The stock price of Pagoda Industrial Group, China's largest fruit retailer, increased after the company announced a private placement of shares to raise nearly HKD325 million (US$42 million), which will be used to cover liabilities.
Shares rose as much as 33 per cent during the day before closing 20.7 per cent higher at HKD1.75 (US$0.23). This gave the Shenzhen-based company a market capitalization of about HKD2.7 billion (US$347.5 million).
Pagoda said it will issue 279.4 million shares to at least six investors at HKD1.17 per share, representing about 15.4 per cent of its enlarged share capital. Securities trader First Shanghai Group will act as global coordinator and sole placing agent.
The placement will raise about HKD325 million after costs. Pagoda noted that 61.5 per cent will be used to settle accounts payable, 30.8 per cent to repay bank loans, and 7.7 per cent will go to general working capital.
Founded in 2001, Pagoda operates a nationwide chain of fruit stores. In recent years, however, its premium positioning has come under pressure due to weaker economic conditions and changing consumer demand. The company has reported continued losses.
In 2024, Pagoda recorded a net loss of CNY386 million (US$54.26 million), compared with a CNY362 million (US$50.9 million) profit in 2023. Revenue dropped 10 per cent to CNY10.3 billion (US$1.4 billion). In the first half of 2025, the company posted a net loss of CNY342 million, while revenue fell 22 per cent year on year to CNY4.4 billion.
Store numbers have also declined. The network decreased by 966 locations to 5,127 in 2024, and fell further to 4,386 outlets by the end of June 2025.
Management stated during an earnings conference on Aug. 22 that the store optimization process was completed in the first half of the year, and gross profit margins have returned to a relatively healthy level. They added that franchisee confidence had improved, with expectations that store numbers will begin to increase again in the second half of the year.
Source: YiCai Global