Longcheer Technology has recently responded to an inquiry letter from the stock exchange. The company initially announced plans to use RMB 1.12 billion of its own funds to acquire an 80% stake in Suzhou Anruike Information Technology Co., Ltd. The original deal structure has now been revised, with the company proposing to use a total of RMB 840 million of its own funds to acquire a 60% equity interest in Anruike.
Around the same period, Longcheer delivered a half-year report that left investors stunned: net profit attributable to shareholders for the first half of 2026 came in at RMB 246 million, a sharp 31% year-on-year decline, while non-GAAP net profit swung to a loss of RMB 101 million. It is worth noting that the company only listed on the main board of the Shanghai Stock Exchange in March 2024, and just over two years after its IPO, it has staged a dramatic earnings reversal.
Longcheer's chosen path is aggressive bolt-on acquisitions. In June 2026, the company acquired a 60% stake in Kejuncheng and Jiya Metal for RMB 540 million, entering the North American thermal management supply chain. Just three months later, it swiftly launched the larger acquisition of Anruike. The two deals together amount to nearly RMB 1.4 billion in total spending.
Where the controversy lies: 425% value uplift and a father's quick entry and exit
According to disclosures in the regulatory response, Anruike's valuation surged from RMB 180 million to RMB 1.4 billion in just over a year, an increase of more than sixfold. Tianyancha data shows that Ren Liguo, the target company's largest shareholder and the father of founder Ding Zhiyong, acquired his stake a mere 26 days before the assessment base date of March 31, 2026. After holding the shares for just five months, he cashed out at a price of RMB 613 million. This rapid entry followed by a high-priced exit is the most contentious element of the entire transaction. The father-son relationship between Ren and Ding, combined with the striking timing coincidence of the stake purchase and the cash-out, continues to fuel skepticism.
The most eye-catching figure in this deal is the 424.98% appraisal premium. With March 31, 2026 as the assessment base date, the market approach valued Anruike's total equity at RMB 1.509 billion, representing a 424.98% premium over the net assets of RMB 287 million on the base date. Under an alternative calculation, the market approach determined the target's total equity value at RMB 1.509 billion, reflecting a 533.50% premium over the base date net assets of RMB 238 million.
In response to the exchange's inquiry, the appraiser Zhonglian Evaluation explained that the income approach was not adopted because, given the company's current operational stage, future earnings are influenced by multiple factors such as projected market shipments, competitive dynamics, downstream data center infrastructure investment scale, and construction pace. The revenue forecast range is wide and highly subjective, and management cannot make precise predictions about future business scale or operating income, making it difficult to reliably estimate future cash flows. This explanation appears reasonable on the surface, but it exposes a core issue with the target company: if even a professional appraisal firm cannot reliably forecast its future cash flows, how can a listed company be confident that this investment will generate the expected returns?
The results from the asset-based approach are even more telling. The asset-based method yields a premium of just 14.7%, a gap of more than 400 percentage points compared to the market approach's 424.98%. This indicates that Anruike's book assets have almost no room for appreciation, and its RMB 1.4 billion valuation is largely built on intangible factors such as customer relationships, industry experience, and brand value. These intangibles are precisely the hardest to verify and the most likely to evaporate when performance falls short of expectations. Research suggests that the market approach relies heavily on the selection of comparable transactions and valuation multiples, leaving appraisers with considerable discretion. When a target company's operating data shows sharp fluctuations, the reliability of the market approach diminishes significantly.
Performance commitment questions and a looming RMB 900 million goodwill overhang
Under the transaction plan, the performance guarantors commit that Anruike's net profit for 2026, 2027, and 2028 will be no less than RMB 130 million, RMB 160 million, and RMB 190 million respectively, with a cumulative total of no less than RMB 480 million over three years. These numbers look reasonable at first glance, but closer scrutiny reveals problems. Anruike's non-GAAP net profit for the full year 2025 was as high as RMB 205 million, yet the 2026 commitment target is only RMB 130 million, a decline of more than 36%. The cumulative target for the entire three-year commitment period of RMB 480 million is equivalent to just 2.3 times the company's single-year profit level in 2025. Investors have further questioned that every single-year commitment target falls below Anruike's 2025 non-GAAP profit.
Upon completion of this transaction, Longcheer is expected to recognize approximately RMB 900 million in goodwill. This figure is nearly equivalent to the company's entire net profit attributable to shareholders for 2025, and any impairment would deliver a significant blow to the income statement. From an industrial logic perspective, the synergies claimed in Longcheer's acquisition of Anruike remain unproven. Longcheer has long focused on consumer electronics ODM businesses such as smartphones, tablets, and AIoT devices, with core strengths in large-scale manufacturing and supply chain management. Anruike's core competitiveness lies in project design, system integration, and client relationship management for data center infrastructure in North America. The two companies' business models differ substantially: ODM is about scale, standardization, efficiency, and cost control, while data center infrastructure is project-based, bespoke delivery that demands solution design capability and customer responsiveness. More critically, there is a gap in talent and team capability. Longcheer lacks accumulated experience and a specialized team in the data center infrastructure sector, meaning that after the acquisition, Anruike's operations will rely heavily on the existing management team to remain intact.
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