Blue Whale News, December 2 - reported by journalist Huang Yujie. On December 2, Blue Whale News learned that Hanyi Co., Ltd. (301270. SZ) recently announced plans to acquire 0.134 billion shares of Founder Hold, a leader in the media publishing and font library industry.

Specifically, Hanyi Co., Ltd. intends to invest in equity through its wholly-owned subsidiary Hanyi International (Hong Kong) Limited (hereinafter referred to as "Hanyi Hong Kong" or "the buyer"), using its own funds totaling HKD 0.134 billion, to purchase a total of 0.134 billion shares of Founder Hold from Chun Ting Investment Limited, Link Capital Enterprises Limited, and Zhao Jin (collectively referred to as "the sellers") through agreement transfer, acquiring nearly 11.2% of the issued shares of Founder Hold.

According to the investment report released by Citic Sec, Hanyi Co., Ltd. is a leader in the domestic font library software industry, having launched over 1,500 B-end fonts. Driven by policies and scenarios, the market size of the font library industry is expected to maintain rapid growth. Citic Sec believes that Hanyi Co., Ltd.'s business ceiling has not yet been reached; firstly, there is ample room for improvement in the payment rate (legitimization), and secondly, downstream scenarios continue to diversify. The company is investing in AI applications, with expected innovative positioning through ARKIE, UPDF, and WorkMagic. Citic Sec is bullish on the company's business resilience and the innovative opportunities brought by SaaS and AI. Considering that the company's main business payment rates are closely related to economic and policy environments, the improvement points remain to be observed, and the contribution of new business income needs to gradually manifest. Citic Sec covers the company for the first time and does not provide a target price or rating for now.

In terms of main business, Hanvon shares have font software licensing business and internet platform licensing business.

The research report shows that Hanyi Co., Ltd.'s font library software licensing business has grown steadily, with contract renewals and additional purchases exceeding 50%. In 2023, the font library software licensing business achieved revenue of 0.161 billion yuan, a year-on-year growth of 6.95%; the number of contracted customers increased by over 10% year-on-year, with revenue contributions high from industries such as information technology and the internet, retail and services, finance, and the csi sws food & beverage index; contract renewals and additional purchases exceeded 50%.

From the bidding cases, financial companies such as Guotou UBS Group, Sichuan Banks, Guotou Securities, Taiping Life Insurance, Chongqing Changan Automobile Finance, China Great Wall, Fujian Rural Credit, Guizhou Trust, and Hunan Caixin Jin控 have all made purchases of Hanyi Co., Ltd.'s products.

In the announcement, Hanyi Co., Ltd. disclosed the purpose of this foreign investment, the existing risks, and the impact on the company.

Regarding the purpose of the trade, Hanyi Co., Ltd. pointed out that Founder Hold has strong comprehensive capabilities in font design, font library software development, Chinese information processing technology, and AI technology, accumulating relatively high-quality and rich resources from aspects such as brand accumulation, customer resources, technology research and development, and intangible asset composition. Hanyi Co., Ltd. is actively laying out information technology and AI frontier industries, and strategically investing in Founder Hold enables the company to better access industry resources, seek industry synergy and cooperation, and explore better industrial models for the development of the Chinese font library software industry, Chinese information processing technology, and Chinese traditional culture in the AI era.

In terms of risks, Hanyi Co., Ltd. disclosed five risks: First, the risk of subsequent synergy integration: The company has acquired shares of the target company and has become one of its shareholders with a certain holding ratio. The company will actively seek synergy and cooperation with it in corporate governance, business development, and other aspects. However, further planning, negotiation, and implementation are required for subsequent cooperation with the target company. If the expected synergy effects do not materialize, it may impact the post-investment results. Second, the risk of performance fluctuations: The operating conditions of the target company may be affected by uncertain factors such as market changes, industry and policy changes, and management, potentially affecting the company's interests. Third, the risk of stock price fluctuations: The target company is a Hong Kong-listed company, and changes in the target company's stock price may affect the profits or comprehensive income during the period the company holds the target company. Fourth, forex risk: This transaction involves overseas investments and requires ODI registration, which may affect investment acquisition costs due to exchange rate fluctuations during the processing period. Fifth, regulatory approval risk: This transaction involves overseas investment and requires registration or filing with relevant authorities, which carries a certain degree of uncertainty.

Regarding the impact on the company, Hanyi Co., Ltd. stated that from a strategic perspective, it is laying out high-quality resources in the industry, strategically investing in the target company, and seeking to generate positive business and technological synergy effects. In the future, it will continue to explore more initiatives for industry integration and value creation.