On the evening of November 24, Beijing Dahao Technology Co., Ltd. (603025.SH, hereinafter referred to as "Dahao Technology") issued an asset restructuring and trading suspension announcement - the company will acquire Beijing Red Star shares by issuing shares. Co., Ltd. (hereinafter referred to as "Red Star Shares") 100 equity.

The flagship product of Red Star Co., Ltd. is the famous Red Star Erguotou.

The Office of the Secretary of the Board of Directors of Dahao Technology responded that since the current asset restructuring plan has not been announced, it is temporarily unable to answer relevant questions. The company is cooperating with the arrangements of the (Beijing) State-owned Assets Supervision and Administration Commission.

Red Star Erguotou with a long history

Many Beijingers like to drink a small bottle of Erguotou when they cook mutton. The history of Red Star Erguotou, which they are very familiar with, can be traced back to 1949, making it 71 years old.

Its official website shows that Red Star Co., Ltd. is the founder of Beijing Erguotou.

Red Star Co., Ltd. was first established in May 1949. It is a famous Chinese time-honored enterprise and a national intangible cultural heritage protection unit. It was formerly the Experimental Factory of North China Liquor Monopoly Company. As the first state-owned winery in Beijing, Hongxing fully inherited the traditional brewing techniques of Erguotou Liquor and produced the first batch of Red Star brand Erguotou Liquor as a gift to the birth of New China.

In 1951, the Red Star trademark became one of the first approved and registered trademarks in New China. In 1965, Red Star supported and managed 19 wineries in suburban counties of Beijing and taught Erguotou techniques. In 1997, Hongxing 56% Da Er was recognized as the national physical standard sample of Erguotou Liquor by the State Bureau of Technical Supervision.

In the development history of Red Star for more than 70 years, there are several key nodes:

In May 1949, in accordance with the national requirements for monopoly on wine, Red Star fully integrated "Yuansheng" 12 time-honored workshops in Beijing, including "Hao", "Longquan", "Tongquanyong" and "Yonghecheng", have established the North China Liquor Monopoly Company Experimental Factory (the predecessor of Red Star), bringing together brewing technology and talents to fully and exclusively pass on the tradition of Beijing Erguotou Brewing techniques.

In 1981, in order to promote the overall development of the Erguotou liquor industry and for the survival and development of other liquor companies in Beijing, Red Star took the overall situation into consideration and voluntarily gave up the registration of the full name trademark of "Erguotou" and only used "Red Star" registered trademark, and shares "Erguotou" with other Erguotou wine factories affiliated to Red Star.

In 2008, the Beijing Erguotou brewing technique declared by Red Star was selected into the "National Intangible Cultural Heritage List". Gao Jingyan, the eighth generation descendant of Red Star (the former director of Red Star), was recognized by the Ministry of Culture as the only representative inheritor of Beijing Erguotou’s brewing skills.

If it successfully lands in the capital market this time, it will be another key point in the history of Red Star.

In terms of equity relations, the actual controller of Red Star Shares is the Beijing Municipal State-owned Assets Supervision and Administration Commission. 45% of its equity is held by Beijing Jingtai Investment Management Center (hereinafter referred to as "Jingtai Investment"); the other 55% of Red Star's equity is held by Beijing Yiqing Holdings Co., Ltd. (hereinafter referred to as "Yiqing Holdings") . Jingtai Investment and Yiqing Holdings are both state-owned enterprises.

Curve Listing Plan

Red Star Shares’ 100% stake was injected into Dahao Technology. The transaction was designed as follows:

Dahao Technology purchased the controlling shareholder by issuing shares. Yiqing Holdings holds 100 shares of Beijing Yiqing Asset Management Co., Ltd. (hereinafter referred to as "Yiqing Asset Management Company"), and purchases 45 shares of Red Star shares held by it from Jingtai Investment by issuing shares; at the same time, it raises funds Fixed-increase matching funds.

Among them, Yiqing Holdings holds a 32.5% stake in Dahao Technology.

Currently, Red Star 55’s equity is not in the hands of Yiqing Asset Management Company.

The main business of Yiqing Asset Management Company is to provide retirement management services and manage the equity of non-main business enterprises. Yiqing Holdings plans to integrate its main business-related assets such as alcohol, food and beverages (including 55% stake in Red Star Shares) and inject them into Yiqing Asset Management Company, and divest the existing functions of Yiqing Asset Management Company.

After the relevant assets are injected into Yiqing Asset Management Company, Yiqing Asset Management Company will focus on alcohol, food and beverage and other related businesses. Its main products include "Red Star" brand series liquor, "Arctic Ocean" "brand series of beverage products, "Yili" brand series of food and other products.

On this basis, the transaction of injecting 100 shares of Red Star shares into Dahao Technology was realized.

In terms of revenue volume, Red Star's operating income may far exceed that of Dahao Technology. In 2019, Dahao Technology achieved operating income of 970 million yuan, a year-on-year decrease of 9%; the net profit attributable to the parent company also increased from 3.7% in 2018. 100 million yuan dropped to 255 million yuan in 2019; Dahao Technology's operating income in 2020 is even less optimistic. The operating income in the first three quarters was 560 million yuan, a year-on-year decrease of 2.44%, and the net profit attributable to the parent company was 118 million yuan, a year-on-year decrease of more than 40.

In the context of declining revenue and profits, Dahao Technology has received strong asset injection from the Beijing State-owned Assets Supervision and Administration Commission. The 70-year-old Red Star Erguotou brand may become Dahao Technology’s most important source of operating income.

In addition, Dahao Technology plans to raise supporting funds through a non-public issuance of stocks from no more than 35 specific investors. The number of shares issued shall not exceed 30% of the total share capital of Dahao Technology before this issuance. The total amount shall not exceed 100 of the transaction price of the asset purchased by issuing shares in this transaction.

On the Shanghai Stock Exchange E Interactive, many investors have asked Dahao Technology about stock price changes and restructuring.

Some investors asked: "Is the company involved in insider trading? Has the restructuring been leaked in advance?"

Dahao Technology responded that the company had announced on November 25 that it would be dealing with insider trading. After verification, the subsequent intermediary will also conduct special verification. If you have relevant clues, you are also welcome to report it to the regulatory agency.

Some investors asked: "The company's cross-border acquisition of liquor companies is not doing its business. Is there any synergy with the original business?"

Dahao Technology responded that this restructuring is part of Beijing's state-owned assets reform. One of the measures to explore is that the company's main business is currently developing well and its market share is steadily increasing. However, the industry has been adjusting in the past three years. Especially this year's emergencies have had a great impact on the company's performance. However, the company's market control is stable, and some new products such as CNC glove machines have grown significantly.

At present, the asset restructuring plan of Dahao Technology has not yet been announced, so it is impossible to know the annual revenue and profit of Red Star Shares, but the answer will be revealed soon.