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Date
2024-10-06
Insider Leaks Cause Turmoil in Yingfang Micro's Asset Restructuring
On the evening of October 23rd, YF Technology (Ying Fang Wei) issued an announcement stating that certain individuals involved in the company's significant asset restructuring were under investigation by the China Securities Regulatory Commission (CSRC) for suspected insider information disclosure, and the case has not yet been concluded. There is a potential risk that the asset restructuring may be suspended, terminated, or canceled.
After the market opened on October 24th, the stock price of YF Technology temporarily fell by more than 9%, but then gradually recovered. By the end of the trading day, the company's stock closed at 6.06 yuan per share, with a gain of 1.85%, and a total market value of approximately 5.1 billion yuan.
In 2020, due to three consecutive years of losses, YF Technology was once suspended from listing. The company leveraged the acquisition of 51% stakes in Huaxin Ke and World Style to improve its performance and successfully regained its listing status. However, the subsequent transactions to acquire the remaining stakes in the two companies were rejected by the CSRC. In November 2023, YF Technology planned for the second time to acquire stakes in the two companies, and this insider information leak incident has again introduced uncertainty to the transaction.
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The leak of insider information began with YF Technology's asset restructuring in November 2023, and in May of this year, the company disclosed the specific details of the restructuring.
The announcement showed that YF Technology planned to acquire 49% of the shares of Huaxin Ke and World Style from Shangyu Yuxin and Rui Chen Communication through the issuance of shares and cash payment, with a total consideration of approximately 733 million yuan. In addition, YF Technology also planned to issue shares to no more than 35 specific objects to raise supporting funds, with a total amount not exceeding 220 million yuan, of which 200 million yuan was used to pay the cash consideration for the aforementioned assets, and 20 million yuan was used to pay for the intermediary agency fees and related taxes of this transaction. After the transaction is completed, Huaxin Ke and World Style will become wholly-owned subsidiaries of YF Technology.
For YF Technology, this transaction is of great significance.
In 2023 and the first half of 2024, YF Technology achieved operating revenues of 3.467 billion yuan and 1.844 billion yuan, respectively, with net losses attributable to the parent company of 60 million yuan and 22 million yuan, respectively. During this period, the main source of the company's performance was indeed the two companies, Huaxin Ke and World Style.
At present, YF Technology's main business is the distribution of electronic components, which is mainly completed through Huaxin Ke and World Style, with Huaxin Ke mainly responsible for domestic business and World Style mainly responsible for foreign business. In 2023, Huaxin Ke and World Style achieved a combined operating revenue of 3.467 billion yuan and a net profit attributable to the parent company of 59 million yuan.
Therefore, for YF Technology, increasing the stake in the two companies helps to boost the company's performance. According to YF Technology's calculations, if the two companies had become wholly-owned subsidiaries of the company from the beginning of 2023, the company's net loss attributable to the parent company in 2023 would have been reduced from 60 million yuan to 31 million yuan. In addition, the company's net assets would have increased from 37 million yuan at the end of 2023 to 344 million yuan, an increase of 826.04%.On the business front, InfoSunny Microelectronics (referred to as "InfoSunny") stated that upon completion of this transaction, the company will further integrate the upstream and downstream industry chain, promoting the healthy and positive development of the company's business. However, due to the suspected insider information leakage by related parties involved in this reorganization, there is a potential risk that the transaction may be suspended, terminated, or canceled. Nevertheless, InfoSunny also indicated that this matter will not have a significant adverse impact on the company's production and operations. The company will timely fulfill its disclosure obligations based on the progress of this reorganization.
The road to reorganization has been full of twists and turns. As an established listed company, InfoSunny was listed on the Shenzhen Stock Exchange as early as 1996, with the company's name then being Tianfa Shares. By 2007, Tianfa Shares (which had been renamed Tianfa Petroleum) went bankrupt and restructured, with Shanghai Shunyuan becoming the company's largest shareholder through judicial auction, and Chen Yanbiao becoming the actual controller of the company. Subsequently, the company's name was changed to S Shunyuan, and its main business was changed to real estate development and management.
However, after Chen Yanbiao took over, the performance of S Shunyuan did not improve, and the company's annual performance was just enough to maintain its listing status. In 2014, the company initiated another share reform. After the completion of the share reform, InfoSunny Electronics became the new controlling shareholder of the company, holding a 25.92% stake, and Chen Zhicheng replaced Chen Yanbiao as the new actual controller, and the company's name was changed to InfoSunny.
After the name change, InfoSunny's main business also changed from real estate to computer and communication-related businesses such as chips, data centers, and the Beidou system. However, in the years following Chen Zhicheng's takeover, InfoSunny's annual reports continued to be issued with non-standard audit reports by auditing institutions. Chen Zhicheng was also arrested in 2018 on suspicion of bill fraud, and his InfoSunny shares were auctioned off by the court.
Fortunes change, and one of the parties taking over InfoSunny's shares this time is Shunyuan Enterprise Management, a company under the previous actual controller Chen Yanbiao. After the equity transfer, Shunyuan Enterprise Management's stake increased to 14.70%, becoming the new largest shareholder. However, Shunyuan Enterprise Management was not identified as the controlling shareholder, and since then, InfoSunny has been in a state without a controlling shareholder or an actual controller. Moreover, due to the company's profits being negative from 2017 to 2019, the company was suspended from listing from April 2020.
Although it did not become the new controlling shareholder, after becoming the largest shareholder of InfoSunny, Shunyuan Enterprise Management began to help the company get back on track. In September 2020, InfoSunny acquired 51% of the equity of Huaxin Science and World Style for a consideration of 601 million yuan, and the above two companies became new pillars of InfoSunny's performance, helping the company to become profitable again.
In April 2021, InfoSunny planned to acquire the remaining 49% equity of Huaxin Science and World Style by issuing shares. At that time, the consideration for the above assets was 632 million yuan. In addition, the company would also issue shares to Shunyuan Enterprise Management to raise funds, with an amount not exceeding 400 million yuan. According to InfoSunny's estimate, if the transaction is successfully completed, Shunyuan Enterprise Management's stake will increase to 26.24%, becoming the controlling shareholder of the listed company, and Chen Yanbiao will return to the position of the actual controller.
However, in November 2022, this reorganization was rejected by the China Securities Regulatory Commission, on the grounds that InfoSunny failed to fully explain that there were no circumstances in this transaction that would harm the legitimate rights and interests of the shareholders of the listed company.However, Ying Fang Wei did not give up on the acquisition of the remaining equity of Hua Xin Ke and World Style. In November 2023, the acquisition was restarted again. But unlike the previous time, the company did not issue shares to Shun Yuan Enterprise Management to raise funds this time. Without considering the raising of supporting funds, if this transaction is successfully completed, the situation of Ying Fang Wei having no controlling shareholder and no actual controller will not change.