong Water Group's main business is sewage treatment. In 2023, sewage treatment business accounted for 87% of its revenue. There is nothing wrong with saying that it is a sewage treatment company.

Although it is called "Guozhong", it is not a state-owned enterprise. The actual controller is Jiang Zhaobai, a slightly mysterious capital master.

People call him mysterious because no one knows how he made his first pot of gold. People call him a capital master because he once controlled four listed companies at the same time, including Guozhong Water, Pengxin Resources, Pengdu Agriculture and Animal Husbandry, and Hong Kong-listed Runzhong International.

However, Pengdu Agriculture and Animal Husbandry has just locked in its delisting at par value. Pengxin Resources' current share price is 2.2 yuan, Runzhong International's share price is 0.107 Hong Kong dollars, and Guozhong Water's share price was 1.3 yuan before the acquisition news was revealed.

In fact, this is not the first time that Guozhong Water has "drank" Huiyuan juice. Since December 2022, Guozhong Water has acquired approximately 22% of Huiyuan's equity three times.

If this time is included, Guozhong Water will become the controlling shareholder of Huiyuan, and Huiyuan's financial data will be consolidated into Guozhong Water, realizing cross-border sales of beverages.

According to the data disclosed by Huiyuan, it achieved revenue of 2.86 billion yuan and non-net profit of 397 million yuan in 2023. Compared with the annual revenue of more than 200 million yuan of Guozhong Water Group, this figure can be regarded as a snake swallowing an elephant.

However, most of the acquired companies have one thing in common: they were thriving before going public, but how they will perform after going public remains to be seen.

Of course, no matter what, it is a win-win situation for Guozhong Water and Huiyuan.