On the evening of April 15, Jinhua Chunguang Technology Co.Ltd(603657) ( Jinhua Chunguang Technology Co.Ltd(603657) , SH; previous closing price of 17.02 yuan) announced that in view of the matters in the acquisition agreement that need to be further supplemented and improved, the two sides could not reach an agreement after communication between the company and the counterparty. Therefore, after careful study, it was decided to cancel the acquisition of 45% equity of Suzhou shangteng Technology Manufacturing Co., Ltd. (hereinafter referred to as Suzhou shangteng).
At the same time, the listed company finally replied to the inquiry letter previously issued by the Shanghai Stock Exchange on the acquisition of Suzhou shangteng Jinhua Chunguang Technology Co.Ltd(603657) in the reply to the inquiry letter, he answered why Suzhou shangteng still chose to acquire the remaining equity when it has not yet achieved profitability.
decided to cancel the acquisition
In December 2020, Jinhua Chunguang Technology Co.Ltd(603657) announced that it planned to acquire relevant business assets of Suzhou Haili Electric Appliance Co., Ltd. (hereinafter referred to as Haili electric appliance). The announcement shows that on the basis of the approval of the evaluation report by all parties and according to the evaluation results, Haili Electric will invest in the establishment of a new company with all equipment and facilities related to the R & D, production and sales of complete household appliances. After the agreed conditions are reached, Jinhua Chunguang Technology Co.Ltd(603657) plans to acquire 55% equity of the target company at the price of RMB 20 million in cash.
In principle, the remaining 45% equity will be purchased by Jinhua Chunguang Technology Co.Ltd(603657) in three years after the expiration of each period of the performance appraisal period in accordance with the relevant agreements, and the purchase price will be valued at 10 times the P / E ratio of the assessment profit of each period of the performance appraisal period. If the assessment profit in any performance assessment period exceeds 20 million yuan, Jinhua Chunguang Technology Co.Ltd(603657) has the right (but not the obligation) to acquire all the remaining equity of the target company.
This new company is Suzhou shangteng. On March 26, the listed company announced that it planned to purchase the remaining 45% equity of Suzhou shangteng, a holding subsidiary, with its own capital of RMB 115million.
At the same time, the parties to the transaction signed a supplementary agreement and agreed on the assessment profit value for Suzhou shangteng as a prerequisite for the payment of part of the equity payment, which is that the assessment profit reached 4.26 million yuan in the first quarter of 2022; The semi annual assessment profit in 2022 reached 10.65 million yuan; The assessment profit in the first three quarters of 2022 reached 18.105 million yuan; In 2022, the annual assessment profit reached 25.56 million yuan. If any precondition for payment is not fulfilled, 10 times of Suzhou shangteng’s 2022 annual assessment profit will be taken as the overall valuation of the target company, and the final purchase price will be finally determined according to 45% of the overall valuation.
However, the previous performance evaluation of Suzhou shangteng did not reach the previously agreed 20 million. Jinhua Chunguang Technology Co.Ltd(603657) announced the performance of Suzhou shangteng in 2021 in the acquisition announcement. In 2021, Suzhou shangteng achieved an operating revenue of 333 million yuan and a net profit of -7.8483 million yuan.
On the evening of April 15, Jinhua Chunguang Technology Co.Ltd(603657) announced that it had decided to cancel the acquisition because the two sides had not reached an agreement on the matters in the acquisition agreement.
Jinhua Chunguang Technology Co.Ltd(603657) said that the cancellation of the acquisition would not have a significant impact on the company’s financial status and business development. Suzhou shangteng is still a subsidiary within the scope of the company’s consolidated statements. The extension and development strategy of the company to the whole business of clean electrical appliances and small household appliances remains unchanged.
is it reasonable to set higher performance indicators
When Jinhua Chunguang Technology Co.Ltd(603657) announced that it would acquire the remaining equity of Suzhou shangteng, the Shanghai Stock Exchange also sent an inquiry letter. Therefore, despite the decision to cancel the acquisition, Jinhua Chunguang Technology Co.Ltd(603657) finally replied after two extensions.
Jinhua Chunguang Technology Co.Ltd(603657) said that the reason why Suzhou shangteng still chose to acquire the remaining equity is that before acquiring 55% equity of Suzhou shangteng, the company had not set foot in the business of cleaning electrical appliances, and lacked in-depth understanding of the technology, operation and management and industry status of the business; On the other hand, when acquiring the equity of Suzhou shangteng for the first time, the actual integration effect of Suzhou shangteng was not very clear.
However, after one year’s management and operation of Suzhou shangteng, the listed company has a clear understanding of the development status and development trend of the whole clean electrical appliance industry. Moreover, through the company’s resource integration, it has optimized the original product structure of Suzhou shangteng, introduced high-quality customers and established a close cooperative relationship. Suzhou shangteng has shown good development potential.
The acquisition did not set performance compensation because Suzhou shangteng is the holding subsidiary of the listed company, and the listed company is responsible for the specific daily operation and management. Therefore, the counterparty Tang longfu is unwilling to set performance commitment compensation measures.
In addition, Jinhua Chunguang Technology Co.Ltd(603657) said that Suzhou shangteng’s valuation increased significantly in the short term because of the broad market development prospects of the whole business of clean electrical appliances and small household appliances, and the good development of Suzhou shangteng’s business. According to Suzhou shangteng’s development plan, based on the broad market development prospects of the whole business of clean electrical appliances and small household appliances and the rapid growth development opportunities in China in recent years, Suzhou shangteng will continue to improve its product development Product supply, after-sales service and other service systems, improve the competitiveness of enterprises, and actively grasp market development opportunities.
What are the reasons for setting higher performance indicators when Suzhou shangteng has not achieved the previously agreed performance Jinhua Chunguang Technology Co.Ltd(603657) said that Suzhou shangteng’s early R & D investment results have gradually appeared, its technical level and R & D capacity have gradually improved, and the types and scope of products that can receive orders are further expanding. The sales revenue of Suzhou shangteng in 2021 was 330 million yuan, which was 220 million yuan higher than that of Haili electric in 2020, a year-on-year increase of 47.61%. Considering the impact of the Spring Festival holiday in February and the traditional off-season sales of clean appliances and small household appliances, its business situation has been improved.
The listed company believes that from the current development trend of Suzhou shangteng and the above reasons, it is reasonable to set higher performance indicators for Suzhou shangteng this time.
