For years, the 'Luwei' (braised snack) sector was the darling of China’s retail investors, driven by the aggressive 'duck neck economy' that saw brands like Huangshanghuang race to blanket the nation’s streets. However, that era of unbridled expansion has met a cold reality. Huangshanghuang (002695.SZ) is currently grappling with a 'triple blow' that signals a deep structural crisis: a massive shareholder divestment, the collapse of its signature expansion strategy, and a high-stakes equity deal that has fallen through.
Confidence in the company appears to be waning from the inside out. Xinyu Huangshanghuang, a major concert party of the controlling shareholder, recently completed a lightning-fast divestment plan, cashing out 202 million RMB in just 15 trading days. By hitting the 'upper limit' of its planned share reduction, the entity lowered its stake from nearly 20% to under 17%. This rapid exit by insiders often serves as a red flag to the market, suggesting that those closest to the business see limited upside in the near term.
Perhaps more damaging is the symbolic death of the company’s 'Thousand Cities, Ten Thousand Stores' ambition. Launched in 2020, the plan aimed to dominate the Chinese landscape with 10,000 outlets by 2026. Instead, the company’s footprint has withered. From a peak of over 4,600 stores, the count has plummeted to roughly 2,898 by the end of 2025—a staggering 40% contraction. The management has quietly pivoted its rhetoric from 'quantity' to 'high-quality stores,' a common euphemism for a failed expansion effort in a saturated market.
Financial performance offers little solace despite a superficial jump in profits. While net profit surged by over 100% in 2025, this was not driven by sales growth, which actually declined by 3%. Instead, the bottom line was propped up by a historical low in the cost of raw materials—specifically duck parts—and aggressive cost-cutting in marketing. As raw material prices normalize and revenue continues to stagnate, the fragility of this profitability is becoming apparent, evidenced by a sharp slowdown in profit growth to just 2.79% in the first quarter of 2026.
To cap off this run of misfortune, a major 379 million RMB equity transfer to a private equity fund has been terminated. The deal, which would have seen a 5.88% stake change hands, was called off by mutual agreement without a clear alternative in sight. While the company maintains that the cancellation will not impact daily operations, the combination of failed external investment and internal divestment paints a picture of a brand that has lost its momentum in an increasingly competitive and cost-conscious consumer market.