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Yangtze Business Daily News● Yangtze Business Daily reporter Shen Yourong

After a large-scale share reduction last year, China Electronics Capital Investment Holdings Co., Ltd. (hereinafter referred to as "China Electronics Capital Investment") increased its holdings by 780 million this year and regained the position of the second largest shareholder of Qi'anxin (688561.SH).

On the evening of August 2, China Power Investment disclosed a report on changes in equity, stating that it acquired 5% of the equity of Qi'anxin (688561.SH) through an agreement transfer, with a transaction price of approximately RMB 779 million.

After the completion of this transaction, China Electronics Capital and its joint actors will jointly control 23.10% of Qi'anxin's shares, consolidating their position as the second largest shareholder.

It is worth mentioning that in March 2023, China Electronics Capital reduced its stake in Qi'anxin by 2% through block transactions, cashing out approximately 1.04 billion yuan.

Qi'anxin was once a subsidiary of 360 Group and was founded by Qi Xiangdong, the second-in-command of 360. In 2019, Qi'anxin became independent from 360 and landed on the A-share market in July 2020. Qi Xiangdong thus became the controlling shareholder and actual controller of Qi'anxin.

Qi'anxin focuses on the cyberspace security market and provides a new generation of enterprise-level network security products and services to government and corporate users. Due to the investment of China Electronics Finance, the company has been included in the "national team of network security".

Qi'anxin has not yet achieved profitability after more than four years of listing. From 2020 to 2023, the company's net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") accumulated a loss of 1.73 billion yuan.

What has attracted much attention is that in the past two years, the company's R&D investment has continued to shrink.

China Power Financial Investment first reduced its holdings and then acquired the transfer

Qi'anxin's equity structure changed again.

According to the announcement, Qi'anxin's shareholder Tianjin Qi'an No. 1 Technology Partnership (Limited Partnership) (hereinafter referred to as "Qi'an No. 1") intends to transfer its approximately 34.2586 million shares of Qi'anxin (approximately 5% of the company's total share capital) to China Electronics Capital Investment at a transfer price of 22.73 yuan per share. The total transaction price is approximately 779 million yuan.

After the completion of this equity transfer transaction, China Power Investment Corporation holds approximately 36.2805 million shares of the company, accounting for 5.30% of the company's total share capital. Its concerted action party Ningbo Meishan Bonded Port Area Mingluo Investment Management Partnership (Limited Partnership) (hereinafter referred to as "Mingluo Investment") holds 17.80% of the company's equity, and the two together hold 23.10% of the company's equity. Qi'an No. 1's shareholding ratio will be reduced to 0.93%, and it will withdraw from the position of a major shareholder.

China Electronics Capital Investment holds 99.90% of the shares of Mingluo Investment. The actual controllers of China Electronics Capital Investment and Mingluo Investment are both China Electronics Information Industry Group Co., Ltd. (referred to as "China Electronics").

Qi'an No. 1 had entered Qi'anxin before its IPO. Qi'anxin's director and president Wu Yunkun holds a 24.36% stake, and vice president He Xinfei holds a 3.83% stake.

Regarding this equity change, Qi'anxin stated in the announcement that China Electronics has set the strategic goal of building the core strategic scientific and technological force of the national network information industry, focusing on the main line of "what the country needs", building "the country's heavy equipment", and serving "the country's major issues". This time, China Electronics intends to further increase its stake in Qi'anxin through its wholly-owned subsidiary China Electronics Capital Investment, which will help enhance China Electronics' core capabilities in the field of network security and deepen its industrial layout in related fields; this increase in holdings is in line with the implementation requirements of major network security projects and key technical research, and will help better protect national network security and digital economic security.

According to the prospectus, in April 2019, Qihoo Technology transferred all of its shares in Qi'anxin to Mingluo Investment, and China Electronics Capital made a strategic investment in Qi'anxin.

In July 2020, Qi'anxin went public through its IPO. China Electronics Capital Investment was its strategic placement investor in its initial public offering. After the listing, its shareholding ratio was 2.31%.

Strangely, on March 13, 2023, China Electronics Capital reduced its holdings of 13.7 million shares of Qi'anxin through block trading, accounting for 2% of the total share capital, cashing out about 1.04 billion yuan.

Why did they first sell off their holdings in a large amount to cash out and then increase their holdings by acquiring equity?

Qi Xiangdong's wealth shrunk by 20 billion

Although Qi'anxin's equity structure has changed, the status of Qi Xiangdong, the company's actual controller, has not been affected.

According to the prospectus, Qi An Xin was established on June 16, 2014, with a registered capital of 10 million yuan, invested by Qi Xiangdong and Shi Xiaohong. After the company was established, 360 Group successively controlled Qi An Xin through its subsidiaries Qizhi Software (Beijing) Co., Ltd. (later renamed "Beijing Qizhi Business Consulting Co., Ltd.") and Qihoo Technology, and carried out enterprise security business with Qi An Xin and its subsidiaries as the main body.

Later, Qi'anxin was no longer under the control of Qizhi Software (Beijing) Co., Ltd. or Qihoo Technology. Qi Xiangdong transferred his shares in Qi'anxin to Qihoo Technology and Qi'an No. 1, and Shi Xiaohong transferred his shares in Qi'anxin to Qi'an No. 1. After a series of operations, Qi'anxin gradually separated from 360, and Qi Xiangdong also gradually withdrew from 360, "parted ways" with Zhou Hongyi, and became the actual controller of Qi'anxin.

Qi Xiangdong's shareholding has not changed since Qi'anxin went public. Currently, Qi Xiangdong directly holds 21.83% of Qi'anxin, and his concerted action parties Ningbo Meishan Bonded Port Anyuan Chuangzhi Equity Investment Partnership (Limited Partnership) and Tianjin Qi'an No. 3 Technology Partnership (Limited Partnership) hold 7.25% and 3.25% of the company respectively. Qi Xiangdong controls a total of 32.33% of the company's equity, and his actual equity holding is 25.55%.

At the beginning of its listing, Qi'anxin's share price reached 142.66 yuan per share, with a market value of nearly 97 billion yuan. On August 2 this year, its share price fell to 23.71 yuan per share, with the maximum decline of 83.38% in the range, and its current market value is 16.25 billion yuan.

Correspondingly, Qi Xiangdong's wealth has shrunk by about 20 billion yuan from a peak of approximately 24.7 billion yuan to 4.15 billion yuan today.

What has attracted much attention is that Qi'anxin's main business is still in a loss-making state. From 2017 to 2019 before the listing, the company's non-net profit was a loss of 640 million yuan, 961 million yuan, and 688 million yuan respectively. From 2020 to 2023 after the listing, the losses were 539 million yuan, 788 million yuan, 306 million yuan, and 97 million yuan respectively. After the listing for 4 years, the total net profit after non-net profit loss was 1.73 billion yuan.

At present, Qi'anxin has not disclosed its operating conditions in the first half of this year. In the first quarter of this year, the company's non-net profit was -524 million yuan.

A reporter from the Yangtze Business Daily found that Qi'anxin's investment in research and development has been shrinking. In 2021, the company's R&D investment was 1.748 billion yuan, and in 2022 and 2023 it was 1.694 billion yuan and 1.486 billion yuan respectively, decreasing year by year. In these three years, the proportion of R&D investment to operating income was approximately 30.09%, 27.22%, and 23.06% respectively.

The number of R&D personnel is also decreasing. At the end of 2022, the company's R&D personnel number was 3,753, accounting for 37.69% of the total number of employees. By the end of 2023, the number of R&D personnel will be reduced to 3,501, accounting for 37.43% of the total number of employees. In 2023, the average salary of the company's R&D personnel was 328,800 yuan, a year-on-year decrease of 3,400 yuan.