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’s monthly update on the “familiar formula” of restructuring progress has continued for a year and a half: the major asset restructuring matter is still ongoing, but there are certain obstacles in advancing the transaction, and there is significant uncertainty about whether it can ultimately be implemented.

Since officially announcing the initiation of related-party asset acquisition in May 2022, Haikong Group’s restructuring plan has undergone three significant revisions over nearly four years, with the valuation of the target assets halved, core terms shrinking step by step, major changes in payment methods, loss of stability, while the timeline for the restructuring to materialize has yet to be seen.

As regulatory authorities continue to intensify the crackdown on “deceptive restructuring,” can this restructuring saga, which is gradually mired in a stalemate, find a way to break through successfully?

The “tug-of-war” of restructuring begins

Haikong Group’s main business is automobile passenger transport, operation of passenger stations, and comprehensive automobile 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 sharply, impacting the company’s core business, with its peak operating revenue since listing being recorded in 2018.

From 2020 to 2024, Haikong Group’s net profit after deducting non-recurring gains and losses has been in continuous loss for five years. The latest performance forecast indicates that the company is expected to incur a net loss of 40 million to 80 million yuan in 2025, with a non-recurring net profit loss of 48 million to 96 million yuan. Meanwhile, the company’s debt-to-asset ratio has been climbing year after year, reaching 69.17% in the third quarter of 2025.

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

The dual expectations of “duty-free + restructuring” quickly ignited the company’s stock price. In August 2020, Haikong Group’s stock price soared to a historical high of 68.22 yuan/share, with an increase of over 500% within two months.

In May 2022, Haikong Group officially suspended trading to plan a major asset restructuring, intending to purchase 100% equity of Hainan Duty-Free for 5 billion yuan, by issuing shares and paying cash, while concurrently raising no more than 1.8 billion yuan in matching funds.

The restructuring benefits further boosted the stock price. With the support of the duty-free concept, Haikong Group’s stock resumed trading and hit 11 consecutive daily limit-up trades, with the stock price skyrocketing from 12.02 yuan/share to a peak of 45.78 yuan/share within 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 revisions lead to shrinking valuations

Since the first announcement of the acquisition of Hainan Duty-Free, Haikong Group’s restructuring process has lasted nearly four years, during which the restructuring plan has undergone multiple revisions and suspensions, and after several rounds of regulatory inquiries, the prospects remain uncertain.

In April 2023, Haikong Group first adjusted the transaction plan, lowering the transaction price from 5 billion yuan to 4.08 billion yuan, and reducing the amount of matching funds from no more than 1.8 billion yuan to 1.4 billion yuan, but the restructuring was halted due to expired financial data.

In March 2024, Haikong Group restarted the restructuring plan and announced significant adjustments to the restructuring plan: the transaction price was further reduced to 2.037 billion yuan, a nearly 60% drop from the initial valuation; the scale of matching financing was compressed to 738 million yuan, with a significant reduction in performance commitments. Haikong Group stated that the main reason for this plan adjustment was that the performance of the target company fell short of 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 the control of Hainan Duty-Free after stripping the Huating project by paying cash and/or assets.” The new plan canceled the arrangements for issuing shares and matching financing, blurred the proportion of equity acquisition, and did not mention key terms such as performance commitments.

Subsequently, Haikong Group released monthly updates on the restructuring process, yet there has been no substantial progress. The company’s latest announcement stated, “Due to the fierce competition in the domestic duty-free market and the slowdown in consumer demand, the performance of the target company after excluding the Huating project is expected to decline significantly in 2025. There are certain obstacles to advancing this restructuring, and there is significant uncertainty about whether it can ultimately be implemented.”

From “issuing shares + cash acquisition + matching financing” to “cash/assets” acquisition, the acquisition plan has been significantly simplified, which also tests the listed company’s payment capability. The third quarter report for 2025 showed that Haikong Group had 281 million yuan in monetary funds, which represents 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 debt-to-asset ratio further exacerbates the financing pressure.

“From the current situation, a simplified merger and acquisition process can be completed in as quickly as three months, while the average time for a standard process is 6-12 months, constituting an average of 12-18 months for restructuring listings. For particularly complex cases, the merger cycle may exceed two years.” Wang Jie, a senior partner at Dacheng Law Firm, told Securities Times reporters. Haikong Group’s restructuring has already exceeded this timeframe.

Restructuring faces numerous difficulties

Liu Zhigeng, a researcher at the Su Gang Management Accounting and Auditing Research Institute, indicated that the prolonged cycle of related mergers and acquisitions usually has four main reasons: first, the target’s performance falls short of expectations; second, the valuation and performance commitment negotiations are deadlocked; third, regulatory reviews are becoming increasingly stringent; fourth, it is difficult to coordinate the interests of all parties involved in the transaction.

Previously, regulatory authorities conducted multiple rounds of inquiries regarding Haikong Group’s restructuring plan, focusing on key issues such as inflated valuations, sources of funding, and performance commitments. The actual performance of the target assets in the acquisition has deviated significantly from expectations, further raising market skepticism about its valuation being inflated.

In the initial acquisition plan in 2022, the valuation of 100% equity of Hainan Duty-Free was set at 5 billion yuan, with an appreciation rate of over 13 times. The plan also committed that the target company’s net profits from 2022 to 2024 would not be less than 116 million, 358 million, and 538 million yuan, respectively. However, in 2021, Hainan Duty-Free’s net profit attributable to the parent company was -24.4689 million yuan, and it has yet to achieve profitability.

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

However, in reality, starting from 2022, Hainan Province’s offshore duty-free sales, after experiencing explosive growth for two years, underwent significant adjustments, coupled with increasing market competition, leading to Hainan Duty-Free’s performance falling far short of expectations. In 2022 and 2023, its net profit attributable to the parent company was only 61 million and 139 million yuan, completing only 52.58% and 38.83% of the performance commitment values, respectively. According to the information disclosed by the company, the target company’s performance is expected to decline significantly further in 2024 and 2025.

On the corporate governance front, since the initiation of the restructuring, Haikong Group’s core management team has seen frequent changes. In January 2024, former Chairman Liu Hairong resigned due to a job transfer, and in June 2025, his successor, Chairman Feng Xianyang, also resigned, with Fu Ren’en taking over as chairman. In November 2025, General Manager Ma Chao resigned and no longer held any position in the company, with the current general manager position temporarily held by Fu Ren’en. The frequent turmoil at the top level inevitably impacts the continuity of restructuring decisions.

“Haikong Group’s multiple significant adjustments to the restructuring plan during the acquisition of Hainan Duty-Free reflect that the core foundation of the transaction has already been shaken. It is a passive compromise by the listed company under the pressure of poor target performance, industry downturn, and regulatory pressure, rather than an active optimization of the plan. Essentially, it represents a shift from ‘strategic upgrading’ to ‘loss mitigation and survival,’” Liu Zhigeng analyzed.

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

The risks of “failed mergers and acquisitions” need to be heeded

Since the implementation of the “Six Guidelines for Mergers and Acquisitions,” the restructuring review process for A-shares has been continuously optimized, significantly improving the efficiency of listed companies’ mergers and acquisitions. Journalists have compiled data showing that since 2025, major asset restructurings initiated by listed companies as buyers have averaged 334 days from initial disclosure to completion, with the shortest taking less than two months and the longest around two years.

In contrast, Haikong Group’s prolonged restructuring process and the repeated modifications of core plans are far from normal, but they are not isolated cases. Companies with excessively long restructuring cycles often exhibit characteristics of sluggish main businesses and heightened speculation, and most end up facing restructuring failures.

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

Liu Zhigeng believes that the prolonged restructuring cycle negatively impacts listed companies in five major areas: first, the listed company misses the window for transformation, leading to a stagnant main business and no new business; second, investors’ expectations are repeatedly frustrated, causing long-term pressure on stock prices and severely weakening financing capabilities; third, the fairness of the transaction is called into question, as significant modifications and concessions of core transaction terms can easily lead to speculation about whether asset pricing is fair or if there are interests being transferred; fourth, inefficient communication with regulators exposes shortcomings in corporate governance capabilities; fifth, the continuous depreciation of target assets may ultimately lead to “negative assets” being injected into the listed company, further increasing the financial burden and facing the risk of “taking over.”

Wang Jie stated that multiple significant adjustments to the restructuring plan are not entirely negative, but if the frequency is too high and the extent too large, it usually indicates insufficient preliminary verification, intense negotiations, or the presence of biased interests. In his opinion, frequent adjustments essentially prolong the cycle, amplify uncertainty, and weaken market trust, ultimately significantly increasing the failure rate of restructuring and compliance risk, and 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 determine whether the plan is a genuine adjustment or a ‘deceptive restructuring,’ one must look at whether the direction of the plan adjustment is converging or diverging. Genuine restructuring modifications usually involve narrowing the scope of the target, more reasonable pricing, and the rectification of compliance flaws, leading to a converged final plan. In contrast, ‘deceptive restructuring’ schemes become increasingly chaotic, with targets fluctuating in size, valuations jumping back and forth, performance commitments appearing intermittently, and transaction structures frequently overturned, with each announcement labeled as a ‘significant adjustment,’ but never resolving key issues,” Wang Jie said.