Xi'an tourism's 300 million yuan private placement approved for acceptance

Xi’an Tourism (000610.SZ), which is facing delisting risk warning (*ST) pressure, is set to receive a targeted “emergency rescue” from its controlling shareholder. The company’s recent announcement said that its application to issue shares to specific parties has been accepted by the Shenzhen Stock Exchange. It plans to raise no more than RMB 300 million, all of which will be used to supplement working capital and repay bank loans. Xi’an Tourism Group Co., Ltd., the controlling shareholder (abbreviated as “Xi’an Tourism Group”), will subscribe in full in cash. This “capital infusion” will provide key support for this long-established listed travel enterprise to ease financial pressure and seize opportunities from the industry’s recovery.

Aiding financial relief with RMB 300 million from the controlling shareholder

According to information disclosed in the offering memorandum (draft for filing), the issuance price for this offering has been set at RMB 9.80 per share. It is not lower than 80% of the company’s average share price over the 20 trading days prior to the pricing benchmark date, and is also not lower than the per-share net asset value attributable to ordinary shareholders of the parent company as audited at the end of the most recent period prior to the issuance; the number of shares to be issued will be no more than 30.6122 million shares, accounting for 12.93% of the company’s total share capital before the issuance, and not exceeding 30% of the total share capital; the total amount of funds raised will be no more than RMB 30,000.00 million.

As the sole issuing party, Xi’an Tourism Group plans to subscribe in full for the shares to be issued in cash. After the completion of this issuance, Xi’an Tourism Group will remain the controlling shareholder of the company. The company’s actual controller will still be the Xi’an Qujiang New District Management Committee, and control will remain stable, which will not affect the company’s listing status.

It is worth noting that before this issuance, Xi’an Tourism Group already held 26.57% of Xi’an Tourism’s shares. After the completion of this issuance, its shareholding ratio will exceed 30%, triggering the tender offer obligations stipulated in the Provisions on the Takeover of Listed Companies. However, Xi’an Tourism Group has made a commitment that the shares it subscribes for will “not be transferred within 36 months from the date of the end of the issuance,” and this matter has already been considered and approved at the company’s extraordinary general meeting of shareholders by non-related shareholders. This meets the circumstances under which the aforementioned provisions allow an exemption from issuing a tender offer. The announcement also shows that as of now, Xi’an Tourism Group has pledged 31.3882 million shares of the company’s equity, accounting for 49.90% of its shares and 13.26% of the company’s total share capital.

The clear earmarking of the use of funds has led the market to interpret this private placement as the controlling shareholder stepping in to provide financial relief. Financial data shows that as of September 30, 2025, Xi’an Tourism’s asset-liability ratio was 93.55%, and the current ratio was only 0.59, facing significant debt repayment pressure and liquidity risk. This situation is mainly attributable to the fact that during the period from 2022 to 2024, the company’s net cash flow generated from operating activities has been continuously negative, while its scale of net assets has kept shrinking. The announcement makes clear that the net proceeds from this fund-raising will be used entirely to supplement working capital and repay bank loans. This move will further optimize the company’s capital structure, improve its financial condition, ease funding pressure, and enhance the company’s liquidity and resilience against risks.

Multiple risks piling up — a key test for a long-established listed travel enterprise

At the time this private placement was launched, it coincided with a critical juncture where the culture and tourism industry is recovering across the board while Xi’an Tourism itself is also under operating pressure. From the perspective of the industry environment, policy dividends and market demand are forming a double tailwind. Policies related to culture and tourism, such as the “Several Measures on Further Cultivating New Growth Drivers and Promoting Prosperity in Cultural and Tourism Consumption” issued in 2025, continue to be implemented with sustained efforts. At the same time, the effects of facilitation measures for the entry of foreign nationals continue to be released, creating opportunities for the development of the culture and tourism industry. According to data from the Ministry of Culture and Tourism, in the first three quarters of 2025, the number of domestic trips reached 4.998 billion, up 18.00% year-on-year; domestic residents’ total spending on trips was RMB 4.85 trillion, up 11.50% year-on-year. Both key indicators have remained in a double-digit growth trend.

From the regional market perspective, as a popular cultural and tourism city, Xi’an received 306 million visitors in 2024, generating total tourism revenue of RMB 376 billion, with year-on-year growth of 10.3% and 12.3%, respectively. In the first three quarters of 2025, Xi’an’s visitor volume and tourism revenue growth rates further expanded to 15.2% and 18.7%. The number of inbound visitors and total spending increased by 75.61% and 79.04% year-on-year, respectively, and the market scale continued to grow.

As one of the four listed culture and tourism companies in Shaanxi Province, Xi’an Tourism’s brand resources are not inferior. Its “Xi’an Tourism Wan’ao” hotel brand’s product lineup covers 12 cities across 6 provinces nationwide, and it has 66 hotels and homestays (including those with signed contracts pending opening). The travel agency segment includes Xi’an China Travel and Xi’an Overseas and other among the province’s top ten travel agencies. In 2024, it received 33,000 inbound visitors and remained among the top in the province.

However, its continuing loss-making operating condition makes it difficult for Xi’an Tourism to fully capture the dividends brought by industry recovery. According to financial reports, from 2022 to 2024, the company’s net profit attributable to the parent company was -RMB 167 million, -RMB 154 million, and -RMB 260 million, respectively. The shareholders’ equity attributable to the parent at the end of each period was RMB 651 million, RMB 497 million, and RMB 237 million, respectively, showing a sustained downward trend. According to the company’s 2025 performance forecast, the net profit attributable to the parent company for the full year is expected to be between -RMB 290 million and -RMB 237 million. If losses continue, it may result in net assets attributable to shareholders of the parent company turning negative at the end of 2025, which could lead to the company’s stock being subject to delisting risk warning measures implemented by the Shenzhen Stock Exchange.

For Xi’an Tourism, this private placement and fund-raising is both “lifesaving money” to defuse short-term financial risks and “development money” to empower upgrades of its main business. The company said that the injection of private placement funds will provide solid support for the company to seize strategic opportunities in the culture and tourism industry. However, “capital infusion” cannot ultimately replace “self-generated cash flow.” How to turn around the loss-making situation by leveraging this private placement opportunity and realize the recovery dividends of the industry will be a key test for the future development of this long-established listed travel enterprise.

Investors should also pay attention to the fact that this private placement may dilute shareholders’ immediate returns. In addition, the issuance still needs to pass the review of the Shenzhen Stock Exchange and obtain the approval to register from the CSRC. Whether it will ultimately pass the review and the timing of the decision to approve registration remain subject to uncertainty.