Privatization failed, and the stock price plummeted by nearly 40%! After years of accumulation of diseases, can the "golden voice" still be sung?

"Protect your throat, please use a golden throat throat piece, Guangxi golden throat!"

The slogan was once a household name, but the company behind it is currently in an awkward position.

After experiencing a series of storms such as non-payment of advertising fees, failure of new product expansion, and revenue attenuation, on October 29, Golden Throat issued a privatization announcement to revoke its listing status on the Hong Kong Stock Exchange on December 15.

A month later, however, Golden Voice announced on November 30 that its privatization proposal had not been approved by court meetings and shareholders' meetings. The Scheme will not be implemented and has lapsed, the Offer Period has expired and the Company will maintain its listing status on the Stock Exchange. Under the Takeovers Code, the Offeror and the Offeror Acting in Concert shall not announce another Offer for Shares for a period of 12 months from the date of the Announcement, unless agreed by the Executor.

Golden Throat shares plunged 37.74% today at HK$1.6 per share. In the six years of listing, the company's stock price fell from a peak of HK$6.19 to HK$1.6, a decline of more than 74%, with a total market value of less than HK$1.2 billion.

Source: CSI Taurus APP

Fist products can not sell

On October 29, Golden Throat announced that it intends to implement a privatization plan of HK$2.8 per share and expects to revoke the company's listing status on the Stock Exchange on December 15.

Golden Voice said that the company's performance since its listing has been mixed, the launch of new products is not attractive enough, resulting in a decline in stock prices, increasingly lack of liquidity in stock trading, lack of growth momentum, and is not ideal for the company, shareholders or other stakeholders. Therefore, it is hoped that through privatization, the introduction of external capital will seek to revive growth.

Golden Throat landed on the capital market in July 2015, and the stock price soared to HK$6.19 in September 2016. Since then, the company's stock price has performed sluggishly, falling to HK$0.75 at the end of 2018.

Since its listing, the company's performance has been weak for a long time. From 2015 to 2020, the company's operating income was 707 million yuan, 768 million yuan, 624 million yuan, 694 million yuan, 797 million yuan and 647 million yuan, respectively, and the net profit in the same period reached 155 million yuan, 103 million yuan, 0.61 billion yuan, 102 million yuan, 168 million yuan and 154 million yuan, respectively.

According to the financial report, Golden Throat has long relied on two products, Golden Throat Throat Treasure and Golden Throat Throat Tablets, of which Golden Throat Throat Tablets account for 90% of revenue, which is the company's fist product. However, this product also has a sales ceiling. In the two years before the listing, the sales of golden throat throat tablets have been stable at more than 120 million boxes, and since then, sales have begun to decline, with sales of only 91 million boxes in 2020, and sales revenue of 582 million yuan, a year-on-year decrease of 19.3%.

New product development is difficult

In 2016, Golden Throat tested the water beverage market and launched a golden throat herbal drink that focuses on throat clearing and throat function. The launch of the beverage significantly increased the company's "other products" revenue by 143.2% to 44.5 million yuan that year, and sales accounted for 5.7% of the total revenue. A subsequent decline ensued, with the company earnings from the sale of other products amounting to only $11.4 million by the end of 2020, accounting for 1.8% of its total revenue.

Not only that, but the drink also plunged the company and its actual controller, Jiang Peizhen, into legal disputes.

According to the China Judgment Documents Network, in April 2016, Golden Throat Food (a subsidiary of Golden Throat, responsible for the herbal beverage business) signed an advertising agency contract of about 80 million yuan with Star China International Media Co., Ltd. to advertise Golden Throat Herbal Beverage on variety shows such as "Heroes of the Gestapo" to increase exposure and agree to charge fees according to ratings.

However, after the end of the program, Golden Throat Food refused to pay the remaining advertising fees of the advertising agency Star Chinese because it did not recognize the ratings of the program, and the two sides went to court.

According to the China Judgment Documents Network, the case was judged in a second instance in June 2019. In October 2019, the Shanghai No. 1 Intermediate People's Court issued an enforcement ruling, ordering Golden Throat Food to pay a total of 51.67 million yuan in advertising fees to Star Chinese.

Due to the delay in fulfilling the above obligations of Golden Throat Food. In September 2019, Golden Throat Food was listed as a judgment defaulter by the Shanghai No. 1 Intermediate People's Court, and Jiang Peizhen, the actual controller of the company, was also listed as a restricted consumer.

On October 9, Guangxi Golden Throat Group, the official public account of Golden Throat, issued a statement saying, "Regarding the dispute over the advertising contract between a media company and Guangxi Golden Throat Food Co., Ltd., the two parties have already reached a settlement, and Golden Throat Food has fulfilled all payment obligations." ”

China Securities News and China Securities Taurus reporter noted that the China Judgment Document Network shows that Golden Throat Food Co., Ltd. is still involved in a number of disputes, and some of the cases are still not closed.

This article originated from China Securities News