Core Viewpoint - Shandong Haihua is making a significant investment of 2.32 billion yuan to acquire a 29% stake in Zhongyan (Inner Mongolia) Soda Industry Co., Ltd, amidst declining synthetic soda market conditions and increasing pressure from environmental regulations [1][2][8]. Financial Performance - In 2024, Shandong Haihua reported total revenue of approximately 6.01 billion yuan, a year-on-year decrease of 29.50%, with a net profit attributable to shareholders of about 39.22 million yuan, down 96.24% [3][4]. - The first quarter of 2025 showed continued decline, with revenue around 1.02 billion yuan, a drop of 44.46%, and a net loss of approximately 66.52 million yuan, down 142.75% [5][6]. Industry Context - The synthetic soda industry, particularly the ammonia soda method, is facing challenges due to high costs and environmental pressures, leading to overcapacity [2][6]. - Natural soda, with its lower costs and simpler production process, is becoming increasingly attractive as a trend in the industry [2][6]. Investment Rationale - The investment in natural soda is seen as a strategic move for Shandong Haihua to diversify and optimize its product structure, transitioning from reliance on synthetic soda to a dual approach of synthetic and natural soda [8][12]. - The targeted natural soda project in Tongliao, with a mineral resource of 1.447 billion tons and a planned production capacity of 5 million tons, is expected to generate an average annual net profit of about 482 million yuan for Shandong Haihua [7][12]. Shareholding Structure - After the investment, Zhongyan Chemical will hold 61% of Zhongyan Soda, while Shandong Haihua will hold 29% and Inner Mongolia Mengyan Salt Industry Group will hold 10% [8][9]. - The investment structure indicates a power dynamic where Zhongyan Chemical, as the majority shareholder, will have significant control over project decisions [9][10]. Funding and Risks - Shandong Haihua's investment will be made in two phases, with the first phase of 1.975 billion yuan due by August 8, 2025, and the second phase of 345 million yuan due by September 25, 2025 [10][11]. - The project faces uncertainties, including the need for successful completion of the equity transfer process and potential administrative approvals, which could impact the expected returns on investment [12].