While the listed company conducts low-priced private placement fundraising, executives are cashing out through share reductions at higher prices, raising market concerns about potential benefit transfers at Chengdu Galaxy Magnets Co.,Ltd.
Chengdu Galaxy Magnets Co.,Ltd. is currently advancing two notable capital operations simultaneously: the company plans to issue shares at 23.15 yuan per share to acquire assets, while company executives plan to reduce holdings at market prices higher than the private placement price. This "buy low, sell high" operation has sparked market skepticism.
As one of China's early enterprises engaged in bonded neodymium iron boron magnet production, Chengdu Galaxy Magnets Co.,Ltd. recently launched an M&A plan to acquire 100% equity of Sichuan Jingdu Longtai Technology Co., Ltd. ("Jingdu Longtai") through share issuance and cash payment.
According to the M&A preliminary plan released by Chengdu Galaxy Magnets Co.,Ltd. in September 2025, the company plans to purchase 100% equity of Jingdu Longtai from 14 counterparties at an issuance price of 23.15 yuan per share. This price is significantly below market value, 28% lower than the company's closing price of 32.29 yuan before trading suspension.
However, while the company launched its share issuance acquisition plan, company executives simultaneously planned to reduce their shareholdings. On May 15, 2025, General Manager and Non-independent Director Wu Zhijian announced plans to reduce no more than 2.55 million shares, representing 0.7891% of the company's total share capital. Based on the stock price of 26.89 yuan at that time, the cash-out amount was approximately 68.57 million yuan.
As of July 28, 2025, Wu Zhijian had actually reduced 1,951,980 shares and decided to terminate the share reduction plan early, achieving actual cash-out of 58.81 million yuan at an average reduction price of 30.13 yuan per share.
More notably, on August 29, Non-independent Director He Jinzhou also announced plans to reduce 460,000 shares. Based on the stock price of 34.5 yuan, the cash-out amount was approximately 15.87 million yuan.
With low-priced private placement on one side and high-priced share reduction cash-out on the other, this capital operation structure raises questions about its reasonableness. Minority investors inevitably ask: why does the company need to issue shares to specific targets at lower prices while company insiders can cash out through share reductions at higher prices?
Chengdu Galaxy Magnets Co.,Ltd. primarily operates bonded neodymium iron boron rare earth magnetic components and parts, with products mainly used in high-efficiency energy-saving motors. However, the company's performance has shown a declining trend in recent years.
Data shows the company's operating revenue declined from 992 million yuan in 2022 to 799 million yuan in 2024. Net profit also decreased from 194 million yuan in 2021 to 147 million yuan in 2024. The 2025 interim report shows the company achieved operating revenue of 389 million yuan, down 2.01% year-over-year.
The company's performance decline is mainly affected by international market contraction and rare earth price fluctuations. As the core raw material for neodymium iron boron permanent magnetic materials, rare earth metal price fluctuations directly impact the cost and pricing of neodymium iron boron magnets.
Facing lackluster growth in its main business, Chengdu Galaxy Magnets Co.,Ltd. launched an M&A plan, attempting to find a second growth curve through external expansion. The target company Jingdu Longtai primarily operates permanent magnet ferrite magnetic tiles, mainly applied in automotive DC motors, especially in the new energy vehicle sector.
Executive share reductions may signal unfavorable views on the company's prospects to the market, creating pressure on stock prices. Particularly when the company launches a private placement acquisition plan simultaneously, executive reduction behavior deserves more attention.
From a pricing perspective, the company's private placement price (23.15 yuan per share) is significantly lower than the market price of executive reductions (around 30 yuan per share), and this pricing differential may raise many questions.
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