Star enterprise Leadcore Technology has been acquired.

Investor Network, Zhu Jingkai

Recently, the CSRC issued the Opinions on Deepening the Reform of Mergers and Acquisitions Market of Listed Companies (referred to as the 'Six M&A Measures'). Among them, it not only clearly supports cross-border mergers and acquisitions, allows the acquisition of non-profitable assets, but also indicates that it will increase regulatory tolerance, improve transaction efficiency, enhance intermediary service levels, and strengthen supervision.

Under the support of policies, the capital market has ushered in a wave of mergers and acquisitions frenzy. Many listed companies have successively announced that they will halt trading to plan major asset restructurings. Listed companies that sensed policy opportunities earlier have taken the lead in embarking on the path of M&A restructuring. Some listed companies, after the review, have seen their stock prices soar like riding a rocket, hitting the daily limit for several consecutive days.

Individual shareholders take the lead in 'laying in wait'.

October 14th was the first day of resumption of trading for Optics Technology Holding Co., Ltd. (Stock code: 300489.SZ, hereinafter referred to as 'Optics Technology'), and the stock price rose by the daily limit of 20% on that day. As of October 24th, the company's stock price has hit the daily limit for 8 consecutive days, and its market cap has exceeded 14 billion yuan. The day before the company's trading suspension, its stock price closed at 22.78 yuan per share.

Looking back at the announcement released by Optics Technology on September 29th, the company plans to acquire a 44.9% stake in Leadcore Technology held by its affiliate, Leadcore Target Material, through the issuance of A shares and other means. The company also intends to purchase shares held by other shareholders of Leadcore Technology, but the trading intentions of these other shareholders have not been confirmed yet. The trading halt is expected to last no more than 10 trading days.

Subsequently, on the evening of October 13th, Optics Technology announced once again its plan to further 'upscale' the acquisition by proposing to purchase 100% of the shares of Guangdong Leadcore Target Material Co., Ltd. and other Leadcore Technology through the issuance of shares and cash payment. This acquisition plan showcased a further escalation, shifting from the initial plan to acquire a 44.9% stake in Leadcore Technology to a one-time purchase of 100% stake in Leadcore Technology.

Investor Network noticed that according to the Wind data platform, on September 27, the last trading day before the company released the acquisition announcement, two new individual shareholders, Wang Xueping and Zhang Jianlong, suddenly appeared among the top ten shareholders, as well as an institutional shareholder HTSC credit guaranty account, holding 1.387 million shares, 0.9258 million shares, and 0.8893 million shares respectively. At the same time, an individual shareholder Liao Lubin also increased holdings by 0.278 million shares.

If calculated based on the company's closing price of 22.78 yuan/share on September 27, and the closing price of 97.97 yuan/share on October 23, the two new individual shareholders and one institutional shareholder mentioned above have unrealized gains of about 0.104 billion yuan, about 69.61 million yuan, and about 66.87 million yuan. In just one month, they have created a 'wealth-making myth', with the two individual shareholders becoming millionaires and billionaires in an instant.

Controller Stages 'Capital Shift'

In addition, according to the Tianyancha platform, both Guangzhou Optics Technology and Leading Optoelectronics have Zhu Shihui as their actual controller, known in the industry as the 'Rare Materials King', and this restructuring involves related party transactions. According to the restructuring plan disclosure, this transaction is expected to constitute a significant asset restructuring, but not a reverse takeover.

It is worth noting that in February of this year, Leading Optoelectronics signed a listing guidance agreement with HTSC and registered for guidance with the Jiangsu Securities Regulatory Bureau. However, in the following months, there was no further information on its IPO progress. After several rounds of guidance by HTSC, they didn't expect to receive the 'fate' of being acquired.

From the timeline of the announcements, Guangzhou Optics Technology originally intended to acquire Leading Optoelectronics step by step. Why did the management suddenly raise the stake in Leading Optoelectronics from 44.9119% to 100% after half a month of consideration? Perhaps analyzing the recent business performance of the two companies can reveal some clues.

According to the official website of Guangzhou Optics Technology, the company's main business includes infrared optical devices, high-performance aluminum alloy material research and development, production, and sales. Past financial reports show that from 2021 to 2023, the company's revenue was approximately 0.724 billion yuan, 0.936 billion yuan, and 1.011 billion yuan respectively, while the net income was approximately 0.004 billion yuan, -0.114 billion yuan, and -0.241 billion yuan respectively, showing a trend where more revenue leads to more losses. However, in the first half of 2024, the company's revenue was approximately 0.572 billion yuan, and the net loss was approximately 0.035 billion yuan, narrowing the loss compared to the same period last year.

In comparison, Leading Optoelectronics, with its deep cultivation in the field of sputtering target materials for vacuum coating, has been focused on the research and manufacture of sputtering target materials and evaporation materials since its establishment in 2017, with products widely used in new displays, photovoltaics, semiconductors, precision optics, data storage, and specialty glass industries. Subsequently, it has successfully attracted substantial investments from industry giants such as Sinopec, CICC, BYD, Sequoia Capital, Morgan Stanley, and many other well-known international financial institutions, becoming a hot star in the primary market. After multiple rounds of financing, its latest valuation exceeds 20 billion yuan.

According to the financial data disclosed by Amperex Technology, from 2022 to 2023, the company's revenue was 2.186 billion yuan and 2.883 billion yuan, with net profits of 0.466 billion yuan and 0.411 billion yuan respectively. In the first half of 2024, the company's revenue was 1.586 billion yuan, with a net profit of 0.261 billion yuan. It can be seen that Amperex Technology's business performance in the past two years has been outstanding. There is no doubt that the acquisition of such high-quality assets by Optics Technology Holding will greatly benefit the company's future performance.

However, the secondary market has already reflected investors' expectations. On the day before the trading halt, the company's market cap was 3.1 billion yuan. After a sharp increase in the stock price during this period, its market cap has exceeded 14 billion yuan.

Optics Technology Holding has a high debt ratio of 76.04%.

Obviously, as the actual controller of the two companies, Zhu Shihui has made "both hands ready", continuing with IPO listing guidance on the one hand, and preparing for a backdoor listing by injecting the company into an existing listed company on the other. On September 24, the CSRC issued the "Opinions on Deepening Market Reform of Mergers and Acquisitions of Listed Companies", clearly stating support for listed companies to inject high-quality assets to enhance investment value, and support absorption and merger between listed companies under the same control. If this acquisition is successfully completed, Zhu Shihui will benefit the most.

However, according to the financial report for the first half of 2024, Optics Technology Holding's net operating cash flow was -0.158 billion yuan, a significant decrease of 460.12% year-on-year; meanwhile, during the reporting period, the company only held 59.1165 million yuan in cash and cash equivalents, and the asset-liability ratio reached 76.04%. During the reporting period, the company's inventory was 0.867 billion yuan, accounting for 24.67% of the total assets. At the end of last year, the inventory was only 0.677 billion yuan, showing a significant short-term expansion in inventory size. In addition, during the reporting period, Optics Technology Holding had short-term borrowings of 0.273 billion yuan and non-current liabilities due within one year of 0.377 billion yuan. Faced with such financial pressure, it is uncertain how Optics Technology Holding will proceed with the acquisition of Amperex Technology.

In fact, Optics Technology Holding's controlling rights were also acquired by Zhu Shihui through a series of capital operations. Its predecessor was AviChina Industry & Technology, a company mainly engaged in the production of nuclear power nuclear fuel processing equipment materials.

At that time, Zhu Shihui's AviChina Industry & Technology also planned to list on the GEM, but eventually exited due to significant uncertainties in sustained profitability. In 2019, Zhu Shihui became the controlling shareholder of AviChina Industry & Technology by acquiring shares and entrusted voting rights, helping the company transform based on AviChina Industry & Technology's business resources, enter the infrared optical field, and rename it as Optics Technology Holding.

Subsequently, Zhu Shihui also carried out a series of capital maneuvers. On January 6, 2020, AviChina Industry & Technology announced a joint venture with Avic XAC Group to establish a joint venture with a total investment of 0.5 billion yuan, with the listed company expected to subscribe for 70%; AVIC XAC Group for 30%. The joint venture will focus on the R&D, production, technical services, sales, and import/export business of optical materials, optical components, and infrared optical components. On this basis, the holding subsidiary Anhui AviChina was established.

Anhui Zhongfei has become a wholly-owned subsidiary of a listed company, holding 55.56% and 44.44% of Anhui Optics Technology Co., Ltd. (hereinafter referred to as Anhui Optics) respectively with Chuzhou Langya State-owned Assets, while its subsidiary Anhui Optics is responsible for implementing and operating the industrialization project of infrared optics and laser devices.

In January 2020, the Shenzhen Stock Exchange sent multiple inquiries regarding the establishment of Anhui Zhongfei and the business operation of Anhui Optics, focusing on related party transactions and fund occupation. In January 2021, Optics Technology announced that, through self-inspection, it was found that related enterprises controlled by the actual controlling shareholder had cumulatively occupied 0.831 billion yuan of the listed company's funds through related party transactions. The company was ordered to correct measures by Heilongjiang Securities Regulatory Bureau, and Zhu Shihui and other related parties were also criticized by the Shenzhen Stock Exchange.

This time, Zhu Shihui once again staged a "capital shuffle," injecting quality assets into the listed company. Whether this can revive Optics Technology, we will wait and see. (Produced by Seeking Alpha)■