Xiwang Food Co., Ltd. Faces Judicial Auction: Control of the "Number One Corn Oil Stock" May Change Hands

Ask AI · How did the debt crisis at Xiwang Group lead to a change in control?

The “corn oil first listed company” Xiwang Food (000639.SZ) is set to undergo major changes in equity. According to a recent announcement, the shares of the controlling shareholder, Xiwang Group Co., Ltd. (hereinafter referred to as “Xiwang Group”), totaling 200,065,333 shares, will be publicly auctioned on the JD Judicial Auction platform at the end of March. This tranche represents 99.01% of Xiwang Group’s total shareholding and 18.53% of the company’s total share capital. If this auction is completed successfully, the shareholding ratio of Xiwang Group and its persons acting in concert will drop to 1.87%, and the listed company’s actual controlling interest will undergo a substantive change.

The immediate trigger for this judicial auction is that, in 2019, Xiwang Group defaulted on a 8B yuan equity pledge financing that had not been repaid. The financing was provided by a local state-owned-asset-backed fund and was once regarded as key rescue funding to help ease the Group’s liquidity crisis. From the perspective of the equity change history, shares held by Xiwang Group and its persons acting in concert have been subject to judicial disposal multiple times over the past several years, steadily weakening their ability to control the listed company.

A reporter from China Business News sent an interview letter to Xiwang Food regarding this auction, the company’s future development direction, and other questions, but as of the time of publication, no reply had been received. Multiple industry experts believe that after the change in control, the strategic choices and resource-integration capability of the new controlling party will directly determine the future development direction of this corn oil sub-sector leader.

A debt crisis behind the judicial auction

Xiwang Group’s debt crisis can be traced back to the 2017 debt default incident involving Qixing Group. As a private enterprise also located in Zouping County-level area of Shandong Province, Xiwang Group and Qixing Group had large mutual guarantee arrangements, involving guarantee amounts ranging from 2.07B to 2.46B yuan. Although, under coordination by local governments, Xiwang Group was responsible for only 10% of the guarantee amount, financial institutions’ confidence in its credit fell sharply; its main-credit rating was downgraded, and its direct financing channels were significantly narrowed.

Financial statements show that as of the end of the third quarter of 2019, Xiwang Group’s total liabilities were about 30.9 billion yuan, including current liabilities of 2.91B yuan, while cash and cash equivalents were only 1.37B yuan—its funding chain was already under strain. In July 2019, Shandong Financial Assets Management Co., Ltd., Binzhou Caijin Investment Group, and Zouping Guotou Investment Group jointly established a key enterprise development fund with a scale of 3.0 billion yuan, providing rescue support to Xiwang Group. In August of the same year, Xiwang Group pledged its shares in Xiwang Food as collateral and obtained financing of 2.07B yuan from this fund, with the maturity date set for August 2022. The parties also agreed that this pledged transaction would not include an early-warning line or a close-out/settlement line.

This rescue funding did not fundamentally change Xiwang Group’s operating situation; the related debt became overdue in August 2022. In 2020, Xiwang Group applied to the court for judicial settlement on the grounds that it could not repay maturing debts, extending the debt-resolution cycle through installment repayment and debt-to-equity conversion, among other methods. However, the debt risk continued to be exposed. According to Tianyancha data, as of March 15, 2026, Xiwang Group still had 4 information records as a judgment debtor being enforced, with a total enforcement amount of 2.6B yuan. In addition, the company had 50 equity freezing records, of which 24 equity freezes occurred in 2025.

In recent years, the shares held by Xiwang Group and its persons acting in concert, Yonghua Investment, have been auctioned by the courts multiple times. As of the disclosure date of this announcement, the total shares that have been auctioned for the two parties have reached 546.63 million shares, accounting for 50.64% of the company’s total share capital. The third-quarter report shows that Xiwang Group became the largest shareholder with a 18.72% shareholding ratio, but 99.01% of the shares it holds have been pledged. If this 200 million-share auction is completed, the combined shareholding ratio of Xiwang Group, Yonghua Investment, and the actual controller Wang Di will drop sharply from 52.51% to 1.87%, and the composition of the company’s top ten shareholders will face major adjustments.

As of the end of September 2025, the company’s top ten shareholders’ combined shareholding in Xiwang Food was 38.35%, with a relatively dispersed equity structure. The second-largest shareholder, Juneng Capital, has a Shandong state-owned asset background and holds 4%. Multiple individual shareholders—including Li Songfeng, Fang Lei, Zhong Ge, etc.—who have been active in the judicial auction market, have entered the top ten shareholders through judicial auctions.

Sun Haoxu, a senior partner at Shanghai Haihua Yingtai Law Firm, said that the auction target amount is relatively large, and there are circumstances such as high-percentage share pledges and consecutive losses by the listed company. As a result, the likelihood that the first auction fails due to lack of bidders may be high. Subsequently, it may enter procedures such as forced sale or debt settlement by transferring shares to creditors. The incoming party is likely to be local state-owned capital or an industrial capital that has industry synergy; information disclosure and compliant acquisition procedures must be strictly followed.

Sun Haoxu further pointed out that a “clear-out” exit by the controlling shareholder will directly trigger changes in the election of the board of directors and the board of supervisors, and the stability of the current management will face challenges. At the same time, it may trigger cross-default clauses in bank credit agreements, creating phased pressure on the company’s operating cash flow and cooperation with channel partners. The relevant legal and operating risks will need to be properly handled by the new controlling shareholder as soon as possible.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said that at the channel level, Xiwang Group has long provided financing guarantees and related-transaction support to Xiwang Food. After a clear-out exit, this chain of funding support will be cut off. Distributor account receivable terms may tighten, and some mid- and small-channel distributors may be lost. At the brand level, the “Xiwang” brand is deeply tied to the Group; after a change in control, brand authorization may be uncertain. In the short term, it could lead to consumer confusion about the brand’s ownership, so it is necessary to clarify brand affiliation quickly. At the level of management stability, many current executives are old members of the Xiwang faction. After the new controlling shareholder enters, it is highly likely that management reshuffling will be launched. There is a risk that core technology and sales teams could be lost, and fluctuations in performance during the transition period will further intensify.

Two core businesses losing momentum

This equity auction is not only the concentrated release of Xiwang Group’s long-term debt risk, but also pushes Xiwang Food’s own operating pressure to the front. After reviewing financial reports, the reporter found that Xiwang Food has been losing money for consecutive years. The 2025 performance preannouncement shows that the expected net profit attributable to shareholders will be a loss of 0.88 billion to 1.32 billion yuan. From 2022 to 2024, the company has already suffered losses for three consecutive years: net profit attributable to shareholders was -619M yuan, -0.017 billion yuan, and -17M yuan, respectively. Based on the lower bound of the losses, the cumulative loss over four years will exceed 1.96 billion yuan.

For the 2025 loss, the company said it was mainly affected by two factors: first, the continued rise in the price of whey protein (a raw material), combined with intensified industry competition, led to the sports nutrition segment performing below expectations; second, during the reporting period, the company recorded intangible asset impairment losses of 0.95 billion to 1.5 billion yuan in accordance with accounting standards, further dragging down net profit performance.

In 2011, Xiwang Food entered the main board of the Shenzhen Stock Exchange by shell financing, becoming the A-share “corn oil first listed company.” According to Nielsen data, relying on the full corn deep-processing industry chain, Xiwang Food’s corn oil market share once exceeded 30%. To get rid of dependence on a single business, in 2016 the company, together with Chunhua Capital, acquired Kerr, a Canadian sports nutrition company, for 444M yuan, trying to build a “edible oils + nutrition” dual-core business pattern. At that time, Xiwang Food’s total assets were only 4.88B yuan, and the deal was viewed by the market as a “David-and-Goliath” style acquisition. The 2025 semiannual report shows that in the reporting period, revenue contribution from the plant oils business and the nutrition supply products business was 44.47% and 44.83%, respectively—two business segments with nearly matching scale.

This acquisition did not bring the expected growth; instead, it became a burden that continued to drag down performance. In 2019, Kerr recorded a net loss of 2.22B yuan due to goodwill impairment. From 2022 to 2024, revenue for the sports nutrition segment fell from 2.54 billion yuan to 1.12B yuan. In the first half of 2025, revenue declined year over year by 21.65% to 0.95 billion yuan. The gross margin for this segment also fell from 42.84% in 2018 to 30.50% in the first half of 2025.

Zhu Danpeng, a China food industry analyst, believes that edible oils and sports nutrition differ fundamentally in sales channels, operating models, and consumer segments. It is difficult to achieve synergy by leveraging existing resources. Moreover, competition in the grain and oil industry is highly homogeneous and profit margins are limited, so companies should focus on their core business and pursue innovation and upgrades.

The edible oils business—its core fundamental business—also faces growth pressure. From 2022 to 2024, revenue from the plant oils business declined continuously from 2.25B yuan to 2.85B yuan. In the first half of 2025, revenue was 2.25B yuan, down 11.84% year over year.

Data from the Huajing Industry Research Institute show that in China’s edible oils industry, leading companies occupy a relatively large market share, and the overall market exhibits an “one super plus multiple strong” pattern, with a stable market landscape. CR3 (the combined market share of the top three companies) is 60.4%, and Yihai Kerry, COFCO, and Luhua hold dominant positions. Industry insiders believe that as a leader in a single product category, Xiwang Food cannot match top companies in full-industry-chain layout, scale effects, and channel coverage. As the dividend from the single corn oil category gradually fades, the company’s future development will face challenges.

Yuan Shuai, an expert from the China Jingji Media think tank, said that the decline in Xiwang Food’s corn oil business stems from dual pressure: fluctuations in raw material costs and a “dimension-reduction” attack by top companies. At the same time, insufficient brand marketing investment has weakened its bargaining power with end customers. When all-category giants such as Yihai Kerry and Luhua use scale effects to wage price wars and push channels downward, as a single-category leader, Xiwang is at a disadvantage in end-customer bargaining power and supply chain coordination, leading to the loss of its core consumer base.

“If it wants to return to growth, Xiwang must get out of the mud of price competition, use its professional credentials in the corn oil niche to compete with differentiation, and raise gross margins through product upgrades—for example, developing differentiated products such as non-GMO and higher-nutrition-content options. At the same time, it should leverage the new shareholder’s channel resources to deeply cultivate vertical e-commerce and community group-buying channels, consolidate core profit regions by tightening the front line.” Yuan Shuai added.

Bai Wenxi suggested that the company should implement a “differentiation + channel deepening” strategy. On one hand, it should strengthen differentiated selling points such as “non-GMO” and “freshness,” avoiding direct price wars with Yihai Kerry. On the other hand, it should draw on resources from the newly appointed controlling shareholder to focus on tier-3 and tier-4 cities and county-level markets. In addition, by selling assets or bringing in strategic investors to spin off the sports nutrition business, the company can recover cash to repay debt and replenish working capital for its corn oil core business.