With net profits declining for three consecutive years, Chengdu Galaxy Magnets Co.,Ltd. (300127) has turned its attention to mergers and acquisitions. On September 27, Chengdu Galaxy Magnets Co.,Ltd. disclosed a restructuring plan, announcing its intention to acquire 100% equity of Sichuan Kyoto Longtai Technology Co., Ltd. (hereinafter referred to as "Kyoto Longtai"). The company's stock will resume trading from market opening on September 29.
The plan reveals that Chengdu Galaxy Magnets Co.,Ltd. intends to acquire 100% equity of Kyoto Longtai through a combination of stock issuance and cash payment. Additionally, the company plans to issue shares to raise supporting funds through inquiry pricing to no more than 35 qualified specific investors. Following preliminary negotiations between the parties, the preliminary estimated value of this transaction target is approximately 450 million yuan. This transaction is expected not to constitute a major asset restructuring, not constitute a restructuring and listing, and not constitute a related party transaction.
According to reports, Kyoto Longtai is primarily engaged in the research, development, production, and sales of permanent magnet ferrite materials. Its products are mainly applied in DC motors, particularly in the automotive industry, especially the new energy vehicle sector. Chengdu Galaxy Magnets Co.,Ltd.'s main business involves the research, development, production, and sales of bonded neodymium iron boron magnets, hot-pressed neodymium iron boron magnets, and samarium cobalt magnets. Both parties are committed to the research, development, production, and sales of magnetic materials.
Chengdu Galaxy Magnets Co.,Ltd. stated that upon completion of this transaction, the company will seize the opportunity of rapid development in China's new energy vehicle market. By integrating the target company's customer resources, it will further capture the magnetic materials market related to DC motors in the automotive field and enhance the company's core competitiveness. An industry expert told reporters that listed companies leveraging acquisitions to expand their business layout has advantages and risks. On one hand, it benefits resource optimization, allowing both parties to share R&D resources and accelerate new product development. On the other hand, there are integration risks - if integration doesn't proceed smoothly, expected synergistic effects may not be achieved.
Furthermore, Chengdu Galaxy Magnets Co.,Ltd. highlighted risks in the plan, noting that during the reporting period, the target company's automotive motor magnetic tile products accounted for a relatively high proportion of main business revenue, creating dependence on a single product. Although automotive motor magnetic tiles, as core components of automotive DC motors, have stable market demand growth, if macroeconomic conditions or industry competitive landscape undergo significant changes leading to dramatic price fluctuations in automotive motor magnetic tile products, the single product structure could have a significant adverse impact on company performance.
Behind the restructuring plan, Chengdu Galaxy Magnets Co.,Ltd.'s net profit has declined year-over-year for three consecutive years. However, in the first half of this year, the company's net profit increased compared to the same period last year.
Specifically, from 2022 to 2024, Chengdu Galaxy Magnets Co.,Ltd. achieved operating revenues of approximately 992 million yuan, 824 million yuan, and 799 million yuan respectively; corresponding net profits attributable to shareholders were approximately 171 million yuan, 161 million yuan, and 147 million yuan respectively; corresponding non-recurring gains and losses adjusted net profits attributable to shareholders were approximately 168 million yuan, 158 million yuan, and 144 million yuan respectively.
However, in the first half of this year, Chengdu Galaxy Magnets Co.,Ltd. achieved operating revenue of approximately 389 million yuan, down 2.01% year-over-year; corresponding net profit attributable to shareholders was approximately 84.25 million yuan, up 7.26% year-over-year; corresponding non-recurring gains and losses adjusted net profit attributable to shareholders was approximately 81.47 million yuan, up 5.27% year-over-year.
Looking at the target company's performance, financial data shows that in 2023, 2024, and the first half of 2025, Kyoto Longtai achieved operating revenues (unaudited) of approximately 138 million yuan, 187 million yuan, and 94.85 million yuan respectively, with net profits (unaudited) of approximately 5.89 million yuan, 11.54 million yuan, and 8.90 million yuan respectively.
Chengdu Galaxy Magnets Co.,Ltd. stated that upon completion of this transaction, Kyoto Longtai will become a wholly-owned subsidiary of the company, and its operating performance will be included in the company's consolidated financial statements. This can significantly enhance the company's operating revenue and net profit levels, helping the company expand revenue sources and diversify overall operational risks.
Notably, Kyoto Longtai's working capital primarily comes from operating cash inflows and financing from banks and non-bank institutions. During the reporting period, Kyoto Longtai had raised company working capital through asset mortgages and other methods. As business scale continues to expand, the target company's working capital requirements also continue to increase. Currently, major fixed assets suitable as collateral have been used for borrowing. Constrained by factors such as enterprise scale, the target company's financing capacity is somewhat limited, creating a risk of insufficient working capital that could adversely affect production and operations.
In the secondary market, on the last trading day before Chengdu Galaxy Magnets Co.,Ltd.'s suspension, September 12, the company's stock price closed up 4.8% at 32.29 yuan per share.
Reporters attempted to contact Chengdu Galaxy Magnets Co.,Ltd. regarding related issues, but no one answered the phone calls.
Comments