Recently, some investors mentioned the investment value of Taoli Bread (SH603866), believing that the low cost of the major shareholder's stock increase and the holding of shares by social security funds may indicate a good investment opportunity. However, in-depth analysis revealed some noteworthy issues with the company's financial condition and business strategy.

Firstly, the frequent reduction of shares by the company's major shareholders has raised concerns in the market. According to public information, since 2019, several executives and major shareholders, including Wu Zhigang, Wu Xuedong, and Sheng Yali, have carried out large-scale reductions, resulting in a substantial amount of cash being withdrawn. This behavior not only affects market confidence but may also suggest a cautious attitude within the company regarding its future development.

Secondly, the company's financial indicators show a concerning trend. Net profit has been declining year by year, and both net assets per share, capital reserve per share, and undistributed profits per share are also on a downward trend. The deterioration of these indicators reflects the challenges the company faces in terms of operational efficiency and profitability.

The reasons for this situation may include the following points:

1. High dividends and shareholder cash-outs: The company has distributed dividends of up to 4.1 billion yuan over the past five years, coupled with significant sell-offs by the family of the actual controller, which has directly consumed a large amount of capital reserves.

2. Inappropriate expansion strategy: The company expanded southward to build factories, but the capacity utilization rate is low, with some subsidiaries even experiencing capital reduction; the initial investment has not effectively transformed into economic benefits.

3. Continuous decline in performance: Since 2021, the company's net profit has been declining for consecutive years, and in 2024, there is a situation of both revenue and profit decline, making it impossible to replenish the capital reserve through profits.

4. Significant decline in stock price: The company's stock price has dropped nearly 90% in recent years, and the price-to-book ratio has decreased, with the channel for supplementing capital reserves through premium stock issuance also basically cut off.

In the face of these challenges, Taoli Bread needs to reassess its business strategy and capital operation methods. Investors should comprehensively evaluate the company's financial status, industry competition landscape, and future development prospects when considering whether to invest in the company, rather than making decisions based solely on single factors such as major shareholders increasing their holdings or institutional shareholding.

Overall, the predicament faced by Taoli Bread highlights the risks hidden in rapid expansion and capital operations for enterprises. This also serves as a warning to other companies: while pursuing growth, it is essential to maintain financial health and sustainable development, balancing short-term interests with long-term strategies.