The stock price has increased for 10 consecutive days, and the leading company in 30 billion pre-made dishes has seen short-term debt surge by 700%.

Ask AI · Short-term debt surges sevenfold—what is the deeper meaning behind the company’s capital strategy?

Introduction: Behind the stock price sprinting higher in red, the OEM “pre-made dishes” are the biggest “potential bombs” that need to be prevented most urgently.

Known as the “King of Pre-made Dishes” and the “No. 1 Frozen Food Brand,” Annway Food (603345.SH) used a wave of “Nine-Yang Divine Skills” to directly take the stock price higher. From March 23 to April 3, after Annway Food’s “nine consecutive positive days,” it delivered “ten consecutive positive days.” The stock price rose steadily from 81.3 yuan per share to 96.61 yuan per share, and its total market capitalization reached 32.2 billion yuan.

But during the pre-made dish craze a few years ago, Annway Food’s total market cap once soared to 68.0 billion yuan; then it gradually declined, and it is currently still less than half of its peak.

While the stock market was rallying sharply, Annway Food’s 2025 performance “answer sheet” that it just released over the past two days showed that net profit declined for the first time in 10 years. Although revenue increased year-on-year by more than 16.0 billion yuan, the situation of “revenue growth without profit growth” is very clear, and at the same time, short-term borrowings surged year-on-year.**

Many investors are also starting to “cash out and go home,” so whether Annway Food, this “fish ball,” can keep “pushing higher” in the stock market is attracting attention.

The pre-made dish leader with large dividends,

Net profit falls, short-term debt surges 7x

In 2025, Annway Food turned in a track record where growth and pressure coexist.

For the full year, it achieved operating revenue of 16.193 billion yuan, up 7.05% year-on-year, and continued to rank first in China’s frozen food industry. However, net profit attributable to shareholders of the listed company was 1.359 billion yuan, down 8.46% year-on-year.

Previously, Annway Food’s net profit attributable to the parent had increased for nine consecutive years, reaching a high of 1.485 billion yuan in 2024. The year-on-year decline in net profit in 2025 is the first negative growth in nearly 10 years for Annway Food. If looking at net profit excluding non-recurring items, Annway Food already saw a year-on-year decline in 2024.

From the financial report details, the decline in profit is not that the core business suddenly lost momentum; rather, it is the result of multiple pressures converging and being realized.

For the year, the gross margin fell by 1.7 percentage points year-on-year to 21.5%. The commissioning of new plants increased depreciation; large increases in prices of core ingredients such as crayfish; foreign exchange losses expanding due to fluctuations in the U.S. dollar exchange rate; and in addition, goodwill impairment charges for acquired assets. With several factors combining, the result directly compressed profit growth below revenue growth.

In stark contrast to the profit decline is Annway’s unchanged high dividend payout.

For 2025, Annway’s cumulative cash dividends totaled 952 million yuan (including tax), accounting for as much as 70.01% of that year’s net profit attributable to the parent. Dividends of 473 million yuan had already been distributed in the first half, and at year-end the board approved a dividend plan for another 478 million yuan. Maintaining a high payout ratio for many consecutive years is rare in the consumer sector.

The controlling shareholder of Annway Food, Fujian Guoli Minsheng Technology Investment Co., Ltd. (abbreviated as “Guoli Minsheng”), is the biggest beneficiary of the dividends. It holds 22% of Annway Food’s shares, and Guoli Minsheng also holds (01752.HK)16.17% of equity in Australia Chengfeng Gaodian Group Co., Ltd.

A look through the equity structure shows that Guoli Minsheng is jointly controlled by Ms. Hang Jianying and Ms. Lu Qiuwen; Ms. Hang Jianying and Ms. Lu Qiuwen are the actual controllers of Annway Food.

At the same time as the large dividends, Annway Food’s short-term borrowings surged to 891 million yuan. Compared with 111 million yuan in January 2024, this is a 702.7% jump! Non-current liabilities due within one year also rose from 7.457 million yuan in 2024 to 30.45 million yuan.

Image source: the company’s financial report

Among them, the secured guarantee loans are borrowings that the subsidiary Hubei Xinliu Wu Food Group Co., Ltd. took from banks, with an ending balance of 1.0 billion yuan; within the guarantee loans, Xinliu Wu’s total borrowings from banks were 343 million yuan, Hubei Honghu Xin Hongye Food Co., Ltd.’s borrowings from banks were 247 million yuan, and Jiangsu Dingwei Tai Food Co., Ltd.’s borrowings from banks were 75 million yuan.

Annway Food stated that the sharp increase in short-term borrowings is mainly due to an increase in working-capital borrowings. But in July 2025, Annway Food had just completed its listings and fundraising in Hong Kong, with net proceeds of approximately 2.302 billion Hong Kong dollars.

While it raised funds through the listing and increased borrowings, we also see that Annway Food has kept positive operating cash flow for consecutive years, yet it is still raising funds through multiple channels. What is the plan behind this?

Heavy concentration in Henan, expanding production and going overseas,

Can Annway hedge short-term pressure?

From the competitive landscape, although Annway is “one giant,” it has enemies on all sides. Even though its market share leads, it is only a relative advantage, and it has not formed an absolute share advantage.

According to Frost & Sullivan data, in 2024 Annway had a market share of 5% in frozen dish products (pre-made dishes) and 13.8% in the segmented market for frozen processed foods (such as hotpot ingredients). Although Annway Food maintains a “leading” position in these two categories, the overall competitive landscape can be described as “one giant with many strong challengers.”

In terms of competing brands, Annway Food faces potential rivals in the frozen segment such as Sanquan, Qianwei Central Kitchen, and Hailan. In the pre-made dish track, there are regional brands such as Weizhixiang and Congchu. In upstream areas, brands including Sanan, Shuanghui, and Guolian Aquatic leverage raw-material advantages to enter B-end contract manufacturing. Offline supermarket chains and restaurant brands are also rolling out private-label brands, and the industry competition is unlikely to be quickly relieved in the short term.

Choosing to increase market share is often the “go-to” move for industry leaders, and Annway Food is also continuously increasing investment: expanding capacity, deepening channels, and pushing overseas expansion. It hopes to build a long-term layout to counter short-term volatility—this is also Annway Food’s deeper consideration behind gathering funds through the above-mentioned multiple channels.

One of the most closely watched moves by Annway Food is its increased investment in Henan.

This March, Annway Food announced an additional capital injection of 120 million yuan into its wholly owned subsidiary Henan Annway, to use for the Phase III annual 140,000-ton frozen food expansion project in Henan. The project is expected to be completed and put into operation by May 2028. This project originally started construction in 2022. At that time, it was expected to be completed and put into operation in 2024, but due to a slower industry recovery pace, Annway Food chose to postpone completion.

However, Henan is the core region of China’s frozen food industry. Sanquan, Simian, Qianwei Central Kitchen, and Shuanghui all have operations here. Annway’s continued heavy bet on Henan is, in essence, about seizing the central China hub, strengthening its ability to radiate to the national market, and further consolidating supply-chain barriers.

In addition, projects such as Sichuan’s Phase III are advancing in parallel, and the nationwide capacity network is continuously improving. By the end of 2025, Annway has formed a nationwide production base layout, which is also its core barrier to fending off smaller and mid-sized brands and maintaining channel stability.

Furthermore, in 2025 Annway Food also increased its investment in new retail and e-commerce channels, including entering membership stores such as Sam’s Club and Hema. But whether consumers recognize and accept these offerings still needs to be validated by market feedback.

When Annway Food did its IPO in Hong Kong, it said it would promote overseas expansion. Last September, several Annway products entered Hong Kong, further expanding into the Southeast Asian market.

But the financial report shows that in 2025 Annway Food’s overseas revenue was only 187 million yuan, up 11.55% year-on-year; however, as a proportion of total revenue, it was only 1.15%.

Looking at the current point in time, Annway still faces five major practical risks: fluctuations in raw-material costs, continued pressure on profitability, intensifying industry price wars, risks related to M&A integration and goodwill impairment, and potential hidden risks of food safety incidents.

Revenue increases but profits don’t—gross margin under pressure

Against the backdrop of capacity expansion and M&A, Annway Food’s “revenue” grows but “profit” does not.

According to a report by Beijing Business Daily, from 2022 to 2024, Annway Food’s revenue growth rates were 31.39%, 15.29%, and 7.7%, respectively; and its year-on-year net profit growth rates attributable to the parent were 61.37%, 34.24%, and 0.46%, respectively.

This also matches the pre-made dish industry’s shift in rhythm from high growth to a pullback. Industry data shows that in 2019, China’s pre-made dish market size was 244.5 billion yuan; by 2023 it rapidly climbed to 516.5 billion yuan, doubling within four years. But in 2024, the market size was only 546.6 billion yuan, up 5.83%. Meanwhile, Annway Food’s revenue growth rate for frozen dish products fell from 111.61% in 2022 to 29.84% in 2023, and further down to 11.76% in 2024.

Annway’s business layout has long adhered to a “three-track advancement” strategy. The performance of its three core categories differs significantly, which directly determines the company’s overall profitability level.

Among them, frozen processed foods (mainly hotpot ingredients) are Annway Food’s core profit base.

In 2025, this category generated revenue of 8.450 billion yuan, up 7.79% year-on-year, accounting for more than 52% of total revenue and making it the company’s largest revenue source. More importantly, this segment’s gross margin is as high as 28.35%, making it Annway’s most stable “profit cash cow.”

The frozen dish products segment (pre-made dishes), viewed as the second growth curve, has high growth but low gross margin.

In 2025, this category’s revenue was 4.821 billion yuan, up 10.84% year-on-year, with a faster growth rate than total revenue, and it has already become the second growth engine. But its gross margin was only 9.49%, down 2.27 percentage points year-on-year, the lowest among the three major product categories.

Meanwhile, its traditional business—frozen noodle and rice products—had revenue of 2.4 billion yuan in 2025, down 2.61% year-on-year. Surrounded by strong competitors such as Sanquan and Simian, its noodle and rice business growth has been weak, becoming one of the drags on overall growth.

In addition, in 2025 Annway entered the frozen bakery track through the acquisition of Dingwei Tai. Full-year added bakery revenue was 67.95 million yuan. Although the scale is not large, the company views it as a potential next growth point.

The financial report shows that Annway Food’s gross margin in 2025 was 21.6%, lower than the 23% levels in 2023 and 2024.

The underlying reasons are not only the sharp rise in raw-material costs, but also goodwill impairment charges that have hit the company’s profits.

Annway Food’s acquisitions of Xin Hongye and Xin Liu Wu—aimed at gaining control over freshwater fish paste resources in Central China and tapping into the crayfish track—together brought a goodwill impairment loss of 164 million yuan. In addition, Kungfu Food, which is involved in developing a European frozen food business, also incurred operating losses, leading to a goodwill impairment loss of 17.4088 million yuan.

Goodwill impairment not only makes investors worried, but is also an issue consumers should care about. Behind the goodwill impairments are Annway Food’s acquisitions of Xin Hongye, Xin Liu Wu, and the previously mentioned Frozen Food Gentleman. Can these external brands be incorporated into standardized quality inspections with consistent standards?

Pre-made dish categories are numerous, and standardized management after “branding” is the hardest-to-defend “big bomb” for Annway Food.