Xgd Inc. recently submitted its Hong Kong IPO prospectus, aiming for an H-share listing. The prospectus revealed that on November 10, 2025, the company transferred its wholly-owned subsidiary, Changsha Fadu Internet Technology Co., Ltd. (Changsha Fadu). However, Xgd Inc. did not disclose this asset sale in its A-share announcements, raising questions about potential disclosure violations. Notably, the goodwill from acquiring Changsha Fadu originally stood at RMB 433 million, while Xgd Inc.'s 2024 net profit attributable to shareholders was only RMB 234 million.
Xgd Inc. has a history of selling acquired assets at significant losses. For instance, Gongxinchengfeng, acquired at a 1,287.68% premium for RMB 500 million, was disposed of for just RMB 10 million. Similarly, Zhongzheng Intelligence, purchased at a 296% premium, saw 55% of its equity sold at a 60% discount, resulting in an estimated loss of RMB 85.5 million. Intriguingly, the four major individual shareholders behind the Zhongzheng Intelligence deal had previously participated in Xgd Inc.'s equity incentive programs, fueling speculation about potential利益输送 (benefit transfer).
**Hong Kong IPO Prospectus Raises Questions About A-Share Disclosure Compliance** Xgd Inc. operates in payment services, electronic payment devices, and AI, with peers including Lakala, Lianlian DigiTech, Newland, and Yika. Since its 2010 ChiNext listing, the company has pursued multiple high-premium acquisitions, often followed by massive goodwill impairments. For example, in 2024, Changsha Fadu’s goodwill impairment reached RMB 122 million.
As of June 30, 2025, Xgd Inc.’s goodwill balance was RMB 558.2 million, down from RMB 695.4 million in 2022, with cumulative impairment losses of RMB 234.3 million. Despite the Changsha Fadu transfer being verifiable via public records like Tianyancha, Xgd Inc.’s A-share disclosures omitted this material event. Under Shenzhen Stock Exchange rules, transactions impacting net profit by over 10% (RMB 23.4 million in 2024) require disclosure—yet the sale price remains undisclosed, leaving compliance in doubt.
Changsha Fadu’s acquirers—Hunan Jiwei Zhongzhi Technology (70%) and Jiangxi Waicai Urban Services (30%)—raised eyebrows. Jiwei Zhongzhi was incorporated just 10 days before the deal and appears to be a shell entity for the transaction. Post-acquisition, Changsha Fadu’s registered capital plummeted from RMB 13.57 million to RMB 100,000, suggesting a low disposal price.
**Controversial Fire Sales and Insider Links** In 2016, Xgd Inc. acquired Gongxinchengfeng for RMB 500 million (1,287.68% premium) but sold it in 2023 for RMB 10 million. The buyer, Shenzhen Huaheng Yi Construction, has zero employees and was twice flagged for regulatory non-compliance.
Zhongzheng Intelligence, bought for RMB 252 million in 2015, saw 55% equity sold in 2021 and 2023 for RMB 53.1 million (60% discount). The buyers—Hangzhou Zhongzheng Juhe and Zhongzheng Juli—were both established shortly before the deals and share key自然人 (natural person) shareholders (Liang Min, Fan Baiyang, Cai Zhiliang, and Liu Zhongqiu), all former participants in Xgd Inc.’s equity incentives.
**Slumping Performance and Questionable Fundraising Needs** Xgd Inc.’s revenue fell 4.15% YoY to RMB 2.34 billion in Q1–Q3 2025, with net profit down 32.97%. Its core payment services revenue dropped 31% from 2022 to 2024. The company also cut 36.4% of its workforce in 2024 (down 900 employees).
Despite holding RMB 4.2 billion in cash and near-zero debt, Xgd Inc. plans to raise H-share capital while earmarking RMB 3 billion for speculative investments—raising doubts about the IPO’s necessity.
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