Huarong Holdings (600421) lasted for nearly a yearBaccarateyeThe acquisition has come to an end. On the evening of May 10, Huarong Holdings announced that in view of the fact that the main products of the target company, Nanjing Development Optoelectronics, were affected by the overall market environment, the recovery of terminal market demand was lower than expected, and decided to terminate this major asset restructuring. In fact, this is not the first time Huarong Holdings has sought to cross the border in recent years, and the company has made two unsuccessful plans for cross-border health care in 2021.
Huarong Holdings also promised not to plan major asset restructuring for at least one month from the date of disclosure of the announcement on the termination of this major asset restructuring.
It took nearly a year for planning to fail.
Huarong Holdings is located in the prefabricated construction industry, which is mainly engaged in the processing and manufacture of PC moulds, mold tables and truss ribs. A paper acquisition announcement in June last year attracted market attention, and the company is planning to acquire and develop a 100% stake in Optoelectronics by issuing shares and paying cash.
Data show that there was no actual production and operation activities from its establishment in August 2016 to March 2022. In July 2022, we began the research, development, production and sales of optical fiber application devices such as optical fiber sensitive ring components, laser optical fiber devices and optical fiber sensors.
Subsequently, Huarong Holdings received two inquiries from regulators. Half a year later, Huarong Holdings continued to press ahead with the transaction and issued relevant announcements such as "issuing shares and paying cash to purchase assets and raise supporting funds and related party transactions (three revisions)" in December last year.
However, the profitability of the underlying company is concerned by the Shanghai Stock Exchange. According to the data, from January to May in 2022 and 2023, the revenue realized by Optoelectronics was 346 respectively.Baccarateye.490 thousand yuan and 1378 yuanBaccarateye740 million yuan, with net profits of-6.2565 million yuan and-10.1619 million yuan respectively.
Huarong Holdings replied that the low income and performance loss of the underlying company is mainly due to the stage of business development, supplier certification, small batch supply to high volume supply, etc. need a certain cycle, the scale of production and marketing is small.BaccarateyeIn addition, fixed expenses such as amortization of decoration expenses and equipment depreciation have a greater impact on net profit, and more R & D expenses are spent on product development and improvement. However, Huarong Holdings believes that the related products of the underlying company belong to the important basic components and "choke" areas of the national defense industry, which are supported by national policies; and in 2023, the business has developed rapidly, market development has made progress, and there is good potential for development.
In March this year, Huarong Holdings also said in an announcement that due to the influence of major related industries, the company's short-term development space was limited and its revenue scale was small. The company will actively promote and develop optoelectronic asset restructuring to further improve the quality and profitability of listed companies.
However, after nearly a year, the plan failed in the end. Huarong Holdings said that in view of the fact that the main products of the underlying company were affected by the overall market environment, the recovery of terminal market demand was lower than expected, which had a great impact on the smooth progress of the transaction evaluation work. The company and the other party of the transaction have agreed that the termination shall not constitute a breach of contract by either party to the transaction.
It is worth mentioning that when the acquisition was still in the planning process, Huarong Holdings planned to provide 30 million yuan in financial assistance to Optoelectronics Development, which was also questioned by the Shanghai Stock Exchange.
In the announcement on the evening of May 10, Huarong Holdings said that so far, the company has provided a cumulative loan of 15 million yuan to Nanjing Development Optoelectronic Technology Co., Ltd., and the last loan is due on August 31 this year. At present, Development Optoelectronics still owes the company 15 million yuan in principal, and agrees to repay the principal and interest on time in accordance with the loan agreement with the Company.
Has planned cross-border acquisitions many times.
In fact, Huarong Holdings made two unsuccessful plans for cross-border health care in 2021.
In July 2021, Huarong Holdings plans to purchase an 80 per cent stake in Wuxi Shenrui Biological products Co., Ltd., with a total transaction amount of no more than 270 million yuan. However, after months of planning, Huarong Holdings said it had decided to terminate the restructuring because it could not agree on core terms because of the big differences between the company and the other party on the valuation of the restructuring. Subsequently, Huarong Holdings found the next restructuring target and disclosed that it planned to buy a 100 per cent stake in Shanghai Xichao Biotechnology Co., Ltd., but failed to do so.
Several cross-border acquisitions may be related to the greater operational pressure encountered by Huarong Holdings.
Prior to this, Huarong Holdings received a working letter from the Shanghai Stock Exchange on the supervision of the company's performance notice due to the operating income of slightly more than 100 million yuan for four consecutive years. According to the annual report, the company's operating income from 2020 to 2023 is 140 million yuan, 130 million yuan, 125 million yuan and 122 million yuan respectively, showing a continuous downward trend in the past four years.
It is worth noting that Huarong Holdings has lost non-net profit for eight consecutive years since 2016, losing 4.3 million yuan, 9.03 million yuan, 7.34 million yuan and 8.55 million yuan respectively from 2020 to 2023.
For the reasons for the continued decline in performance, Huarong Holdings said that the company's traditional housing construction PC moulds, moulds and other products are mainly used in related industries in the field of construction, in recent years, affected by relevant industries, the total income of housing construction PC moulds and moulds has dropped from 136.1465 million yuan in 2020 to 49.8117 million yuan in 2023, resulting in a low level of revenue.
On the evening of the 10th, Huarong Holdings also announced that it would hold an investor briefing on the termination of major asset restructuring on May 30 to conduct interactive exchanges and communication with investors.
