“Science and Technology Innovation Board Daily”, April 20 (Reporter Chen Mei) A takeover termination notice triggered the stock price of Hi-Tech Development (000628) to fall to a standstill for several days.

On April 19, Hi-Tech Development closed at 44.91 yuan. This price was cut in half from the highest price of 95.7 yuan on March 19 this year.

Nearly a month ago, Hi-Tech Development also stated that 70% of Huakun Zhenyu's acquisition was “progressing steadily.”

The huge contrast between before and after made investors ask fiercely questions at the investor briefing on April 20. The three major issues are the biggest flashpoints for investors:

Does Hi-Tech have plans to expand into the computing power server sector in the future, and are there any plans to acquire 55% of GAC Electronics' Huakun Zhenyu in the future?

Who actually disagreed with the acquisition plan, and why wasn't the transaction price reached?

Currently, small and medium-sized investors are seriously losing money and stock prices are plummeting. Does the company have any positive countermeasures?

Hi-Tech Development has failed to provide a specific and clear explanation of the above issues surrounding “transaction failure”; it is simply:

“Since the second half of 2023, the computing power industry has become a hot topic in the market. Considering that this transaction took a long time, the target company's industry was affected by the internal and external environment, market expectations were high, and the audit and evaluation results involved have not yet been determined, so the listed company and some counterparties were unable to reach an agreement on the transaction price.”

So, who are some of the counterparties? Hi-tech development is not specified. According to equity penetration, 70% of Huakun Zhenyu's shares include 30% held by the controlling shareholder Chengdu Gaotou Electronics, 25% held by Gongqingcheng Huakun Zhenyu Investment, and 15% held by Hainan Yunchen Joint Industry Technology.

With the exception of some counterparties, what is the “unsettled transaction price”? Regarding this, some investors believed at the briefing that as the largest underwriter of Huawei's computing power, combined with the market capitalization of Tuowei shares and Tongfang shares as a reference, Huakun's valuation may be between 30 and 50 billion dollars. Currently, Chengdu Gaotou Electronics holds 55% of the new shares, with a valuation of about 165-27.5 billion yuan.

However, in the process where Hi-Tech Development plans to acquire 70% of Huakun Zhenyu's shares, 22% of Huakun Zhenyu's shares were successfully transferred in December 2023, and users exercised priority bids, and the transaction price was 638 million yuan. According to information, Chengdu Gaotou Electronic Information Industry Group Co., Ltd., the controlling shareholder of Hi-Tech Development, reserves priority purchasing rights.

Based on a price of 638 million yuan, Huakun Zhenyu's valuation was still 3.19 billion yuan when Chengdu Gaotou made an electronic bid in December 2023. The valuation is not much different from Hi-Tech Development Plan's acquisition of 70% of the shares at 3 billion yuan.

There was a huge difference between the 3.19 billion yuan valuation initiated by Chengdu Gaotou Electronics at the end of 2023, to the “unreached transaction price” in Hi-Tech Development, and the “30-50 billion” valuation that investors thought was at the investor conference.

Furthermore, Huakun Zhenyu is a Huawei Kunpeng ecosystem enterprise. Huakun Zhenyu's revenue in 2022 reached 3.5 billion yuan, ranking first in the “Kunpeng + Shengteng” ecosystem sales scale and capacity evaluation. It is the only partner among Huawei's ecosystem partners to obtain the “Kunpeng + Shengteng” dual leading level certification.

Therefore, Huakun Zhenyu's latest valuation may be a stumbling block in the completion of this acquisition by Hi-Tech Development.

In fact, on April 18, the day the announcement was terminated, when the “Science and Technology Innovation Board Daily” reporter called Gaoxin Development as an investor, the board secretary's office staff said, “The possibility that the 70% equity acquisition plan (original plan) will be implemented is already very small.” The original plan, on the other hand, was valued at 3 billion yuan, with 70% equity.

And as for whether acquisitions will be promoted in the future? The director's secretary told the “Science and Technology Innovation Board Daily” reporter that it depends on the possibility of other plans.

Due to the failure of the acquisition plan, in return to investors, Hi-Tech Development stated that it has issued the “Notice on the 2023 Profit Distribution Plan” on March 26. It plans to distribute cash dividends of 1.52 yuan (tax included) to all shareholders for every 10 shares, and also formulates a “Shareholder Return Plan for the next three years (2024-2026)”. It plans to distribute profits using cash dividends when profits are earned during the annual reporting period and accumulated undistributed profits are timely, using cash dividends for profit distribution.

However, the “Science and Technology Innovation Board Daily” reporter noticed that in 2023, Hi-Tech Development's revenue was 8.08 billion yuan, up 21.88% year on year; net profit was 365.9 million yuan, up 83.82% year on year. Looking at the breakdown, this increase in performance did not come from the main business, but rather from selling Beit Futures to obtain a net cash flow of 470 million yuan; after deducting the above amount, the net cash flow from the company's operating activities was -56.81 million yuan, a decrease from the same period last year. It was mainly due to the expansion of the company's business scale during the reporting period and the corresponding increase in operating payments and tax expenses...

On the other hand, Senwei Technology, or Power Semiconductor Company, which was acquired by Hi-Tech Development in 2022, achieved revenue of 160 million yuan in 2023, an increase of 56.85% compared to the same period last year. **However, this power semiconductor accounted for only 1.84% of Hi-Tech Development's revenue, compared to 0.94% in 2022.

As a result, it is also worth paying attention to whether Hi-Tech Development's shareholder return plan for the next three years (2024-2026) can be implemented. **

With the termination of the acquisition of 70% of Huakun Zhenyu's shares, Hi-Tech Development's cross-border investment has temporarily failed.

In terms of future development, Hi-Tech Development stated in its 2023 annual report and investor conference that it will firmly establish the technology transformation and upgrading strategy, actively lay out the Fab-Lite business model based on Senwei Technology and Xinwei Semiconductor, and expand the industrial layout upstream and downstream to make power semiconductors a strong main business for the company.

Also, do a good job in investment mergers and acquisitions. In 2024, we will continue to make full use of the capital market and select a high-tech segment circuit through direct mergers and acquisitions of listed companies to help the company develop its technology industry.