Lehuiyue International raises 350 million through a private placement to supplement working capital and repay debts; the fresh beer business's "cash-burning" nature drags down profits

China Economic Journal Reporter Jiang Zheng, Beijing

Le Hui International Announces New Financing Plan.

On March 11, Le Hui International announced that it plans to issue targeted shares to specific investors, raising a total of no more than 350 million yuan (including this amount). After deducting related issuance costs, all funds will be used to supplement working capital and repay bank loans.

Le Hui International is a Chinese beer and beverage equipment company. In 2020, it launched the “Fresh Beer 30 Kilometers” business to create a new growth curve. In the first three quarters of 2025, the company’s revenue was 950 million yuan, up 0.28% year-over-year; net profit attributable to the parent was 33.6 million yuan, down 17.10%; net profit excluding non-recurring gains and losses was 16.79 million yuan, up 17.58%.

The targeted issuance will be made by the company’s actual controller Lai Yunlai and enterprises controlled by Huang Yuening, which are affiliated companies of the listed company. The investors will subscribe with cash at a price of 20.92 yuan per share, not less than 80% of the average trading price of the company’s stock over the 20 trading days prior to the pricing date.

Well-known tax and finance expert Liu Zhigeng told China Business Journal that the full subscription by the actual controller indicates a high level of confidence and recognition of the company’s future development and current valuation. This “blood transfusion” signals three positive messages: deep interest alignment, easing of funding anxiety, and market confidence transmission.

Le Hui International mentioned in the announcement that after the funds are received, the company’s debt-to-asset ratio will decrease, which will help optimize the company’s debt structure and enhance sustainable profitability and risk resistance.

Public information shows that as of the end of September 2025, the company’s cash flow from operating activities was 220 million yuan, down 20.87% year-over-year; cash and cash equivalents were 418 million yuan; short-term loans amounted to 558 million yuan; the asset-liability ratio was 62.97%, slightly higher than 61.71% in the same period last year.

In fact, Le Hui International’s asset-liability ratio has long been above 50%. From 2019 to 2024, the ratios were 61.55%, 52.82%, 53.86%, 60.27%, 62.30%, and 61.37%. During the same period, revenue increased from 754 million yuan to 1.652 billion yuan.

Liu Zhigeng believes that a 62.97% debt ratio is considered medium-high in manufacturing. In segmented industries, it is relatively high, reflecting a higher financial leverage than peers.

Xu Litao, Secretary of the Board of Le Hui International, told reporters that the additional funds from this issuance will be used to supplement liquidity, which is a “blood replenishment” measure, aiming to be prepared for any future needs.

“The company’s fresh beer business is in the investment stage, and further investments will be made in market development and team building. If market conditions change faster, the company’s funds can better respond,” Xu said.

The “fresh beer” business mentioned by Xu refers to the “Fresh Beer 30 Kilometers” segment.

Le Hui International has traditionally focused on beer and beverage equipment, and in 2019, it expanded into liquor equipment, gradually penetrating into dairy machinery and whisky equipment. In 2020, the company launched the “Fresh Beer 30 Kilometers” project and took four years to become the top seller of cold chain fresh beer in China.

However, to date, this business segment has not yet turned a profit.

Financial reports show that the “Fresh Beer 30 Kilometers” business lost 45.54 million yuan in 2022, 60.65 million yuan in 2023, and 75.28 million yuan in 2024. The company responded to investor questions that in the first three quarters of 2025, the net loss attributable to the parent was 11.70 million yuan, with a significant narrowing of losses.

A staff member from the company’s Secretary Office told reporters that the pub projects under the fresh beer business previously adopted a direct operation model with higher investment. Later, they shifted to a franchise model with lighter assets, reducing costs significantly.

Reviewing related financial reports, the losses in this segment are mainly due to “being in the factory construction and market investment phase.”

As early as 2021, Le Hui International raised over 400 million yuan to fund six projects, including a craft beer brewery, fresh beer vending machines, and other initiatives. Four of these projects were city breweries or beer factories located in Changsha, Wuhan, Kunming, and Changchun.

Most of these fundraising projects have since undergone changes or delays. As of February 25, the projects with changed use of funds involved 398 million yuan, accounting for 98.38% of the total raised amount.

According to Liu Zhigeng, such changes in fundraising use are common in the capital markets. From 2023 to 2025, about 800–1200 A-share listed companies each year have announced changes to their fundraising projects, with 1,147 in 2023 alone, nearly 40% of listed companies that year.

Specifically for Le Hui International, the previous projects—“Fresh Craft Beer (Brewery) Project” and “Vending Machine Operation Project”—have been terminated, with remaining funds transferred to other factory or brewery projects. The “Changsha 10,000-ton City Factory Project” was completed after changes; the “Wuhan City Factory Project” (Phase II), “Kunming City Beer Factory,” and “Changchun City Beer Factory” projects were delayed due to lower-than-expected sales of the craft fresh beer.

Because of these reasons, after more than four years, about a quarter of the previous funds remain unused. However, Xu Litao mentioned that the company’s fresh beer capacity is sufficient, and there is no rush to expand blindly.

Xu said that early-stage investment in consumer goods industries tends to be larger. The fresh beer business is currently in the investment phase, focusing on brand building, channels, and internal teams. The company hopes to turn profitable sooner, but it depends on market conditions.

Strategy positioning expert and founder of Jiu De Positioning Consulting, Xu Xiongjun, believes that “Fresh Beer 30 Kilometers” has good development prospects. Its core advantages are being fresher, better-tasting, and healthier. Future consumers will pay more attention to such craft products. “The company’s strengths lie in production equipment and technology, while its weaknesses are in marketing, store operations, and franchise recruitment.”

Jian Junhao, founder of Fujian Huace Brand Positioning Consulting, shares a similar view. He states, “‘Fresh Beer 30 Kilometers’ features urban breweries, short-term cold chain logistics, and active yeast fermentation, leading the cold chain fresh beer sales in China with clear growth potential. The current losses are due to capacity ramp-up, channel expansion, and cold chain investments, but losses are expected to decrease significantly by 2025, laying a foundation for profitability.”

He recommends slowing down expansion, improving existing capacity utilization, reducing costs through refined cold chain and channel management, strengthening brand awareness, balancing ready-to-drink and retail channels, and using data-driven operations to improve store and plant efficiency, steadily realizing growth.