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(Original title: Kailong shares plans to acquire assets at a "214 times premium", why did the target's performance "suddenly" increase?)

Old brand civil explosivesPublic CompanyChironShares (002783. SZ) is planning an acquisition with an appreciation rate of up to 21410.50%.

Target Company Wuxue CityJunanBlasting Engineering Co., Ltd. (referred to as "Jun'an Blasting") was established in 2008. Its performance and asset scale, which were mediocre in 2022, were extremely optimistic in 2023, and its net assets turned from negative to positive. It was disclosed that Jun'an Blasting occupied most of the local mining blasting business market and signed long-term cooperation agreements with related companies.

Kailong Co., Ltd. stated that it has no affiliation with Junan Blasting, and the counterparty of this transaction has no affiliation with the company and its top ten shareholders in terms of property rights, business, assets, debts and receivables, personnel, etc.

Jiemian News reporters made a cross-comparison and noticed that the names of Junan Explosion's supervisor and the former financial director of its company shareholder had appeared in Kailong's 2021 financial statements.EquityIn addition, there are also cases where natural person shareholders of the target company hold positions in subsidiaries of Kailong Shares.

Why the sudden improvement in performance?

According to the results of the income method valuation, the total equity value of Junan Blasting shareholders as of November 30, 2023 is RMB 310 million. Value Added 3 . 0.9 billion yuan, with an appreciation rate of 21410.50% 。

On July 16, Kailong Co., Ltd. announced that it plans to use its own funds of 158 million yuan to acquire 51% of the registered capital of Junan Blasting from four natural person shareholders, in order to further consolidate and expand the market share of industrial explosives in Wuxue area and increase the scale of the engineering blasting service market, while driving the sales of electronic digital detonators.

According to Kailong, Junan Blasting occupies the vast majority of the mining blasting business market in Wuxue and has signed long-term cooperation agreements with relevant companies. At the same time, Junan Blasting has implemented an integrated drilling and blasting operation model, and its operating income and profitability have increased significantly compared with previous years.

The financial data in the announcement shows the "leap forward" of Junan Blasting's profitability. In 2022, Junan Blasting's revenue was 48.4615 million yuan, and its net profit was only 810,000 yuan. In the first 11 months of 2023, Junan Blasting's revenue exceeded 100 million yuan, and it achieved a net profit of 36.8303 million yuan. In the first half of 2024, Junan Blasting has achieved a revenue of 131 million yuan and a net profit of 39.0867 million yuan.

At the same time, Junan Blasting's net assets increased from -36.1382 million yuan in 2022 to 1.4422 million yuan at the end of November 30, 2023. As of June 30, 2024, its net assets were 76.2263 million yuan.

Although the announcement did not disclose Junan Blasting's data before 2022, the number of personnel revealed Junan Blasting has grown in recent years Tianyancha data shows that in 2019, the number of insured persons was only 30. From 2020 to 2022, the number of insured persons was 112. By 2023, the number of insured persons changed to 186.

However, Junan Blasting was established in 2008. Why did its scale and business only improve significantly in 2023 and this year? A person from the secretary's office of Kailong Shares told Jiemian News: "It is possible that the original shareholders of the company had tax evasion considerations. According to the investigation of the investment department, Junan Blasting's overall profit is acceptable. If there is a subsequent acquisition, the financial statements will be standardized according to regulations."

The source further said that it is understood that Junan Blasting has received sufficient orders and has also accepted some long-term contracts. The other party has also made performance commitments, so future profits should be guaranteed.

The announcement mentioned that the original shareholders of Junan Blasting promised that Junan Blasting will achieve net profits of no less than 50 million yuan, 51.5 million yuan, 53.045 million yuan, 53.045 million yuan, 53.045 million yuan, and 53.045 million yuan from 2024 to 2029, respectively, with a total net profit of no less than 314 million yuan.

Regarding this "good deal", Kailong Co., Ltd. stated in the announcement that there is no affiliation between the company and Junan Blasting, and the four transaction counterparties have no affiliation with the company and its top ten shareholders in terms of property rights, business, assets, debts and receivables, personnel, etc.

Both sides are interspersed with famous people

The two parties are not completely unrelated. A reporter from Jiemian News compared the data and found that there were duplicate personnel between Junan Blasting and Kailong Shares, and the name of a supervisor of Junan Blasting appeared on the equity incentive list of Kailong Shares.

The counterparties of this acquisition transaction are four natural person shareholders, Wu Youquan, Wu Ping, Wu Fan and Zhang Jiehong, who hold 0.6024%, 24.3976%, 4.4938% and 21.5062% of Junan Blasting's equity respectively. In addition, Gui Jiuming, Hubei Gaohe Engineering Technology Co., Ltd., Hubei Fuyuan Transportation Co., Ltd. and Susong Dingchang Engineering Technology Co., Ltd. hold 1%, 16%, 16% and 16% of Junan Blasting's equity respectively.

Tianyancha shows that The supervisor of Junan Blasting is Cheng Qing , the name has appeared in Kailong Shares In the list of 2021 equity incentive plans; Shareholders of Junan Explosion The historical financial director of Hubei Gaohe Engineering Technology Co., Ltd. was named Lv Miao , served as the financial director of Hubei Gaohe Engineering Technology Co., Ltd. on June 13, 2022, and immediately withdrew on July 8, 2022. Lv Miao's name also appears in Kailong Shares List of 2021 Equity Incentive Plan 。

According to Tianyancha information, Hubei Gaohe Engineering Technology Co., Ltd. and Junan Blasting are closely connected. The registered address of Hubei Gaohe Engineering Technology Co., Ltd. in 2022 is No. 1, Zhengda Village 1, Wuxue, and the email address is lixues*****@163.com, which are consistent with the current information of Junan Blasting.

Jiemian News reporter learned from the secretary of the board of directors of Kailong that an employee named Cheng Qing was from a subsidiary in Macheng District that the company had previously acquired. He may have been recommended by shareholders to join Kailong and was therefore on the equity incentive list. He did not know whether Cheng Qing had other investments. Regarding the fact that Lv Miao, the former financial director of Hubei Gaohe Engineering Technology Co., Ltd., was also on the company's equity incentive list, the person said that the issue needed to be further understood from the investment department.

Kailong shares stated in the announcement that it had no relationship with the acquisition target and pointed out that there was no direct business dealings between the company and Junan Blasting. Junan Blasting purchased and used the company's civilian blasting equipment through Hubei Lianxing Civil Explosive Equipment Operation Co., Ltd. (referred to as "Hubei Lianxing") 。

Hubei Lianxing, as a civil explosives safety management platform jointly funded by a number of civil explosives production and operating enterprises in Hubei Province, is involved with Kailong Co., Ltd. in both personnel and operations.

Kailong Co., Ltd. is the largest single shareholder of Hubei Lianxing. The chairman of Kailong Co., Ltd. is also the vice chairman of Hubei Lianxing. Hubei Lianxing's director Shao Aiping and supervisor Lu Weihua appeared on Kailong Co., Ltd.'s 2021 equity incentive list. Combined with Kailong Co., Ltd.'s financial reports from 2021 to 2023, Hubei Lianxing is Kailong Co., Ltd.'s largest customer of the year, with sales reaching 150 million yuan, 194 million yuan, and 246 million yuan from 2021 to 2023.

Hubei Lianxing may also be one of the reasons why Kailong and Junan Blasting were able to "get in touch". The above-mentioned person from the Secretary's Office said that the company's products were sold to Wuxue Blasting Company through Hubei Lianxing, and Junan Blasting used the company's products, but in addition to product sales, there should have been other related contacts before.

Tianyancha data shows that Gui Jiu Ming, one of the natural person shareholders of Junan Explosion, is the supervisor of Hubei Lianxing. That is, the shareholder of the counterparty to this transaction holds a position in a company in which Kailong Holdings has a stake.

Such a situation also exists in Macheng Kailong Technology Chemical Co., Ltd., another important holding subsidiary of Kailong Co., Ltd. Wu Ping and Gui Jiumin, the counterparties in this transaction, are senior executives of the company, serving as supervisors and directors respectively, while Lu Weihua serves as chairman.

The announcement shows: The civil blasting equipment required for Junan Blasting's production and operation will be purchased through existing channels; if Junan Blasting does not have to purchase civil blasting equipment from the Wuxue Branch of Huanggang Chenglin Civil Explosives Co., Ltd. and Huanggang Chenglin Civil Explosives Co., Ltd. in the future, the original shareholders of Junan Blasting agree that Junan Blasting will purchase civil blasting equipment directly from the company and its subsidiaries.

Interface News reporter found thatLu Weihua once again Gui Jiuming Appeared at the same time as Wu PingThe person in charge of the Wuxue branch of Huanggang Chenglin Civil Explosives Co., Ltd. is Wu Ping. The company is a wholly-owned subsidiary of Huanggang Chenglin Civil Explosives Co., Ltd. The vice chairman of Huanggang Chenglin Civil Explosives Co., Ltd. is Gui Jiuming and the director is Lu Weihua.

Regarding the situation where the target of such acquisition is directly or indirectly related to the listed company and its subsidiaries, Wang Zhibin, a lawyer at Shanghai Minglun Law Firm, said that this situation does not fall under the related-party transactions clearly listed in the stock listing rules of the exchange.If there is evidence that a special relationship exists between a listed company and its counterparty and that this relationship may result in the listed company favoring its interests, the regulatory authorities may determine that such transactions constitute related-party transactions based on the principle that substance prevails over form."For example, whether there are issues such as capital flow behind these relevant personnel," he gave an example.

Will the parties to the agreement still fulfill their contract and bid?

At the same time as announcing the acquisition of Junan Blasting, Kailong Holdings also announced the sale and purchase of two other assets.

On the one hand, Kailong Holdings' holding subsidiary Shandong Tianbao Chemical Co., Ltd. (referred to as "Tianbao Chemical") plans to publicly list and transfer 46% of the equity of Jiangsu Hongguang Chemical Co., Ltd. (referred to as "Jiangsu Hongguang").

The background of this transaction is that Tianbao Chemical originally planned to acquire the remaining equity of Jiangsu Hongguang in 2020, but because the two parties failed to reach an agreement, Jiangsu Hongguang began to seek other third parties to sell its equity in 2022. In September 2023, Guangdong Minghua Machinery Co., Ltd., a subsidiary of Guangdong Hongda (002683. SZ), completed the acquisition of 54% of the equity of Jiangsu Hongguang, and according to the announcement of Kailong Shares, Guangdong Hongda intends to continue to acquire the 46% equity of Jiangsu Hongguang held by Tianbao Chemical.

What once attracted investors' attention was that in January this year, Tianbao Chemical planned to publicly list 46% of the equity of Jiangsu Hongguang for auction, and signed a "Framework Agreement on Equity Acquisition" with Guangdong Hongda, stipulating that if the listing price is not higher than 186 million yuan, Guangdong Hongda or its holding subsidiaries will guarantee to participate in the auction and acquire the 46% equity of Jiangsu Hongguang held by Tianbao Chemical.

According to the latest announcement of Kailong Shares on July 16, the minimum listing price of Jiangsu Hongguang's 46% equity is not less than the assessed price of 230 million yuan. If the listing price is higher than 1 . 8 6 If the auction amount is 100 million yuan, Guangdong Hongda or its holding subsidiaries have no obligation to participate, and whether to participate in the auction is an open market behavior.

On the same day, Kailong Co., Ltd. announced an acquisition plan between its two subsidiaries by way of capital increase and stock expansion.

Specifically, Xinjiang Tianbao Blasting Engineering Co., Ltd. (referred to as "Xinjiang Tianbao Blasting") and Xinjiang Tianbao Mixed Explosives Manufacturing Co., Ltd. (referred to as "Xinjiang Tianbao Mixed") are both subsidiaries controlled by Shandong Tianbao Chemical Co., Ltd. (referred to as "Tianbao Chemical"), a wholly-owned subsidiary of Kailong Co., Ltd.

All shareholders of Xinjiang Tianbao Mixed Loading will increase the capital of Xinjiang Tianbao Blasting by 100% of the shares they hold, and subscribe to the newly added registered capital of Xinjiang Tianbao Blasting of RMB 53.4868 million. Considering that the registered capital of Xinjiang Tianbao Blasting has not been paid up by RMB 10 million, it is planned that before Xinjiang Tianbao Blasting acquires Xinjiang Tianbao Mixed Loading, Xinjiang Tianbao Blasting will pay up the registered capital by distributing dividends to the original shareholders and then paying up the capital.

After the capital increase, Xinjiang Tianbao Mixed Loading became a wholly-owned subsidiary of Xinjiang Tianbao Blasting, thereby expanding the asset scale of Xinjiang Tianbao Blasting and improving the business qualification level of Xinjiang Tianbao Blasting.

According to the data, Kailong's main business is the production and sales of civilian blasting equipment, ammonium nitrate and compound fertilizer, nano calcium carbonate and stone products, and provides blasting services. After a huge loss of 395 million yuan in 2021, Kailong's performance has returned to the 100 million yuan level in the past two years. The annual report shows thatIn 2024, the company will continue to increase its merger and reorganization efforts, and increase the production capacity of civil explosives equipment.