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

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Republished from: China Business News

Zhongjing Reporter Yan Na and Sun Jizheng report from Chengdu

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

The direct trigger behind this judicial auction is that, in 2019, Xiwang Group had an overdue equity pledge financing of 2.072 billion yuan. The financing was provided by a fund with a local state-owned asset background, which had been regarded as key “rescue” capital to ease the group’s liquidity crisis. From the perspective of the equity change history, in the past several years, the shares held by Xiwang Group and its acting-in-concert parties have repeatedly been subject to judicial disposal, continuously weakening their control over the listed company.

On China Business News’ reporter request for interviews regarding this auction, the company’s future development direction, and other issues, China Business News sent an interview letter to Xiwang Food. As of the time of this release, no reply has been received. Multiple industry experts believe that after the change in control, the incoming party’s strategic choices and resource integration capability will directly determine the future development path 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 private enterprises both located in Zouping County-level city, Shandong Province, Xiwang Group and Qixing Group have large-scale cross-guarantee arrangements, involving guarantee amounts ranging from 2.464 billion yuan to 2.907 billion yuan. Although, with coordination from local governments, Xiwang Group would only assume responsibility for 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 report data show that as of the end of the third quarter of 2019, Xiwang Group’s total liabilities were approximately 30.9 billion yuan, of which current liabilities were 16.369 billion yuan and cash and cash equivalents were only 1.373 billion yuan, leaving its capital chain under severe strain. In July 2019, Shandong Financial Asset Management Co., Ltd., Binzhou Caijin Investment Group, and Zouping Guotou Group jointly established a key enterprise development fund with a scale of 3 billion yuan, providing rescue support to Xiwang Group. In August of the same year, Xiwang Group pledged its shares in Xiwang Food and obtained 2.072 billion yuan in financing from this fund, with the term due in August 2022. The parties agreed that the pledge would have no warning line or liquidation line.

This rescue financing did not fundamentally reverse Xiwang Group’s operating situation, and the related debt became overdue in August 2022. In 2020, Xiwang Group applied to the court for judicial restructuring on the grounds that it could not repay due debts, extending the debt reduction cycle through installment repayment, debt-to-equity conversion, and other methods, but its debt risks continued to be exposed. According to Tianyancha, as of March 15, 2026, Xiwang Group still had 4 pieces of information as a person subject to enforcement, with a total enforcement amount of 2.598 billion yuan. In addition, the company also had 50 equity freeze records, among which 24 equity freeze cases occurred in 2025.

In recent years, the shares held by Xiwang Group and its acting-in-concert party Yonghua Investment have repeatedly been auctioned by the courts. As of the disclosure date of this announcement, the cumulative auctioned shares of both parties have reached 546.63 million shares, accounting for 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% stake, but 99.01% of the shares it held have been pledged. If this 200 million share auction is completed, the combined shareholding ratio of Xiwang Group, Yonghua Investment, and the controlling person Wang Di will drop sharply from 52.51% to 1.87%, and the composition of the company’s top ten shareholders will face major adjustments.

As of the end of September 2025, the company’s top ten shareholders held a combined 38.35%, with a dispersed equity structure. The second-largest shareholder, Juneng Capital, has a Shandong state-owned assets background, holding 4%. Several natural person shareholders active in the judicial auction market, including Li Songfeng, Fang Lei, and Zhong Ge, have entered the top ten shareholders through judicial auctions.

Sun Haojun, Senior Partner at Shanghai Haihua Yingtai Law Firm, stated that the auction amount in this case is large, and the shares have a high proportion pledged, along with continuous losses by the listed company, meaning the likelihood of a failed first auction is relatively high. Subsequently, it may enter a process of sale-by-assignment or debt settlement with shares. The buyer is likely to be local state-owned assets or an industrial capital with industrial synergy. Information disclosure and compliant acquisition procedures must be strictly fulfilled.

Sun further noted that a “clearing-out” exit by the controlling shareholder will directly trigger the re-election of the board of directors and the board of supervisors. The stability of the existing management will be tested. Meanwhile, it may also trigger cross-default clauses in bank credit lines, creating periodic pressure on the company’s operating cash flow and cooperation channels. Relevant legal and operating risks need to be properly addressed by the new controlling shareholder as soon as possible.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, said that at 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. Dealer accounts receivable cycles may be tightened, and mid- and small-channel dealers may experience losses. At the brand level, the “Xiwang” brand is deeply bound to the group; after a change in control, there is uncertainty regarding brand authorization. In the short term, this may cause confusion in consumer recognition, so the brand’s ownership needs to be clarified quickly. Regarding management stability, many current executives are longtime “Xiwang” staff. After the new controlling shareholder enters, it will most likely initiate a reshuffling of management. There is a risk of talent loss in core technical and sales teams, and performance volatility during the transition period will be amplified.

Double main businesses losing momentum

This equity auction is not only a concentrated release of long-term debt risk at Xiwang Group, but also pushes operating pressure at Xiwang Food itself to the forefront. After reviewing the financial reports, the reporter found that Xiwang Food has been loss-making for consecutive years. The 2025 performance forecast shows that the company expects attributable net profit to be between a loss of 0.88 billion yuan and a loss of 1.32 billion yuan. From 2022 to 2024, it has been loss-making for three consecutive years, with attributable net profit of -0.619 billion yuan, -0.017 billion yuan, and -0.444 billion yuan respectively. Based on the lower end of the losses, the cumulative losses over four years will exceed 1.96 billion yuan.

Regarding the 2025 performance loss, the company explains that it is mainly affected by two factors: first, the continued rise in raw material whey protein prices, combined with intensifying industry competition, caused the performance of the sports nutrition segment to fall short of expectations; second, during the reporting period, in accordance with accounting standards, it accrued intangible asset impairment losses of 0.95 billion yuan to 1.5 billion yuan, further dragging down net profit performance.

In 2011, Xiwang Food got listed on the Shenzhen Stock Exchange main board through a backdoor listing, becoming A-share “the first corn oil stock.” According to Nielsen data, relying on the full corn deep-processing industrial chain, Xiwang Food’s corn oil market share once exceeded 30%. To escape reliance on a single business, in 2016 the company, together with SpringHill Capital, acquired the Canadian sports nutrition company Kerr for 4.875 billion yuan, attempting to build a dual-main business pattern of “edible oil + nutrition.” At that time, Xiwang Food’s total assets were only 2.218 billion yuan, and the transaction was viewed by the market as a “dragon swallowing an elephant” type of acquisition. The 2025 interim report shows that during the reporting period, revenue shares from the plant oil business and the nutrition supplement business were 44.47% and 44.83% respectively, with the scale of the two major business segments almost equal.

This acquisition did not bring the expected growth; instead, it became a burden that continuously dragged down performance. In 2019, Kerr recorded a net loss of 1.116 billion yuan due to goodwill impairment accruals. From 2022 to 2024, sports nutrition segment revenue fell from 2.54 billion yuan to 2.248 billion yuan, and in the first half of 2025, revenue同比 decreased by 21.65% to 0.95 billion yuan. The gross margin of this segment also declined from 42.84% in 2018 to 30.50% in the first half of 2025.

Zhu Danpeng, a China food industry analyst, believes that edible oil and sports nutrition have fundamental differences in sales channels, operating models, and consumer groups. It is difficult to achieve synergy by leveraging existing resources. Moreover, in the grain and oil industry itself, competition among similar products is intense and profit margins are limited, so companies should focus on their core business for innovation and upgrades.

The core edible oil business is also facing growth pressure. From 2022 to 2024, plant oil business revenue fell continuously from 2.853 billion yuan to 2.253 billion yuan, and in the first half of 2025 revenue was 0.942 billion yuan,同比 down 11.84%.

Data from the Huajin Industry Research Institute show that in China’s edible oil industry, leading companies occupy a large share of the market, and the industry overall exhibits an “one super and many strong” pattern, with market structure remaining stable. CR3 is 60.4%. Yihai Kerry, COFCO, and Luhua hold dominant positions. Industry insiders believe that as a single-category leader, Xiwang Food cannot compete with leading companies in terms of full-industry-chain layout, scale effects, and channel coverage. As the dividend from the single corn oil category gradually fades, its future development will face challenges.

Yuan Shuai, an expert from the China Jingji Media Think Tank, said that Xiwang Food’s corn oil business decline stems from a double squeeze of raw material cost fluctuations and “dimension-reducing” attacks by leading companies, alongside insufficient brand marketing investment, which continuously weakens its terminal pricing power. When all-category giants such as Yihai Kerry and Luhua use scale effects to wage price wars and push channels deeper, as a single-category leader, Xiwang is at a disadvantage in terminal pricing power and supply-chain synergy, leading to the loss of its core consumer base.

“To return to growth, Xiwang must get out of the mud of price competition, leverage its professional backing in its corn oil niche sector for differentiated competition, and raise gross margins through product upgrades—such as developing and marketing non-GMO and more highly nutritious segmented products. At the same time, by leveraging the new shareholders’ channel resources, it should deepen its efforts in vertical e-commerce and community group-buying channels, shrink its front line, and consolidate core profit areas.” Yuan added.

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

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