Golden Throat Privatization Failed Stock Price Plunged by More Than 30% The single problem of products remains to be solved

Picture according to the official website of The Golden Voice

On 30 November, Golden Throat Holdings Group Limited ("Golden Throat") announced that its privatization plan had failed and would continue to maintain its listing status.

At the opening of the market on December 1, the share price of Golden Throat fell sharply, falling more than 40% in 5 minutes. By the close, the stock price was down 36.96%.

Golden Throat privatization failed

The failure of Golden Throat's privatization plan directly led to a cliff-like decline in its stock price.

According to the golden voice announcement, its privatization proposal has not been approved by the court meeting and the general meeting of shareholders, the plan will not be implemented and has lapsed, the offer period has ended, and the company's shares will maintain its listing status. The announcement states that, under the rules, the offeror may not announce another offer of shares for a period of 12 months from the date of the announcement, unless agreed by the executing officer.

Previously, on October 29, Golden Throat had issued an announcement that the offeror and the company would take the company private through an agreement arrangement, and would cancel the shares at HK$2.8 per share of the planned shares, and it was expected to revoke its listing status on the Stock Exchange on December 15.

Wang Chuanhao, managing partner of Huabixin Accounting Firm, told Tianmu News that the help of privatization to the company is that shareholders can share more benefits, and the company can no longer disclose financial reports regularly. Of course, all this is based on the premise of the company's stable performance and good future development, otherwise the risk will be very large, which will easily cause the company's capital chain to break or even have the possibility of bankruptcy.

In fact, since the company first revealed its intention to privatize in early August, the company's stock price has shown a rising trend, and by November 25, its share price reached a maximum of HK$2.74, which is close to the privatization offer price. However, as soon as the news of the failure of the privatization came out, the stock price fell sharply, and it is clear that the capital market is not optimistic about its future.

A single product problem to be solved

It can be seen on the official website of Golden Throat that Golden Throat focuses on the pharmaceutical and food health industries, and its main products are more than 60 kinds of drugs such as Golden Throat Throat Tablets, Sugar-free Golden Throat Throat Treasure, and more than 10 kinds of traditional foods such as peanut nougat and moon cake. According to recent financial reports, the annual revenue of Golden Throat is between 600 million and 800 million yuan, of which Golden Throat Throat Tablets are its main products, with annual sales of about 100 million boxes.

As for the reasons for the privatization, Golden Throat said in its October 29 announcement that the proposal was made five years after the company's initial public offering, during which time its financial results were mixed, the launch of new products was less attractive, resulting in a decline in stock prices and an increasing lack of liquidity in share trading.

In addition, in the announcement, factors such as "the new product is not attractive enough" and "facing financial and operational problems" are highlighted. In fiscal 2020, sales of Golden Throat Tablets (OTC) accounted for approximately 89.9% of Total Golden Throat Revenue. As of June 30, 2021, the revenue of Golden Throat was approximately $373 million, of which the revenue from the sale of Golden Throat Tablets (OTC) was about $333 million, accounting for 89.3%.

"At present, the biggest problem of Golden Throat is that the product structure is too single, and the overall market development is very weak." Jiang Han, a senior researcher at Pangu Think Tank, said in an interview with Tianmu News that in fact, the innovation and research and development of Golden Throat itself has been insufficient for a long time in recent years, and once there is a situation where marketing advertising cannot be supported, there will be relatively large market fluctuations.

Jiang Han believes that the performance growth of Golden Throat itself has touched the ceiling, and if it continues to be listed, it will be difficult to conquer the capital market, and if Golden Throat cannot develop the market well in the future, there will be relatively big problems.