Lancang Ancient Tea Plans to Acquire $7.5 Million through Share Sale at a 16% Reduced Price
Hong Kong-listed tea company Pu'er Lancang Ancient Tea Co. Ltd. (6911.HK) has been grappling with significant operational and financial difficulties. In 2024, the company reported a net loss of 308 million yuan (approximately $43 million), a sharp reversal from a net profit of 80 million yuan the previous year.
The financial decline reflects underlying operational difficulties: profit dropped steeply in the first half of 2024, contributing to troubles including the dismissal of its former general manager over business disagreements, a delayed annual results publication, and a resulting suspension of trading of its shares from April 1 to July 2, 2025.
To address its liquidity needs amid these challenges, Pu'er Lancang Ancient Tea announced a share placement raising about HK$59 million (~$7.5 million) at a 16% discount to support ongoing business development and working capital requirements. The company is also undergoing corporate governance changes, such as nominating a new independent non-executive director as of late July 2025.
From a revenue perspective, growth slowed markedly. After achieving 2.12 billion yuan in revenue with 206 million yuan net profit in 2023, the first three quarters of 2024 saw revenue of 1.65 billion yuan (up less than 1%) and a modest profit increase to 208 million yuan, indicating stagnation despite nominal profit growth earlier in the year.
The placement represents 16% of the company's enlarged issued share capital, with the placement price set at HK$2.46 per share, which represents a 16.61% discount to last Friday's closing price of HK$2.95. Pu'er Lancang Ancient Tea Co. Ltd. (6911.HK) announced plans to place 24 million Hong Kong-listed shares, with the fundraising effort expected to raise HK$59.04 million ($7.52 million).
The company has faced multiple challenges since its IPO in late 2023. In addition to the financial and operational struggles, Lancang Ancient Tea replaced auditor PwC at year-end. Despite these challenges, the company remains committed to addressing its issues and moving forward.
The financial difficulties at Pu'er Lancang Ancient Tea Co. Ltd. (6911.HK) are evident in the company's significant net loss of 308 million yuan in 2024, compared to a net profit of 80 million yuan the previous year. To alleviate its financial strain, the company announced a share placement, aiming to raise about HK$59 million for business development and working capital needs.
