Oriental Rise Holdings announced a non‑binding letter of intent to acquire a controlling stake in Hubei Daguan Tea Industry Group, a vertically integrated tea producer located in Yingshan County, Hubei Province. The deal is intended to secure upstream tea plantation resources, expand the company’s product mix toward higher‑margin teas, and deepen its distribution network across China.
The acquisition follows a series of earlier LOIs targeting distribution partners Daohe and Minji, underscoring Oriental Rise’s push toward full vertical integration. By owning the cultivation and processing stages, the company can reduce input cost volatility, lock in quality standards, and create a differentiated premium product line that commands higher margins.
Oriental Rise’s recent financials show a sharp decline in revenue and net income—half‑year revenue fell to $5.0 million from $7.7 million a year earlier, and net income dropped to $0.108 million from $2.19 million. Gross margin contracted from 35 % to 18 %. The acquisition is therefore positioned as a turnaround lever to reverse the margin squeeze and restore profitability.
Investors reacted positively, with the stock surging after the announcement. Analysts highlighted the strategic fit and the potential for margin expansion, noting that the deal could lift the company’s average selling price and reduce reliance on lower‑margin retail channels.
CEO Dezhi Liu emphasized that securing upstream resources is “fundamental to improving long‑term competitiveness and earnings quality.” He added that Daguan Tea’s modern, automated production facilities and strong product development pipeline would complement Oriental Rise’s existing distribution network, creating a synergistic value chain.
Oriental Rise will conduct due diligence and, pending satisfactory results, negotiate a definitive agreement. The company has not disclosed financial terms, but the LOI signals a commitment to pursue a transaction that could reshape its business model and potentially unlock shareholder value.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.