Shahe Co. Major Asset Restructuring! Plans to Cross-Border Acquire "Little Giant"

Shahe Co., Ltd. announced on the evening of February 6th that the company plans to purchase a 70% stake in Jinghua Electronics held by Shenye Pengji through a cash payment. After the completion of this transaction, Jinghua Electronics will become a controlling subsidiary of the company and will be included in the company’s consolidated financial statements. This transaction constitutes a major asset restructuring and related-party transaction, with a transaction price of 274 million yuan.

After the transaction is completed, Shahe Co., Ltd. will change its current single real estate business operation status and enter the fields related to the research, development, production, and sales of smart display controllers and LCD display devices.

Data shows that on February 6th, Shahe Co., Ltd.'s stock closed at 13.21 yuan per share, down 1.2%, with a market value of 3.2 billion yuan.

Achieving Business Strategy Transformation

The announcement shows that the counterparty to this transaction is Shenye Pengji, a controlling subsidiary of Shenye Group, the indirect controlling shareholder of the listed company. This transaction is a cash acquisition, with funds sourced from the listed company’s own or raised capital.

Public information indicates that Jinghua Electronics is a nationally recognized “Little Giant” enterprise certified by the Ministry of Industry and Information Technology, focusing on human-machine interaction displays and intelligent control system research, development, and manufacturing for nearly forty years. Its products are widely used in core scenarios of national strategic emerging industries such as smart homes, industrial automation, intelligent vehicles, and smart healthcare.

After the transaction, Shahe Co., Ltd. will gradually realize a strategic business transformation, effectively reducing the company’s business concentration risk. Based on Jinghua Electronics’ core position in the display industry chain and its technological and customer reserves in smart homes, industrial control and automation, OA office, intelligent vehicles, and smart healthcare, Shahe Co., Ltd. will enter the advanced manufacturing sector, which is conducive to opening new business development and performance growth space, enhancing sustainable operation capability, profitability, and core competitiveness.

The related proposal for this transaction still requires approval at the company’s shareholders’ meeting and other approvals, filings, or consents as required by relevant laws and regulations.

Making Performance Commitments

Shahe Co., Ltd. recently disclosed its 2025 performance forecast, estimating a net profit attributable to the parent company of a loss between 136 million yuan and 156 million yuan in 2025. In 2025, the decline in sales prices of some projects led to a reduction in gross profit margin, and the company conducted impairment tests on development projects based on the market conditions of the regions where the real estate projects are located and actual sales, resulting in inventory write-down provisions.

The announcement shows that in the first three quarters of 2023, 2024, and 2025, Jinghua Electronics’ main business revenue was 412 million yuan, 343 million yuan, and 304 million yuan, respectively.

After the transaction is completed, Shahe Co., Ltd.'s net profit attributable to the parent company will increase. In 2024, the company’s earnings per share before this transaction are 0.07 yuan/share, with a projected combined earnings per share of 0.14 yuan/share. After the transaction, the company’s earnings per share will be slightly increased, and there will be no dilution of basic earnings per share.

The announcement shows that regarding performance commitments, in 2026, 2027, and 2028, Shenye Pengji commits that Jinghua Electronics’ net profit will not be less than 37.2022 million yuan, 40.3136 million yuan, and 43.5512 million yuan, respectively.

(Source: China Securities Journal)