Finance Society news on November 6th (Reporter Luo Yichen): With the continuous decline in performance, Zhejiang Construction Investment Group (002761.SZ) is turning its focus to equity operations. Tonight, the company issued an announcement, intending to purchase the minority shareholdings of three subsidiary companies held by Guoxin Jianyuan Equity Investment Fund (Chengdu) Limited Partnership (referred to as the "Guoxin Jianyuan Fund"), seeking to achieve full ownership. This also means that Chengdu State-owned Assets behind the Guoxin Jianyuan Fund will exit after investing 1 billion yuan nearly four years ago.

The announcement indicates that Zhejiang Construction Investment Group intends to raise funds for this transaction through issuing shares to the controlling shareholder, Zhejiang State-owned Capital Operation Co., Ltd. The transaction involves the minority shareholdings of Zhejiang Construction Group Co., Ltd. (referred to as "Zhejiang Construction Group One"), Zhejiang Construction Group No.2 Co., Ltd. (referred to as "Zhejiang Construction Group Two"), Zhejiang Construction Group No.3 Co., Ltd. (referred to as "Zhejiang Construction Group Three", collectively with Zhejiang Construction Group One and Zhejiang Construction Group Two known as the "target companies"), with corresponding equity proportions ranging from 13% to 25%. Upon completion of the transaction, the target companies will become wholly-owned subsidiaries of Zhejiang Construction Investment Group.

Currently, the transaction price has not been determined. Tianyancha information shows that the three target companies were originally wholly-owned subsidiaries of Zhejiang Construction Investment Group, and Guoxin Jianyuan Fund first held shares in 2020. This transaction occurs during Zhejiang Construction Investment Group's shell acquisition through Dorabot, at that time, Zhejiang Construction Investment Group planned to convert debts into equity for the three target companies, introducing Guoxin Jianyuan Fund as a debt-to-equity investor, with the latter collectively injecting 1 billion yuan into the target companies. At that time, the listed company stated that this was aimed at reducing the asset-liability ratio.

In terms of performance, after successfully introducing debt-for-equity investors and going public through shell acquisition, Zhejiang Construction Investment Group's performance was once quite impressive. From 2020 to 2022, the company's revenue increased year by year, and the net income remained relatively stable. However, starting from 2023, the company's performance entirely entered a downward trend, further declining this year. The target companies also face considerable operational pressure, with the semi-annual report showing that the combined net income of the three target companies was 0.272 billion yuan, a decrease of about 21% year-on-year. During the same period, the listed company's net income attributable to shareholders was 0.167 billion yuan, a significant decrease of nearly 70% year-on-year. Simply based on performance, the three target companies are indeed high-quality assets under the listed company, but the acquisition of minority shareholdings may have limited impact on performance improvement.

Due to this transaction, Zhejiang Construction Investment Group and Zhejiang Construction Convertible Bonds (127102) will be suspended from trading starting this Wednesday, with an expected total suspension period not exceeding 10 trading days.