The fading of Hainan Coconut Island's capital: five consecutive years of losses, high risk of delisting

Originally from: Shell Finance

Hainan Yedao (*ST Yedao, 600238.SH) is drinking the bitter wine it brewed itself.

As the “No. 1 Stock in Health Liquor,” Hainan Yedao once dominated the capital market, but now it has reached the brink of delisting.

On one hand, the annual review agency is investigating the company’s 2025 terminal sales. If the review finds that the terminal sales impact the company’s revenue deduction amount, and as a result, the company’s operating income after deducting non-core business income and non-substantial income falls below 300 million yuan, the company will trigger financial delisting indicators; on the other hand, for the total revenue of over 35 million yuan between 2019 and 2021, the audit firm has yet to obtain key documents such as outbound shipment orders and freight bills. If sufficient appropriate audit evidence cannot be obtained in the end, it will affect the financial reports or internal controls, and the company faces the risk of termination of listing.

On the evening of March 24, Hainan Yedao disclosed a reply to the regulatory work letter regarding the 2025 performance forecast. This reply is full of expressions like “cannot be confirmed yet,” exposing the survival crisis of Hainan Yedao.

Caught in dual delisting risks

Company revenue compliance and audit opinions both uncertain

Previously, it was announced that in 2025, Hainan Yedao is expected to achieve a net profit attributable to shareholders of -29 million yuan, and a net profit after deducting non-recurring gains and losses of -23 million yuan; it is expected to achieve operating revenue of 370 million yuan, with operating income after deducting non-core and non-substantial income at 350 million yuan.

On March 24, in response to the regulatory work letter, Hainan Yedao emphasized that the annual review agency is verifying the company’s 2025 terminal sales. If the review finds that the terminal sales impact the revenue deduction amount and cause the operating income after deducting non-core and non-substantial income to fall below 300 million yuan, the company’s stock may be delisted after the disclosure of the 2025 annual report.

Notably, the Shanghai Stock Exchange paid special attention to the significant revenue increase in the fourth quarter of 2025. The performance forecast shows that the company expects revenue of 172 million to 192 million yuan in Q4 2025, accounting for about half of the total annual revenue, nearly matching the total revenue of 2024.

In response, Hainan Yedao stated that the revenue growth in 2025 is mainly due to a substantial increase in liquor sales, and the sharp rise in Q4 revenue is also driven by this. The increase in liquor revenue is mainly attributed to the release of seasonal consumer demand, differentiated distribution models helping rapid channel expansion, and other factors.

Additionally, in its reply to the regulatory work letter, Hainan Yedao revealed another delisting risk. The annual review agency examined the company’s historical return situations from 2019 to 2024 and found that for the total returned goods revenue of 5.1867 million yuan in 2019-2020, 13.8451 million yuan in 2021, and the revenue of 16.6573 million yuan related to debt discounting with Duchi Company in 2020-2021, they have yet to obtain key documents such as outbound shipment orders and transfer of ownership documents. Further data collection and targeted audit procedures are planned.

If the review cannot obtain sufficient appropriate audit evidence, this may lead the review agency to issue non-unqualified opinions on the company’s financial statements or internal controls. If the 2025 audited financial report is issued with a qualified, disclaimer, or adverse opinion, or if internal control audits are similarly qualified or adverse, the company’s stock may be delisted after the 2025 report is disclosed.

From “No. 1 Stock in Health Liquor” to a Diversification Failure

Hainan Yedao has suffered losses for five consecutive years

Centered on the “big health industry,” Hainan Yedao’s main products include deer-turtle wine, King of the Sea wine, soy sauce-flavored liquor, and others. The company also has businesses in coconut juice and other specialty ecological beverages. It was listed on the Shanghai Stock Exchange on January 20, 2000, and maintained profitability for many years afterward. Starting in 2008, it began to incur losses, turned profitable again in 2009, but then suffered losses in 2011, 2016, 2017, 2019, and from 2021 to 2024, with a forecasted loss in 2025.

Calculations show that Hainan Yedao has been continuously losing money for five years (2021-2025).

Recent performance of Hainan Yedao. Chart by Beijing News Shell Finance Reporter Yan Xia

A review found that the reasons for Hainan Yedao’s ongoing losses include: first, shrinking core business, with liquor revenue dropping from 327 million yuan in 2020 to 127 million yuan in 2024; according to the 2025 forecast, liquor revenue is about 326 million yuan, showing some signs of recovery. However, on one hand, revenue compliance remains to be confirmed; on the other hand, Hainan Yedao admits, “In 2025, to expand market sales of liquor and promote new products, increased market giveaways, promotions, and related marketing investments led to higher operating costs and sales expenses. Coupled with asset impairments, the operating income could not cover all costs, resulting in operational losses.”

Second, pain from strategic transformation, with new business development falling short of expectations. In its 2021 financial report, Hainan Yedao stated that to broaden its business scope, it formed teams for retail and international trade, with upfront expenses and delayed benefits, leading to operational losses that year.

Additionally, some legacy issues continue to erode profits. In 2023, due to changes in control, management adjustments, and sluggish market sales, main business revenue declined overall. Operating gross profit could not cover operating expenses, and credit impairment losses on receivables further worsened the loss.

Liquor analyst Cai Xuefei told Beijing News Shell Finance: “Hainan Yedao is the first health liquor stock, with a clear advantage in the health liquor market. But later, to seek growth, it expanded into other liquor categories through investments and mergers, including traditional white liquor, sauce-flavor, and strong aroma spirits, and even ventured into beverages, real estate, cross-border retail, etc. Many of these efforts ultimately failed, severely worsening the company’s financial situation.”

Beijing News Shell Finance Reporter Yan Xia, Editor Chen Li, Proofreader Yang Xuli