As the sole listed platform of Chengdu Gaotou Group, Gaoxin Development has become a target for capital speculation due to its acquisition of a computing power company, with the highest increase reaching five times in just half a year. Now, with the announcement of the temporary suspension of the acquisition of computing power assets due to the failure to agree on the price, the stock price directly hit the limit down, with nearly 170,000 orders sealed.

The computing power stock Gaoxin Development has "collapsed."

On April 18th, Gaoxin Development opened with a limit down, with more than 170,000 orders sealed, a turnover rate of 3.27%, and nearly 900 million funds waiting to exit. The day before, the company had just achieved a daily limit up.

In terms of news, Gaoxin Development announced in the early morning of the 18th that due to the failure to reach a consensus with some transaction counterparts on the transaction price, it is negotiating whether to terminate the transaction of 70% of the equity of Hua Kun Zhenyu.

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This means that the 3 billion "computing power asset" acquisition planned for half a year may be aborted.

As the sole listed platform of Chengdu Gaotou Group, Gaoxin Development has been in the municipal construction project business for 17 years since its listing, with meager profits. During this period, it has expanded into futures and kitchen cabinet manufacturing, all of which have not improved and have been withdrawn. In 2022, it acquired two semiconductor start-ups, which have not yet contributed to profits.

Gaoxin Development has repeatedly stated that it will base itself on the pillar industry of electronic information in Chengdu High-tech Zone, make full use of the capital market, especially refinancing and mergers and acquisitions, choose the right track to establish a new main business, and enhance its influence. But now that the transaction price has "collapsed," this acquisition may also have to be suspended.

For the capital market, if the computing power transaction fails, this "construction company" naturally cannot retain a valuation three times higher than the industry average.

The failure to agree on the price led to the stock price "collapse."

In September 2023, Gaoxin Development, whose main business is construction, announced a suspension of trading to plan the acquisition of equity in the computing power company Hua Kun Zhenyu.The following month, the company disclosed a preliminary plan, valuing 100% of the "high-quality computing power assets" Hua Kun Zhenyu at no more than 3 billion yuan. The corresponding static price-to-earnings ratio is 69.11, which is a 1354.05% increase from the net assets at the end of September, meaning a 13-fold increase in value.

In terms of transaction method, Gaoxin Development plans to complete the acquisition by issuing shares and paying cash. The share issuance part is priced at no less than 80% of the average transaction price of the company's stock in the 20 trading days before the pricing benchmark date, specifically determined at 12.24 yuan per share.

After announcing the merger and acquisition, Gaoxin Development's stock price resumed trading and immediately achieved 11 consecutive daily limit-ups, followed by "ups and downs."

After reaching a stage high of 71.63 yuan per share at the end of 2023, the company's stock price was halved in a month. In early February of this year, the stock price rebounded sharply, reached a high of 95.7 yuan per share in mid-March and then fell back, and on April 17, it once again achieved a 10CM daily limit-up, and then hit the daily limit-down the next day.

During this period, Gaoxin Development also repeatedly stated: "The company is currently not involved in computing power-related businesses, nor has it established a business cooperation with NVIDIA." It also stated that if there is a significant difference between the evaluation results of the acquisition target and the estimated value, there is a risk that the transaction parties cannot reach a consensus on the transaction pricing, and ultimately lead to the failure of the transaction.

According to last year's preliminary disclosure of the acquisition, as of the end of 2022, Hua Kun Zhenyu's revenue scale was about 3.5 billion yuan, which has exceeded half of Gaoxin Development's revenue that year, but the profit was only 40 million, and the asset-liability ratio was as high as 96.82%. This acquisition is obviously not easy for the listed company.

It is worth noting that in the announcement on the 18th, Gaoxin Development has not yet fully declared the end of the equity merger and acquisition of Hua Kun Zhenyu.

Gaoxin Development stated that due to the long duration of this transaction, the industry in which the target company is located has been affected by internal and external environments, and the market expectations are high, and the company has not been able to reach a consensus on the transaction pricing with some transaction counterparts.

As of the date of this announcement, the closing price of the company's stock has increased by 239.5% compared to the closing price before the suspension of trading for this major asset restructuring. Since it is expected that this transaction will not be able to continue, it may lead to a decline in the company's stock price.

Capital "meat grinder"Stock speculation naturally involves the participation of capital players, with individual investors and institutions entering the market in droves over the past six months.

Looking at the number of shareholders, Gaoxin Development saw a doubling from around 20,000 before the merger announcement last year to 53,800 on November 10th, and expanded to over 100,000 households by March this year.

In terms of trading activity, Gaoxin Development has made it to the top gainers and losers list, known as the "Dragon and Tiger List," as many as 22 times in the past three months, indicating intense bull and bear contention. According to the Look at the Truth APP, the "stock trading for living" deeply tied with several branches of Huaxin Securities, and the frequently used seat of investment tycoon Ge Weidong, Guotai Junan Shanghai Branch, have been on the list frequently in March.

However, on the eve of the storm on April 9th, Ge Weidong's frequently used seat, Guotai Securities Shanghai Branch, topped the sellers' list with 189.5 million yuan, possibly having successfully "escaped." On the same day, there were still institutional special seats buying heavily with 57.47 million yuan, and China Galaxy Beijing Zhongguancun Street bought 41.55 million yuan.

In the fourth quarter of last year, individual investor Zhang Jianping ranked as the seventh largest shareholder with 3.1812 million shares. If Zhang Jianping still holds Gaoxin Development, he will inevitably face losses.

Additionally, in the fourth quarter, 44 funds from 26 public funds newly entered as shareholders of Gaoxin Development, holding a total of 6.9553 million shares. Among them, the public fund holding the most shares of Gaoxin Development held 3.0701 million shares, accounting for 1.59% of the circulating shares, with a holding value of 153 million yuan.

Another public fund holding more than 1 million shares is Wanjia Artificial Intelligence, with 1.4041 million shares. The product was established on November 19, 2021, and has a return rate of -36.5% since its establishment, with a first-quarter return rate of 8.95%.

If these funds did not reduce their positions on the eve of the "explosive event," they may be trapped.

It is worth noting that according to some of the disclosed first-quarter reports of funds, Debon Xinxing Value has just bought 36,500 shares of Gaoxin Development, becoming the seventh largest holding fund. If it does not reduce its position in time, it may affect its net value due to the sharp drop.

The acquisition is shelved, and the stock price may return to its original state.The market's high level of attention is due to the fact that this acquisition carries the "transformational" expectations for high-tech development. As the target of the acquisition, Hua Kun Zhenyu is a Southwestern computing power giant, with state-owned capital holding 60%, fully responsible for the design, production, sales, and service of the "Tiangong" brand's own server, storage, PC, machine vision, and other product series based on Huawei's "Kunpeng + Ascend" processors.

In July 2023, Huawei announced contracts with three companies to jointly delve into urban digitalization, and Hua Kun Zhenyu was one of the contracted companies. For Hua Kun Zhenyu, because of the early acquisition of controlling rights by the related party of High-tech Development - High Investment Electronic Group, the market believes that the injection into the listed company is already a "done deal."

According to the Southwest United Property Exchange website's fourth property disclosure at the end of 2023, at the end of 2023, the Southwest United Property Exchange website's fourth property disclosed that Sichuan Changhong Electronics Holding Group Co., Ltd. intended to transfer 22% of Hua Kun Zhenyu's equity. The final transaction price was 638 million yuan, and the shareholder High Investment Electronic Group retained the right of first refusal, involving the right of priority.

The market believes that High Investment Electronic Group has acquired 22% of Hua Kun Zhenyu's equity, plus the already held 30% equity in Hua Kun Zhenyu, its holding ratio has exceeded 50%. High Investment Electronic Group and High-tech Development are both member enterprises of Chengdu High-tech Investment Group Co., Ltd., and there is a related relationship between the two.

In terms of price, High Investment Electronic Group purchased 22% of Hua Kun Zhenyu's equity for 638 million yuan, and the valuation of Hua Kun Zhenyu is also around 3 billion yuan, which is comparable to the estimated value previously disclosed by High-tech Development.

Data shows that High-tech Development is the only state-owned listed company under Chengdu High-tech Zone, and it is one of the first batch of shareholding pilot enterprises in the national high-tech industrial development zone. It is also the first shareholding pilot enterprise in the country to combine science and technology with the economy by the National Science and Technology Commission and the National Economic System Reform Commission.

In recent years, High-tech Development has frequently made asset shuffling moves, and similar operations have also occurred. In June 2022, the listed company spent 300 million yuan to cross-industry acquire two semiconductor start-ups - Senwei Technology and Xinwei Semiconductor, thereby ushering in a wave of performance and valuation的提升. Similar to Hua Kun Zhenyu, before the merger and acquisition, Senwei Technology was first controlled by Chengdu High Investment, and the listed company's acquisition constituted a related transaction.However, due to the relatively small size of the aforementioned semiconductor targets and the fact that the production lines are still in the planning and construction phase, this does not constitute a significant asset restructuring. The impact on the stock price at the time was also relatively minor, with the market even questioning the limited contribution of the merger to the company's profits in the short term.

The latest 2023 annual report shows that Gaoxin Development achieved a revenue of 8.008 billion yuan last year, a year-on-year increase of 21.88%; net profit was 366 million yuan, a year-on-year increase of 83.82%. Among them, the construction industry remains the main part of the revenue, recording 7.318 billion yuan, an increase of 18.21% compared to the same period last year, and the net profit margin increased by 1.47 percentage points compared to the same period last year.

At the same time, Gaoxin Development plans to use 352 million shares as the base to distribute a cash dividend of 1.52 yuan (including tax) per 10 shares to all shareholders, with a total distribution of 53.5466 million yuan, which is also seen as an attempt to "stabilize shareholders."

However, it is clear that dividends are not the focus of investors, and whether high-quality computing assets can be successfully injected is the key to confidence.

If this construction company cannot meet the financial requirements of the transaction parties through private placement or other means to complete this cross-border "snake swallowing elephant" acquisition, it naturally cannot retain the high-tech valuation given by the market.

Today's limit down may just be the beginning of the "collapse" of the stock price.