By ZHAO Yangge
Since October 19, Chengdu Hi-tech Development Group, a state-owned construction company, has been on a journey of continuous "limit-up" trading, totaling eight consecutive limit-ups with a cumulative increase exceeding 114 percent. But the turnover rate over the past eight days is only 2.5 percent, so what’s going on?
On September 27, Hi-tech Development announced plans to issue shares for the acquisition of assets and halted trading. On October 19, the company resumed trading and revealed its intention to acquire 70 percent of Huakun Zhenyu through a combination of share issuance and cash payment.
Established in 2020, Huakun Zhenyu is a computer business that makes servers, storage, PCs, and a machine vision based on Huawei's "Kunpeng + Ascend" processors. Preliminary estimates indicate that Huakun Zhenyu's equity is worth no more than 3 billion yuan.
Hi-tech Development's main business is in construction and semiconductors. Huakun Zhenyu, in the computational power industry, will diversify Hi-tech Development's portfolio.
The major shareholder of Hi-tech Development is the State-owned Financial Bureau of Chengdu Hi-Tech Industrial Development Zone, holding 90 percent of the company's shares, while the remaining 10 percent is held by the Finance Department of Sichuan Province.
For the first three quarters of 2023, Huakun Zhenyu reported operating revenue of 4 billion yuan, with a net profit of 47 million yuan. As of September 30, 2023, the company's external borrowings amounted to approximately 4.9 billion yuan.
