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After years of continuous losses in net profit after deducting non-recurring items, Ningbo Fubon (600768) launched a major merger and acquisition move. Stimulated by the news, the company's stock price rose strongly on August 8. On the evening of August 7, Ningbo Fubon disclosed that the company intends to purchase no less than 51% of the equity of Ningbo Electrical Alloy Materials Co., Ltd. (hereinafter referred to as "Electrical Alloy") and add silver alloy material processing business. It is worth mentioning that the target electrical alloy is an asset of Ningbo Fubon's related party, and this transaction also constitutes a related transaction.

The stock price hit the daily limit

On August 8, Ningbo Fubon’s stock price hit the daily limit, with the company’s daily limit price at 7.48 yuan per share, and its latest total market value at 1 billion yuan.

On the evening of August 7, Ningbo Fubon announced that it is planning to acquire no less than 51% of the equity of Electrical Alloy by paying cash. The specific acquisition plan and acquisition ratio are subject to further demonstration and negotiation. After the completion of this transaction, Electrical Alloy will become a holding subsidiary of the company.

According to Ningbo Fubon, on August 7, the company signed a "Letter of Intent for Equity Acquisition" with Electrical Alloy's major shareholder Ningbo Xinle Holding Group Co., Ltd. (hereinafter referred to as "Xinle Group") and Wang Haitao.

Equity relations show that Xinle Group is the largest shareholder of Electrical Alloy, holding 51% of the shares; Wang Haitao is the second largest single shareholder, holding 37% of the shares; Zhou Liming, Qi Wenya, Ou Zhigang and Wang Yuefen each hold 2% of Electrical Alloy's shares; Zhang Chunting, Zhang Hao, Zhang Ming and Zhou Bin each hold 1% of Electrical Alloy's shares.

It is worth mentioning that the above transaction constitutes a related transaction. The largest shareholder of the target's controlling shareholder Xinle Group is Ningbo Fubon Holding Group Co., Ltd. (hereinafter referred to as "Fubon Holding"), and Fubon Holding is the controlling shareholder of Ningbo Fubon. In response to relevant questions, a Beijing Business Daily reporter sent an interview letter to the office of Ningbo Fubon's secretary, but no reply was received as of press time.

In addition, Beijing Business Daily reporters noticed that on August 8, Ningbo Fubon sparked heated discussions in the stock bar, with many investors saying, "TikTok is a hit," "Open TikTok, and it's full of advertisements for this stock," and "TikTok is all about promoting this stock."

Net profit after deducting non-operating items has been in the red for many years

Behind the proposed asset purchase, Ningbo Fubon's operations are weak and the company's net profit attributable to shareholders after deducting non-recurring items has been in the red for many consecutive years.

It is understood that Ningbo Fubon's main business belongs to the non-ferrous metal rolling processing industry. It is a regional aluminum deep processing enterprise specializing in the production of industrial aluminum profiles, and also engages in the trading business of aluminum cast bars and other products; Electrical Alloys focuses on the research and development, design, manufacturing, sales and application of contact materials and components used in the low-voltage electrical field. Its main products are silver alloy materials, rivet-type electrical contacts, etc., and its products are widely used in various low-voltage electrical industries such as relays, AC contactors, thermostats, switches and timers.

Regarding this transaction, Ningbo Fubon stated that the company will add silver alloy material processing business to expand its non-ferrous metal processing business, which will help to give full play to the industry synergy effect and enhance the overall asset quality and core competitiveness of the listed company.

In addition, Ningbo Fubon also admitted that after the completion of this transaction, the company's business scale and profitability are expected to increase, further enhancing the company's ability to resist operational risks.

Financial data shows that Ningbo Fubon's net profit attributable to shareholders after deducting non-recurring items has been negative for many consecutive years. The net profit attributable to shareholders after deducting non-recurring items in 2021-2023 was approximately -3.731 million yuan, -5.695 million yuan, and -7.197 million yuan, respectively.

For the first half of this year, Ningbo Fubon expects to achieve a net profit of about -1.33 million yuan, and a net profit of about -1.47 million yuan after deducting non-recurring items. Regarding the main reason for the expected loss, Ningbo Fubon said that during the reporting period, the company's aluminum processing business and trading sector as a whole achieved stable operation, but the company's non-recurring gains and losses decreased by about 3.06 million yuan compared with the same period last year, mainly because it did not purchase financial products during this period, resulting in a significant decrease in non-recurring gains and losses compared with the same period last year.

Beijing Business Daily reporter Ma Huanhuan