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(Original title: Huadong Heavy Machinery plans to acquire Ruixin Tuxin’s equity)

Securities Times reporter Sun Xianchao

East China Heavy Machinery(002685) announced on the evening of July 28 that the company intends to acquire Xiamen at a pre-investment valuation of no more than 300 million yuanRuixin Image CoreTechnology Co., Ltd. (hereinafter referred to as "Ruixin Tuxin") equity and capital increase, that is, to acquire a total of 37.5% equity of Ruixin Tuxin (corresponding to a registered capital of 1.2626 million yuan) for no more than 113 million yuan, and to subscribe for Ruixin Tuxin's newly increased registered capital of 336,700 yuan for no more than 30 million yuan. After the completion of this transaction, the company holds 43.18% of Ruixin Tuxin's equity and becomes the single largest shareholder of Ruixin Tuxin. Ruixin Tuxin will be included in the company's consolidated financial statements.

Ruixin Tuxin's main business is GPU chips and solutions. It has achieved mass production and batch supply of GPU chips. The current first-generation products are aimed at the domestic domestic information and communication technology market. The BF2000 series GPU chips are benchmarked against the main information and communication technology chip products of the domestic leading GPU chip companies.

GPU is a core component for domestic substitution, and as information technology products penetrate into more core business areas, its market prospects are optimistic. According to Verified Market Research, the global GPU chip market size will reach US$109.1 billion in 2025, a year-on-year increase of 34%, and will grow to US$477.4 billion in 2030.

Ruixin Tuxin's GPU has been adapted to domestic mainstream CPU, operating system and other ecological manufacturers, and has been used in batches in domestic desktops, all-in-one computers, notebooks and tablets. The products have currently entered the party and government office, transportation, education, taxation, electricity and rail transit industries.

The relevant guarantors promised that the net profit attributable to the parent company in the consolidated statements of Ruixin Tuxin from 2024 to 2026 will not be less than 12 million yuan, 21 million yuan, and 30 million yuan respectively. At the same time, Huadong Heavy Machinery promised that after the 2026 annual audit report is issued, if the cumulative performance commitment is completed and excess net profit is achieved, 50% of the excess net profit will be rewarded to the founder shareholders in the form of stocks of equal value at that time.

Huadong Heavy Machinery is mainly engaged in high-end equipment manufacturing business, mainly container loading and unloading equipment and CNC machine tools; at the same time, the company expands photovoltaic cell module business and promotes the transformation and upgrading of its business structure.

East China Heavy Machinery expects to achieve a net profit of 20 million to 30 million yuan in the first half of 2024, turning losses into profits year-on-year.

The changes in Huadong Heavy Machinery's performance in the first half of 2024 are mainly attributed to three reasons: First, the shipping market improved during the reporting period. The company seized the opportunity of port machinery equipment renewal and transformation, and made use of the company's sufficient backlog of orders and the increase in domestic and foreign market share to ensure the delivery of key port machinery projects and customer service. During the reporting period, all orders on hand were advanced as scheduled; secondly, the CNC machine tool business is the company's major asset sale business in 2023. The reorganization is currently being implemented. During the reporting period, the company further increased its efforts to recover accounts receivable, recovered some old money, offset credit impairment losses, signed new orders and shipped them during the reporting period, and digested the depreciated inventory; finally, during the reporting period, due to the overall severe and continued decline in prices in the photovoltaic industry chain and the continued low prices of battery cells, the company's photovoltaic battery module business suffered a loss.