On August 27, Xgd Inc. announced its plan to issue H-shares and list on the main board of the Hong Kong Stock Exchange, aiming to deepen the company's global strategic positioning.
From a capital adequacy perspective, Xgd Inc.'s need to raise funds through a Hong Kong listing appears insufficient. As of the end of the first half of 2025, Xgd Inc.'s broad money funds totaled over 43 billion yuan, accounting for more than 70% of total assets, with interest-bearing liabilities of only 2.18 billion yuan and a net cash position as high as 41 billion yuan. More interestingly, in March this year, the company announced plans to use up to 30 billion yuan of idle proprietary funds for entrusted wealth management and securities investment, clearly showing the company is "not short of money."
In 2024 and the first half of 2025, Xgd Inc.'s profits continued to decline, and the company conducted massive layoffs in 2024. Against this backdrop, is spending huge amounts on wealth management and "stock trading" a distraction from core business? And is raising funds through a Hong Kong listing reasonable? Xgd Inc.'s significant profit decline in 2024 was related to acquisition targets. The company has historically made multiple high-premium acquisitions, many of which have failed, and the company has continuously transferred some high-premium cash-acquired assets at low prices, raising questions about potential damage to company interests.
Continuous Profit "Decline" - Mass Layoffs Followed by Hong Kong Fundraising
According to data, Xgd Inc. is a payment technology service provider with business mainly covering payment services, electronic payment equipment, and artificial intelligence. In 2010, Xgd Inc. listed on the ChiNext board.
After listing, Xgd Inc. frequently made acquisitions, with many high-premium acquisition targets failing, causing the company's profits to fluctuate dramatically. In 2024 and the first half of 2025, Xgd Inc.'s revenue and net profit continued to decline, with profits particularly sliding continuously.
In 2024 and the first half of 2025, Xgd Inc. achieved operating revenues of 31.48 billion yuan and 15.27 billion yuan respectively, down 17.2% and 3.17% year-over-year; net profits attributable to shareholders were 2.34 billion yuan and 2.75 billion yuan respectively, down 68.98% and 38.61% year-over-year.
Xgd Inc. stated that the significant decline in 2024 net profit was due to adjustments related to tax matters from previous years involving acquired Jialian Payment, with an estimated impact of -325.02 million yuan on net profit attributable to listed company shareholders. Additionally, consolidated Changsha Fadu Internet Technology Co., Ltd. (Changsha Fadu) had goodwill impairment, with goodwill impairment of 122 million yuan that year.
Behind the significant profit decline, Xgd Inc. conducted continuous massive layoffs. Wind data shows that at the end of 2021, 2022, 2023, and 2024, Xgd Inc.'s total employee count was 2,821, 2,745, 2,471, and 1,571 respectively, decreasing for three consecutive years. Particularly, the end of 2024 saw 900 fewer employees compared to the end of 2023, a reduction rate of 36.4%. The total employees at the end of 2024 decreased by 44.31% compared to the end of 2021. This means the company's layoff rate over three years approached 45%.
Employees are one of a company's most core resources, and continuous layoffs indicate the company is actively reducing labor costs, possibly due to declining revenue and shrinking profits, forcing cost reduction to maintain survival. "Continuous multi-year layoffs + poor performance" is a typical signal of business deterioration.
Against the backdrop of continuous profit decline and mass layoffs, Xgd Inc. wants to raise funds in Hong Kong to deepen the company's global strategic positioning, accelerate overseas business expansion, build an international capital operation platform, and broaden diversified financing channels. Some investors are puzzled by the reasonableness of Xgd Inc.'s mass layoffs followed by Hong Kong fundraising.
Net Cash Position as High as 41 Billion Yuan, Planning to Use Up to 30 Billion Yuan for Wealth Management and "Stock Trading"
From a capital adequacy perspective, Xgd Inc.'s need to list in Hong Kong for fundraising also appears insufficient.
As of the end of the first half of 2025, Xgd Inc.'s monetary funds reached 26.48 billion yuan, with trading financial assets at 16.79 billion yuan, totaling 43.27 billion yuan, accounting for 70.81% of total assets (61.1 billion yuan).
Not only are book funds abundant, but Xgd Inc.'s interest-bearing liabilities (sum of short-term borrowings, non-current liabilities due within one year, long-term borrowings, bonds payable, and lease liabilities) are also very low, totaling only 2.18 billion yuan as of the end of the first half of 2025. Moreover, the company's asset-liability ratio is less than 30%, with main liabilities being operational liabilities, reserve funds, and receivables.
Calculating from the difference between broad money funds and interest-bearing liabilities, Xgd Inc.'s net cash position exceeds 41 billion yuan, appearing "not short of money."
More interestingly, in March this year, Xgd Inc. announced plans to use idle proprietary funds for entrusted wealth management and securities investment totaling no more than 30 billion yuan or equivalent foreign currency, with entrusted wealth management not exceeding 25 billion yuan or equivalent foreign currency, and securities investment not exceeding 5 billion yuan or equivalent foreign currency.
At the end of 2024, the company's total assets were 56.91 billion yuan. Combined with the company's significant profit decline and recent mass layoffs, using up to 30 billion yuan for wealth management and "stock trading" (maximum amount exceeding half of the previous year-end total assets) at this time raises questions about whether this constitutes neglecting core business.
High-Premium Acquisitions Frequently Fail, Continuous "Buy High, Sell Low" - Does This Damage Listed Company Interests?
As mentioned above, Xgd Inc.'s significant profit decline in 2024 was largely related to acquired Jialian Payment and consolidated Changsha Fadu, with Jialian Payment impacting net profit by -325 million yuan and Changsha Fadu's goodwill impairment reaching 122 million yuan.
In 2018, Xgd Inc. acquired 100% equity of Jialian Payment for 710 million yuan in cash, creating approximately 500 million yuan in goodwill. Currently, the nearly 500 million yuan goodwill from Xgd Inc.'s acquisition of Jialian Payment has not been impaired. If Jialian Payment experiences poor operations or other deteriorating conditions in the future, it faces significant goodwill impairment risk.
Xgd Inc.'s high-premium acquisitions extend beyond Jialian Payment. Starting in 2015, the company continuously made cash acquisitions, with at least 6 acquisitions by 2018.
Wind data shows that in June 2015, Xgd Inc. spent 252 million yuan to acquire 100% equity of Zhejiang Zhongzheng Intelligent Technology Co., Ltd. (Zhongzheng Intelligent), with an acquisition premium as high as 296%. In August 2015, Xgd Inc. used 50 million yuan to subscribe for 30% equity of Dana Technology. In August 2016, Xgd Inc. used 500 million yuan to purchase 100% equity of Gongxin Chengfeng, with an acquisition premium as high as 1,287.68%. In April 2018, Xgd Inc. acquired 100% equity of Jialian Payment for 710 million yuan in cash, with an acquisition value-added rate as high as 233%. In August and September 2018, Xgd Inc. acquired 100% equity of Huizhou Huixin and 30% equity of Dingjia Information respectively.
Xgd Inc.'s high-premium acquisitions frequently failed, mainly manifested in Zhongzheng Intelligent and Gongxin Chengfeng. In 2020, due to business development and operating results of Gongxin Chengfeng and Zhongzheng Intelligent not meeting expectations, the company made goodwill impairment provisions of approximately 106.94 million yuan for the two targets, which was one of the important reasons for the company's net profit decline that year.
In fact, Zhongzheng Intelligent and Gongxin Chengfeng had shown signs of poor operations early on, with one failing to meet performance commitments and the other barely meeting them. Transaction counterparts promised that Zhongzheng Intelligent's adjusted net profit attributable to shareholders would be no less than 18 million yuan in 2015, no less than 23.4 million yuan in 2016, no less than 30.42 million yuan in 2017, totaling no less than 71.82 million yuan over three years. However, Zhongzheng Intelligent's actual three-year cumulative adjusted net profit attributable to shareholders was 67.27 million yuan, failing to meet targets.
Gongxin Chengfeng barely met targets. Transaction counterparts promised that Gongxin Chengfeng needed to cumulatively achieve adjusted net profit attributable to shareholders of no less than 150 million yuan from 2016-2018, actually completing 152 million yuan, which could be called precise.
More interestingly, Xgd Inc. sold Zhongzheng Intelligent and Gongxin Chengfeng, which were acquired at high premiums with huge investments, at low prices externally. Does this damage the interests of the listed company and minority shareholders?
In July 2021 and November 2023, Xgd Inc. transferred 15% and 40% equity of Zhongzheng Intelligent respectively, with transfer amounts of 19.5 million yuan and 33.6 million yuan respectively, totaling 53.1 million yuan. In June 2015, Xgd Inc. spent 252 million yuan to acquire 100% equity of Zhongzheng Intelligent, with the transferred 55% equity showing a book floating loss of approximately 85.5 million yuan.
In September 2023, Xgd Inc. lost control of Gongxin Chengfeng, with disposal proceeds of 10 million yuan at the time of losing control, showing a book floating loss of 490 million yuan compared to the 500 million yuan acquisition price. An asset acquired for 500 million yuan in cash at nearly 13 times premium was disposed of for 10 million yuan, leaving investors bewildered. Moreover, the company did not disclose the transferee, raising questions about potential benefit transfers.
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