(FMCG News) Hongjiu Fruit (06689. HK) was suspended by the Hong Kong Stock Exchange for failing to release its 2023 annual report on time.
FMCG understands that KPMG, which was supposed to announce its financial results in March, announced its resignation before the release of the financial results due to the inability to provide an estimated timeline and to determine the nature, timing and scope of additional procedures required to complete the audit without obtaining the required information and independent findings. The news has heightened concerns about the company's financial fraud, particularly the large discrepancy between accounts payable and prepayments. "In January 2024, Hongjiu Fruit made an advance payment of about $1.52 billion to these suppliers and received about $405 million in return from them in the same month. ”
In the face of the dilemma, Hongjiu Fruit hired a new auditor and consultant team to conduct an internal investigation, and plans to issue relevant financial announcements in July this year. At the same time, the company is also actively adjusting its business strategy, considering reducing the financial pressure through regional partnerships and other models, and raising funds through pledged equity and other means for many times.
Industry insiders believe that the current predicament of Hongjiu Fruit is mainly caused by three factors. First, going public can be a bad decision, with consistently negative operating cash flow. According to the data, from 2019 to 2021, the operating cash flow of Hongjiu Fruit was -450 million yuan, -804 million yuan, and -982 million yuan respectively. After listing, the operating cash flow pressure in 2022 will further increase, to -1.823 billion yuan. The management and customer problems brought about by the scale expansion have laid hidden dangers for the later development. Secondly, changes in the market environment, especially the adjustment of community group buying platforms, have had a significant impact on the sales channels of Hongjiu Fruits. Finally, some parties said that some regional branches may have problems such as false sales in order to increase their performance. （Z）