Haite Group's related mergers and acquisitions face a "four-year tug-of-war": the plan keeps changing, and the valuation of the transaction target has shrunk by 60%.

Securities Times reporter Fan Luyuan

As of March this year, Haikong Group has been releasing a monthly announcement about the progress of its familiar “recipe” for restructuring for a year and a half: the major asset restructuring is still in progress, but there are certain obstacles in advancing the transaction, and there is significant uncertainty about whether it can ultimately be completed.

Since officially announcing the start of related party asset acquisition in May 2022, Haikong Group’s restructuring plan has undergone three major modifications over nearly four years, with the valuation of the target assets being halved, core terms being gradually reduced, significant changes in payment methods, and a loss of stability, while the timeline for the restructuring has yet to materialize.

As regulatory authorities continue to crack down on “deceptive restructuring,” can this restructuring drama, which has gradually fallen into a stalemate, find a smooth resolution?

The “tug-of-war” for restructuring begins

Haikong Group’s main business includes passenger transportation, operation of passenger stations, and comprehensive automotive services. It was listed on the Shanghai Stock Exchange in July 2016. In recent years, with the rapid expansion of the national high-speed rail network and a significant increase in private car ownership, the demand for medium- and long-distance passenger transport has declined, impacting the company’s main business. Since its listing, the peak of its operating revenue was recorded in 2018.

From 2020 to 2024, Haikong Group’s net profit excluding non-recurring gains and losses has been in continuous loss for five years. The latest performance forecast indicates that the company’s net profit is expected to lose between 40 million and 80 million yuan in 2025, and net profit excluding non-recurring gains and losses is projected to lose between 48 million and 96 million yuan. Meanwhile, the company’s asset-liability ratio has been rising year by year, reaching 69.17% in the third quarter of 2025.

Faced with the continued decline of its main business, Haikong Group has turned its attention to the duty-free business. In 2020, the construction plan for Hainan Free Trade Port was released, and the duty-free concept became one of the hottest topics in the capital market. In the same year, Haikong Group’s actual controller, the Hainan State-owned Assets Supervision and Administration Commission, transferred its equity stake in Haikong Holdings to Hainan Travel Investment, which holds a duty-free license, thereby becoming the indirect controlling shareholder of the listed company, currently holding 42.5% indirectly.

The dual expectations of “duty-free + restructuring” quickly ignited the company’s stock price. In August 2020, Haikong Group’s stock price surged to a historic high of 68.22 yuan per share, rising over 500% within two months.

In May 2022, Haikong Group officially suspended trading to plan a major asset restructuring, intending to acquire 100% equity of Hainan Duty-Free at a price of 5 billion 2 million yuan through the issuance of shares and cash payment, while simultaneously raising no more than 1.8 billion yuan in supporting funds.

The positive news for restructuring once again pushed up the stock price. With the boost of the duty-free concept, Haikong Group received 11 consecutive daily price limits after resuming trading, with the stock price soaring from 12.02 yuan per share to a peak of 45.78 yuan per share in just one month, an increase of 280%.

However, after the stock price frenzy, Haikong Group’s restructuring plan fell into a prolonged tug-of-war.

Multiple modifications lead to reduced valuation

Since the first announcement to acquire Hainan Duty-Free, Haikong Group’s restructuring process has lasted nearly four years, during which the restructuring plan has undergone multiple modifications, been suspended several times, and faced multiple rounds of regulatory inquiries, leading to ongoing uncertainties about its prospects.

In April 2023, Haikong Group first adjusted the transaction plan, lowering the transaction price from 5 billion 2 million yuan to 4 billion 8 million yuan, and reducing the amount of supporting fundraising from no more than 1.8 billion yuan to 1.4 billion yuan, which was subsequently halted due to expired financial data.

In March 2024, Haikong Group restarted its restructuring plan and announced significant adjustments to the restructuring plan: the transaction price was further lowered to 2 billion 37 million yuan, a nearly 60% reduction from the initial valuation; the scale of supporting financing was compressed to 738 million yuan, and the performance commitments were significantly reduced. Haikong Group stated that the main reason for this adjustment was that the performance of the target company did not meet expectations.

However, just six months later, in September 2024, Haikong Group made another significant adjustment to the restructuring plan, changing the original plan of “issuing shares and paying cash to purchase 100% equity of Hainan Duty-Free” to “acquiring control of Hainan Duty-Free after stripping the Huating project through cash and/or asset payments.” The new plan eliminated the arrangements for issuing shares and supporting financing, blurred the proportion of equity acquisition, and did not mention key terms such as performance commitments.

Subsequently, Haikong Group has issued monthly progress announcements regarding the restructuring, but there has been no substantial progress. The company’s latest announcement showed that “due to factors such as fierce competition in the domestic duty-free market and a slowdown in consumer demand, it is expected that the performance of the target company, excluding the Huating project, may decline significantly in 2025. There are certain obstacles in advancing this restructuring, and there is significant uncertainty about whether it can ultimately be completed.”

From “issuing shares + cash acquisition + supporting fundraising” to “cash/assets” acquisition, the acquisition plan has been greatly simplified, which also poses challenges to the listed company’s payment capabilities. The third quarter report for 2025 shows that Haikong Group has cash of 281 million yuan, which leaves a funding gap of over 1.7 billion yuan compared to the last announced valuation of Hainan Duty-Free; on the other hand, the company has interest-bearing liabilities exceeding 1 billion yuan, and the high asset-liability ratio further exacerbates the financing pressure.

“Based on the current situation, an acquisition restructuring using a simplified procedure could be completed in as fast as three months, while the average time for a normal procedure is 6 to 12 months, and the average time required for a restructuring listing is 12 to 18 months. For particularly complex cases, the acquisition cycle may exceed two years.” Wang Jie, a senior partner at Dacheng Law Firm, told Securities Times reporters. The restructuring of Haikong Group has already exceeded this range.

Difficulties in restructuring implementation

Liu Zhigeng, a researcher at the Suzhou Management Accounting and Auditing Research Institute, stated that the prolonged cycle of related mergers and acquisitions usually has four main reasons: first, the target’s performance does not meet expectations; second, the valuation and performance commitments have reached a stalemate; third, regulatory scrutiny is becoming increasingly strict; fourth, there are difficulties in coordinating the interests of all parties to the transaction.

Previously, regulatory authorities conducted multiple rounds of inquiries regarding Haikong Group’s restructuring plan, focusing on key issues such as overvaluation, source of funds, and performance commitments. The actual performance of the target assets in the acquisition is seriously disconnected from expectations, leading the market to question the existence of a significant “bubble” in its valuation.

In the initial acquisition plan in 2022, the valuation of 100% equity of Hainan Duty-Free was 5 billion 2 million yuan, with an appreciation rate exceeding 13 times. The plan also promised that the net profits of the target company from 2022 to 2024 would not be less than 116 million yuan, 358 million yuan, and 538 million yuan, respectively. However, in 2021, the net profit attributable to the parent company of Hainan Duty-Free was -24.4689 million yuan, and it had not yet turned a profit.

The high valuation of Hainan Duty-Free is based on the listed company’s optimistic expectations for its performance growth. Approximately 80% of Hainan Duty-Free’s revenue comes from offshore duty-free business, and Haikong Duty-Free City, established in December 2020, is its core business carrier. The listed company initially predicted that Hainan Duty-Free’s annual growth rate of duty-free business revenue would exceed 50% in both 2022 and 2023.

However, starting from 2022, the sales volume of offshore duty-free in Hainan Province experienced a significant adjustment after two years of explosive growth, coupled with increasingly fierce market competition, Hainan Duty-Free’s performance fell significantly short of expectations. In 2022 and 2023, its net profit attributable to the parent company was only 61 million yuan and 139 million yuan, completing only 52.58% and 38.83% of the performance commitment, respectively. According to the information disclosed by the company, the performance of the target company is expected to decline sharply in 2024 and 2025.

In terms of corporate governance, since the restructuring was initiated, Haikong Group’s core management has undergone frequent changes. In January 2024, the former chairman Liu Hairong resigned due to a job transfer, and in June 2025, the successor chairman Feng Xianyang also resigned, with Fu Ren’en taking over the chairman position. In November 2025, general manager Ma Chao resigned and no longer held any position in the company, with the general manager position temporarily held by Fu Ren’en. The frequent turmoil at the top is bound to impact the continuity of restructuring decisions.

“Haikong Group has made multiple significant adjustments to the restructuring plan in the process of acquiring Hainan Duty-Free, reflecting that the core foundation of the transaction has been shaken, which is a passive compromise under the pressure of poor performance of the target, industry downturn, and regulatory pressure, rather than an active plan optimization. Essentially, it is a transition of the company from ‘strategic upgrade’ to ‘loss-cutting for survival,’” Liu Zhigeng analyzed.

Regarding the obstacles to advancing the restructuring, the basis for plan adjustments, funding gaps, and other issues, reporters sought an interview with Haikong Group, but no response was received by the time of publication.

Risks of “difficult mergers” need to be heeded

Since the implementation of the “six merger rules,” the restructuring review process for A-shares has continued to optimize, significantly improving the efficiency of mergers and acquisitions for listed companies. Reporters have compiled that since 2025, the average time from the first disclosure to the completion of major asset restructurings initiated by listed companies as bidders is 334 days, with the shortest time being less than two months and the longest being about two years.

In contrast, the prolonged and unresolved restructuring process of Haikong Group, along with the repeated modifications of the core plan, is far from normal but not an isolated case. Companies with excessively long restructuring cycles often exhibit characteristics such as sluggish main business and heightened speculative sentiment, and most end up with restructuring failures.

For example, Zhongyida initiated a 10 billion yuan acquisition in May 2021, intending to acquire 100% equity of Wengfu Group. This restructuring plan underwent multiple rounds of inquiries from regulatory authorities and was terminated in February 2024 after nearly three years.

Liu Zhigeng believes that the prolonged restructuring cycle has five major negative impacts on listed companies: first, the listed company misses the transformation window, leading to the main business not recovering and new businesses not being established; second, investors’ expectations are repeatedly frustrated, resulting in long-term pressure on stock prices and severely weakened financing capabilities; third, the fairness of the transaction is questioned, as significant modifications and concessions to core terms of the transaction can lead to speculation about whether asset pricing is fair and whether there is any benefit transfer; fourth, inefficiency in communicating with regulators exposes shortcomings in corporate governance capabilities; fifth, the continuous depreciation of the target assets may ultimately lead to “negative assets” being injected into the listed company, further increasing the company’s financial burden and facing “takeover” risks.

Wang Jie stated that multiple significant adjustments to the restructuring plan are not entirely negative, but excessive frequency and magnitude usually indicate insufficient early verification, intense competition, or skewed interests. In his view, frequent adjustments essentially elongate the cycle, amplify uncertainties, and weaken market trust, ultimately significantly increasing the failure rate and compliance risks of the restructuring, harming the long-term value of listed companies and the rights and interests of minority shareholders. “Regulators and the market should focus on distinguishing whether it is a compliance correction or arbitrary adjustment; whether it is to protect the listed company or to benefit specific parties.”

“To judge whether the adjustment of the plan is a genuine change or ‘deceptive restructuring,’ one should look at whether the direction of the adjustment is converging or diverging. Genuine restructuring modifications typically narrow the scope of the target, make pricing more reasonable, and fix compliance flaws, resulting in a final plan that converges, while ‘deceptive restructuring’ increasingly complicates the plan, with fluctuating target sizes, repeated valuation jumps, performance commitments being inconsistent, and frequent overturning of transaction structures. Each announcement claims ‘significant adjustments,’ but never resolves the key issues,” Wang Jie said.