Core Viewpoint - Donghu Gaoxin Group has decided to terminate the equity acquisition of Progr, as the transaction did not meet the preconditions and terms outlined in the letter of intent [1][3][4]. Group 1: Acquisition Details - Donghu Gaoxin signed a letter of intent with Progr's actual controllers to acquire controlling equity for a cash consideration, with the total value of Progr's equity estimated to be no more than 700 million yuan [3]. - Progr, established in 2012, has over 300 intellectual property rights and 169 R&D personnel, providing digital supply chain services for internal logistics in smart warehousing and factories [3][4]. - Progr's revenue surged to 778 million yuan in 2023, with a net profit of 39.83 million yuan, but faced a revenue drop to 124 million yuan and a net loss of 18.5 million yuan in the first half of 2024 due to seasonal impacts [4][8]. Group 2: Financial Performance - Donghu Gaoxin's revenue from the engineering construction sector contributed over 70% of its income from 2020 to 2023, with revenues exceeding 10 billion yuan in both 2022 and 2023 [6]. - Following the divestment of its engineering construction business for 2.387 billion yuan, Donghu Gaoxin's revenue plummeted by 77.05% to 3.367 billion yuan in 2024, and net profit decreased by 51.07% to 528 million yuan [6][8]. - The company aims to enhance its gross and net profit margins and revenue quality through the divestment, but the transition has led to significant financial challenges [6]. Group 3: Strategic Shift to Digital Technology - Donghu Gaoxin established a wholly-owned subsidiary, Gaoxin Digital Technology, with an investment of 2 billion yuan to accelerate the development of its digital technology business [7]. - The company also increased its stake in Hubei Data Group by 300 million yuan to further enhance its digital technology portfolio [7]. - Despite these efforts, revenue from digital technology remains low, accounting for only 0.23 billion yuan, less than 1% of total revenue in 2024 [8].