Ceepower (SZ:300062) Mei Ri Jing Ji Xin Wen·2025-12-21 23:54Core Viewpoint - Zhongneng Electric is planning a significant acquisition of three high-voltage electric companies in Shandong for approximately 8.57 billion yuan, despite recently turning a profit and having only 6.61 billion yuan in cash, raising concerns about the financial implications and risks involved in this "elephant swallowing snake" acquisition strategy [1][2][13]. Financial Overview - Zhongneng Electric's market capitalization is approximately 6.22 billion yuan, and its cash reserves as of Q3 2025 are 6.61 billion yuan [1][2]. - The three target companies have a combined debt of approximately 2.92 billion yuan, which Zhongneng Electric will also assume as part of the acquisition [16]. - The projected revenue from the target companies for 2024 is about 1.154 billion yuan, which would double Zhongneng Electric's revenue if the acquisition is successful [13]. Acquisition Details - The acquisition involves purchasing 65% stakes in Shandong Dacheng Electric Co., Shandong Dacheng High Voltage Switch Co., and Water Development Chixiang Electric (Shandong) Co. [2][5]. - Zhongneng Electric has already committed to a 100 million yuan deposit for the bidding process, which could become a sunk cost if the acquisition is not approved by shareholders [5][6]. - The bidding process requires that the buyer must acquire all three companies simultaneously, complicating the acquisition strategy [12]. Strategic Implications - The acquisition aligns with national goals for new power system construction, aiming to enhance Zhongneng Electric's position in the high-voltage sector [1][13]. - However, two of the target companies reported losses exceeding 44 million yuan in the first ten months of 2025, raising concerns about the viability of the acquisition [2][13][16]. - The management's request for "unlimited" bidding authority from shareholders poses governance risks and may undermine shareholder interests [10][12]. Market Reaction - The market is cautious about the acquisition due to the potential financial strain it could impose on Zhongneng Electric, especially given the recent turnaround to profitability [1][16]. - Analysts express concerns that the acquisition could either serve as a strategic growth opportunity or become a financial burden if the target companies do not recover from their losses [2][16].