(Yicai Global) Dec. 4 -- Chinese online bakery brand Bestcake will slowly resume cake deliveries tomorrow, it announced on its website on Dec. 2. The statement seeks to dispel reported misgivings over operating irregularities at the famous Shanghai-based confectionery supplier hard-hit by Covid-19. Its parent is also set to soon delist from China’s alternate National Equities Exchange and Quotations board, another reason it cited as a cause of the disruptions. 

Some web users recently charged the cake seller with operating abnormalities such as arbitrary cancellation of orders and irredeemable pastry coupons. Yicai Global called the Bestcake website’s customer service hotline multiple times but got only a recorded message saying it was out of service.

Users cannot use the system to place orders as usual due to a management reshuffle and supply chain upgrades, the baker stated, adding the pandemic and its operator’s looming delisting from the NEEQ are also placing it under exceptional strain.

The company’s operator Shanghai Shoule Electronic Commerce Holding announced its delisting scheme in September, doing so, “In accordance with [our] strategic plan and business growth needs, and to raise the efficiency of company business decision-making and lower costs,” it explained. 

Shoule [NEEQ:835491] debuted on the NEEQ in 2016. Everbright Securities, the broker sponsoring the firm's listing, issued a recent risk-warning notice, advising investors that the company and its units had been branded dishonest debtors subject to compulsory measures, with the firm's de-facto controller Wu Zifeng barred from extravagant consumption such as air and high-speed rail travel and stays at starred hotels. 

Imperial Aspirations

Its founder Wu indirectly holds a 40.63 percent stake in Shoule, whose shareholders also include affiliates of Asian private equity group SAIF Partners and Everbright Capital, along with Orient Securities. 

Bestcake has been growing ever since Shoule started trading on the NEEQ in 2016, setting up units in Shanghai, Hangzhou, Suzhou, Ningbo, Wuxi and Nanjing in 2016. The pastry vendor, which aims to build a nationwide "baking empire,” has opened branches in 14 cities across China to date. 

Fallout from the Covid-19 pandemic drove its parent’s operating revenue down an annual 3.37 percent to CNY110 million (USD16.8 million) in the first half, with net profit down 26.98 percent on the year to CNY11.73 million after steady growth in both annual revenue and net profit since 2015, its financial data show.

The Beijing-based NEEQ is an over-the-counter market for up-and-coming small and medium companies that do not otherwise qualify for the main boards in Shanghai and Shenzhen.

Compulsory measures under Chinese law comprise bail, house arrest, temporary detention and remand.

Editors: Liao Shumin, Ben Armour, Xiao Yi