Core Viewpoint - The company, Xingmin Zhitong, plans to acquire a 50.29% stake in Zhongke Xinwei for approximately 1.106 billion yuan, while also raising up to 0.923 billion yuan through a private placement to its controlling shareholder, Qingdao Chuangjiang [1] Group 1 - The acquisition will allow Zhongke Xinwei to focus on the research, production, and sales of HDD precision components after completing its acquisition of PCPL [1] - Major clients of Zhongke Xinwei include well-known hard drive manufacturers such as Seagate, Western Digital, and Toshiba [1] - Following the transaction, Zhongke Xinwei will become a wholly-owned subsidiary of the listed company, enabling the company to enter the promising data storage business sector [1]

Core Viewpoint - The company Xingmin Zhitong (002355) faced a significant drop in stock price after announcing a restructuring plan to acquire a 50.29% stake in Wuhan Zhongke Xinyi Information Technology Co., Ltd. for 1.106 billion yuan, reflecting investor skepticism about the deal's value and potential risks [1][9]. Group 1: Acquisition Details - The acquisition price for Zhongke Xinyi's 50.29% stake is set at 1.106 billion yuan, with plans to raise up to 0.923 billion yuan through a private placement [2][3]. - Zhongke Xinyi primarily holds a 100% stake in PCPL, a company engaged in the manufacturing of precision components for hard disk drives, with major clients including Seagate, Western Digital, and Toshiba [2][4]. - The valuation of Zhongke Xinyi has decreased by 200 million yuan compared to a previous attempt to acquire it for 2.4 billion yuan in 2018 [2][3]. Group 2: Financial Performance - PCPL's financial performance has deteriorated, with reported revenues of approximately 520 million USD and a net loss of 220 million USD in 2019, followed by a slight recovery in 2020 with revenues of 508 million USD and a net profit of 12.03 million USD [4][5]. - Zhongke Xinyi's net profits were negative in both 2019 and 2020, indicating poor financial health [4][5]. Group 3: Market Reaction and Future Outlook - Following the announcement of the acquisition, Xingmin Zhitong's stock experienced a "limit down" situation, closing down 8.21% on the day of the announcement, reflecting investor concerns about the deal [1][9]. - The company has reported three consecutive years of losses, with net profits of -271 million yuan, -32.11 million yuan, and -350 million yuan from 2018 to 2020 [9]. - The acquisition represents a strategic shift into the data storage sector, but the company faces challenges in integrating operations and cultures due to the cross-border nature of the target company [7][8].