Analysis of Inventory Turnover Efficiency of Hongjiu Fruits: Operational Difficulties Amid Delisting

Based on the information searched, I need to first clarify a key point:

[1][2], with its market capitalization plummeting over 95% from its peak of HK$67 billion. The company is facing severe financial crisis and governance issues[1][3].

According to your description, if inventory turnover days changed from 26 days to less than 1 month (approximately 30 days), this actually represents a

rather than an improvement, for the following reasons:

Indicator Change	Implication
Inventory turnover days decrease	Faster inventory turnover, improved operational efficiency
Inventory turnover days increase	Slower inventory turnover, decreased operational efficiency

An increase from 26 days to approximately 30 days means:

• Fruits stay in inventory for about
  15% longer
• For perishable fresh produce, this
  increases the risk of spoilage
• Capital is tied up in inventory for a longer period,
  exacerbating cash flow pressure

According to public reports, Hongjiu Fruits’ operational model has fundamental flaws[4]:

Upstream Pressure

: To secure high-quality supply, the company has long adopted a “high prepayment” strategy, paying large sums of cash to suppliers in advance

Downstream Collection Difficulties

: When dealing with B-end customers such as large supermarkets, the company accepts an account period of up to

188.5 days

This aggressive model of “high prepayments, long accounts receivable” has led to:

• Negative operating cash flow for four consecutive years from 2019 to 2022
  , with a cumulative net outflow exceeding RMB 4 billion[1]
• As of the first half of 2023, accounts receivable amounted to RMB 8.673 billion, while book cash was only RMB 557 million[4]

Factor	Impact on Operations
Slower inventory turnover	Increased capital occupation, higher warehousing costs
Fresh produce characteristics	Fruits have a short shelf life; delayed turnover directly increases spoilage
Tight capital chain	Inability to turn over inventory quickly means greater financial pressure

. On the contrary, it may indicate:

1. Problems on the sales side
   : Slower goods turnover may reflect weakened market demand or reduced channel efficiency
2. Deteriorated inventory management
   : For fresh produce enterprises, inventory turnover efficiency directly impacts profitability
3. Deteriorating cash flow
   : The slower the turnover, the more difficult it is to recover funds, exacerbating liquidity crisis

As industry insiders analyzed: “The fruit business is a typical heavy-asset sector. Industry characteristics determine that its capital turnover is characterized by ‘large inflows and outflows’, which occupies a large amount of cash flow. Against this background, once an enterprise has low operational efficiency and its management level cannot keep up with the pace of development, it is very easy to trigger serious operational risks.”[3]

---

: Hongjiu Fruits is currently in delisted status. It has been suspended from trading since March 2024 and has not resumed trading to date, and the company is facing multiple crises including collective involvement of senior management in legal cases and debt restructuring[1][2]. In this context, the superficial changes in inventory turnover data may not reflect the actual operational status, and the company’s overall financial health has systemic risks.

---

[1] 10000link - “Listed for only 3 years, officially delisted today! From the HK$67 billion market capitalization myth to the arrest of the chairman” (https://info.10000link.com/news.aspx?doc=2025123090003)

[2] Caifuhao - “Hongjiu Fruits, the first fruit stock, was dismally delisted, with 95% of its market capitalization evaporated in 3 years” (https://caifuhao.eastmoney.com/news/20251226172235853845920)

[3] The Paper - “Fattened fruit farmers, cheated shareholders; can Hongjiu escape the curse of fruit enterprise listings?” (https://m.thepaper.cn/newsDetail_forward_32310357)

[4] Tencent News - “Hongjiu Fruits delisted from HKEX at year-end: multiple financial reports not released, once involved in financial fraud” (https://view.inews.qq.com/a/20251224A06I2I00)