Financial Services Association, March 2 (Editor: Gi Chen) OpenAI launched Wang Bang at the beginning of the Year of the Dragon. Sora, the first Wensheng video model, was released to open the door to a new world, and the global computing power market continues to be hot. The State Council's State-owned Assets Administration Commission held a special promotion conference on artificial intelligence for central enterprises on “AI Empowering Industry Renewal” last week, and computing power concept stocks once again set off a climax. After the market on Thursday this week, it was announced that Guizhou issued the first batch of “computing power vouchers” to 72 enterprises in and outside the province to promote the development of the computing power industry. Guiguang Network, which is promoting the construction of major projects such as the Southwest Regional Center for National Cultural Big Data and the Computing Power Node for the East Digital Western Computing Project, hit a rise or fall during the Friday session. According to the Wind AI Hashrate Index, the index range increase since the beginning of the Year of the Dragon (February 19 to March 1) has been 27.65%.

Computing power stocks also ushered in a bright moment. It plans to lay out the Big Data Company Innovation Division and its subsidiary at a premium of 440 million yuan, and Annel, a cross-border computing power bully whose subsidiary is the purchasing agent for the computing power platform project equipment and software, closed with 4 consecutive accounts. Ziguang Co., Ltd., which owns the Xinhua Sanaofei computing power platform, recorded 3 boards in 4 days. MeiG Intelligence, which has a high-computing power AI module, and Smart Intelligence, which provides AI servers and AI BOX edge devices to provide users with a computing power base, all closed up and down. In addition, the cross-border computing power Bullstock Hi-Tech Development, which plans to acquire 70% of Huakun Zhenyu's shares, closed on Thursday and recorded a record high of 7 boards in 10 days.

▌Cross-border hashrate bullish stocks: the phenomenon of “rising computing power” of A-shares continues to unfold. New faces such as Annell, Henglin, and Annuoqi have “emerged” tenfold, and the big bull stock Hongbo Co., Ltd. is already “ownerless”

The stock price of Anna, which is mainly in the middle and high-end children's clothing business, has recently risen sharply. The cumulative increase in just 11 trading days from February 8 to the closing of the market on March 1 has doubled, and the rise and stop has accelerated in the last three trading days. Annell announced on the evening of December 15 last year that it plans to lay out the Big Data Company Innovation Division at an 11-fold premium of 440 million yuan. In addition, it was also revealed on the same day that the wholly-owned subsidiary Annel Technology signed procurement contracts with Henan Media Digital and Innovation Division, amounting to 97.4653 million yuan and 87.718,800 yuan, respectively. In this transaction, ANEL Technology assumed the role of equipment and software procurement agent for the computing power platform project. Just the day after Annell announced the acquisition news (December 16 of last year), the Shenzhen Stock Exchange issued an urgent letter of concern, questioning issues such as the rationality of the purchase transaction amount, whether the counterparty had a relationship with the company, and the rationality of signing a digital contract with Henan Media.

Annelle said on an interactive platform on February 27 that Innovation Technology is a high-tech enterprise that integrates data centers, cloud services and big data services based on big data storage systems. Its main products include cloud storage, unified storage, application storage, hyperconverged architectures, and data center servers and supporting software. In addition, Annelle disclosed the performance forecast on January 31. The net profit loss for the year 2023 is estimated to be 758.762 million yuan to 118 million yuan, compared to -237 million yuan for the same period last year.

Home furnishing manufacturer Henglin Co., Ltd. announced on Tuesday evening that it plans to purchase 100% of Hengsheng Smart Computing's shares and carry out server purchases. The total amount is 399 million yuan. The day after the announcement, the stock price of the cross-border computing power stock Henglin Co., Ltd. rose and stopped on Wednesday. The stock price of Henglin Co., Ltd. continued to be strong at the opening of the market on Thursday, then suddenly dived high. The stock price fell 4.16% on Thursday and the stock price plummeted 7.43% at the close of Friday. According to the announcement, Hengsheng Intelligent Computing, the target company to be acquired by Henglin Co., Ltd. has not generated actual revenue since it was registered and established in November 2023. The company has a registered capital of 100 million yuan and a paid-in capital of 1 million yuan. Wang Aiqin, the younger sister of Wang Jianglin, the actual controller of Henglin Co., Ltd., holds 99% of the shares, and Mei Yiting, the younger brother of Wang Jianglin's spouse, holds 1% of the shares.

Annuo, whose main business is textile dyes, plans to achieve the fourth 20CM rise and fall within five trading days after closing last Thursday after crossing the border computing power. Annuoqi is a leader in the dye industry. On the evening of February 6, it announced that it plans to acquire 100% of Shanghai Gencong's shares. The cross-border acquisition of computing power companies also led to a letter from the Shenzhen Stock Exchange. In response to a letter of concern from the Shenzhen Stock Exchange on Monday evening, Annuo said that the main business direction of Shanghai Gencong, which the company plans to acquire, is computing power services and generative AI platforms. Although there are certain differences from the company's current main business, it will help the company adapt to future technological development trends and enhance the company's competitiveness. Furthermore, the company's shareholding company, Shanghai Shanghu Color Chain Company, is committed to providing blockchain services to textile industry brands while actively exploring AI design services for customers. This acquisition is also conducive to more cooperation among the Group's companies in the future.

Some analysts pointed out that crossing borders is not a panacea, and the strategic layout needs to be careful. Judging from financial data, Annuo is facing short-term debt pressure, cash flow gaps, and high inventories, while Shanghai Gencong, the target of the planned acquisition, plans to trade at a price of no more than 100 million yuan. Whether its valuation is reasonable and whether the technical strength behind it is strong are all issues that investors and regulators cannot avoid. The key is how Annuo, as a leader in the dye industry, manages newly acquired subsidiaries to avoid “outsiders leading insiders” and prevent the risk of subsidiaries getting out of control. After all, the expertise in the two fields is not the same, and the difficulty of achieving effective integration of resources, technology, and management in a short period of time should not be underestimated. There is no denying that the future of AI is promising, but if it were to hastily cross borders on a whim or market hot spot alone, it would be tantamount to putting the future of the company at risk.

In fact, Annel, Henglin, and Anoch are not the only players outside the circle of cross-border computing power. Since 2023, driven by generative AI, demand for computing power has remained high, and it is not uncommon for A-share listed companies to seek cross-border computing power business. Players from all walks of life, such as Hongbo Co., Ltd., a leader in the Chinese lottery printing industry, Hengrun Co., Ltd., which specializes in wind power forging equipment, monosodium glutamate giant Lotus Health, dye company Jinji Co., Ltd., and Aoya Co., Ltd., whose main business is landscape design, announced their entry into the computing power industry last year in an attempt to “share a slice of the pie.”

Judging from the stock price performance, most companies' cross-border movements have caused major damage in the capital market. For example, Hongbo Co., Ltd.'s cross-border computing power jumped tenfold after joining industry giant Nvidia; Lotus Health's stock price surged more than 140% from August to October last year; Hengrun shares and Aoya shares rose and stopped 20 cm for three consecutive days... The “computing power rises” phenomenon will continue until 2024.

Cross-border hashrate bullish stocks also recently revealed their respective recent developments. Thanks to the “marriage” with Nvidia, the stock price of Hongbo Co., Ltd. rose all the way up last year. Regarding the AI business, Hongbo Co., Ltd. announced on Monday evening that the progress and risks of the Beijing AI Innovation and Empowerment Center was disclosed. Based on market feedback, the company continued to invest in the expansion of the intelligent computing center, and the expansion equipment was delivered one after another. Furthermore, Hongbo Co., Ltd. announced on Wednesday evening that some of the shares held by shareholders were judicially withheld, and the company changed to no controlling shareholder or actual controller. According to statistics, shares held by shareholders of Hongbo Co., Ltd. were judicially withheld 6 times during the year.

Lotus Health, another former leader in cross-border computing power, issued an announcement on the progress of the transformation of the computing power business on Wednesday evening. Currently, Lotus Health's computing power business has already started, but most servers have not yet been delivered, especially GPU series servers. According to Lotus Health, on September 27, 2023, its subsidiary Lotus Science and Technology and Xinhuasan Information signed a procurement contract for 330 GPU series servers, with a contract amount of 693 million yuan. Up to now, apart from the 12 GPU series servers delivered by Xinhua News Service to Lotus Science and Technology on November 16, 2023, the remaining 318 GPU series servers have not been delivered. In addition to this, the rest of Lotus Health's subsidiaries have also signed contracts with various partners for the purchase of servers. Among them, on December 20 of last year, Lotus Zixing signed a purchase contract with Company E for 10 GPU servers, with a purchase unit price of 2.8 million yuan and a contract amount of 28 million yuan. Lotus Health has made an advance payment of 5 million yuan on December 25, 2023. As of now, this batch of servers has not been delivered.

Analysts said that the impeding transformation has put some financial pressure on Lotus Health, and the main business is also being tested by the ceiling. According to public information, Lotus Health's main business is the production and operation of food and condiments, but there is concern that the consumption of MSG products as its core business is declining. Lotus Health's procurement amount to transform its computing power business far exceeds the amount of funds available. Regarding the funding issue, Lotus Health stated that in addition to the actual procurement capital of 50.2 million yuan, the first batch of purchases in 2023 was about 200 million yuan according to the company's procurement arrangements, and the purchase amount in 2024 was about 490 million yuan. Analysts also pointed out that according to simple estimates of foreign loans of 200 million yuan in 2022, foreign loans of 500 million yuan in 2023, and a financing interest rate of 5%, the company's balance ratio will reach 60% in 2024, and interest expenses for the year will reach 32.5 million yuan. In response, Lotus Health also admits that the aforementioned financing may put some financial pressure on the company.