Chery-related assets are injected for the first time! Wandes plans to invest over 30 million yuan to cross into the "scrap car" industry. Why was a zero-revenue target chosen behind this move?

Environmental protection company Wandes announces entry into new energy recycling field.

On March 2, Wandes announced plans to invest 31.95 million yuan to acquire assets related to power battery recycling and scrap vehicle dismantling from its indirect controlling shareholder.

The “Daily Economic News” reporter (hereinafter referred to as “the reporter”) noted that the target company of this acquisition, Wuhu Minghao, had zero revenue in 2025 and reported a net loss. At the same time, this transaction did not include any performance commitment clauses.

The announcement shows that Wandes’ wholly owned subsidiary, Nanjing Wandes Green Material Technology Co., Ltd. (hereinafter “Wandes Green Material”), intends to acquire 68% equity stakes in Anhui Jiaqing Energy Technology Co., Ltd. (hereinafter “Anhui Jiaqing”) and Wuhu Minghao New Materials Co., Ltd. (hereinafter “Wuhu Minghao”).

Because the counterpart in this transaction is a wholly owned subsidiary and a wholly owned grandchild company of Ruyuan International Resources Investment Co., Ltd. (hereinafter “Ruyuan International”), which is indirectly controlled by Wandes, this constitutes a related-party transaction.

From Environmental Protection to Cross-Industry “Scrap Car Collection” — Chery Assets First Injection

Since May 2025, when Ruyuan International (backed by Chery Group) became an indirect controlling shareholder of Wandes, the capital market has been eager to see how Ruyuan International will integrate its assets.

According to the transaction plan, Wandes Green Material intends to purchase 68% of Anhui Jiaqing’s shares from Chery Resources Technology Co., Ltd. in Wuhu for 11.5 million yuan; simultaneously, it plans to buy 68% of Wuhu Minghao from Anhui Jaxin Recycle Resources Co., Ltd. for 20.45 million yuan. After the transaction, Anhui Jiaqing and Wuhu Minghao will become Wandes’ holding subsidiaries and will be included in consolidated financial statements.

As an environmental protection company, why did Wandes suddenly venture into scrap car collection and battery recycling?

“Widespread use of batteries is nearing the end of their life cycle in China. According to the State Administration for Market Regulation, in 2024, domestic power battery recycling will exceed 300,000 tons, and by 2030, the annual waste power batteries generated are expected to surpass 1 million tons,” Wandes stated.

Wandes said that with the introduction of policies for vehicle scrapping, renewal, and trade-in subsidies, the number of scrapped vehicles in China will continue to grow, creating opportunities for the dismantling and recycling industry. “Engaging in power battery recycling and scrap vehicle dismantling is a way to extend the industrial chain in resource and environmental sectors, representing a subdivision within the broader environmental protection field.”

The reporter noted that upstream and downstream industry collaboration is the core logic behind this “package acquisition.” It is also the first time that Chery assets have been injected into Wandes.

Wandes stated that, according to the “Interim Measures for the Recycling and Comprehensive Utilization of Waste Power Batteries of New Energy Vehicles,” which will take effect on April 1, 2026, scrapped new energy vehicles must strictly follow the “vehicle and battery as one” principle, with power batteries transferred to qualified recycling and dismantling organizations along with the vehicle.

“Acquiring power battery recycling and scrap vehicle dismantling businesses simultaneously will help build an internal closed-loop system from vehicle scrapping to battery reuse,” Wandes added.

One of the targets had zero revenue last year, and no performance commitment was set

Financial data disclosed in the announcement shows that Anhui Jiaqing, engaged in recycling and utilization of waste power batteries from new energy vehicles, is currently the only enterprise in Wuhu city selected as the “Anhui Province New Energy Vehicle Power Battery Recycling and Utilization Regional Center.”

In 2025, Anhui Jiaqing achieved revenue of 96.15 million yuan and a net profit of 7.32 million yuan. As of December 31, 2025, its total assets were 122 million yuan, with net assets of 14.12 million yuan.

In contrast, Wuhu Minghao, established in August 2024 and engaged in scrap vehicle recycling and dismantling, has obtained relevant qualifications but had zero revenue and a net loss of 8.589 million yuan in 2025. By the end of 2025, its total assets were 34.17 million yuan, and net assets were 29.99 million yuan.

In valuation and pricing, both companies used asset-based methods rather than income approaches. The valuation agency explained that Anhui Jiaqing has a short operating history and its performance is heavily influenced by fluctuations in lithium carbonate spot prices, making future earnings difficult to predict. Wuhu Minghao, being newly established and still in resource integration, has not yet engaged in actual operations, and its future earnings and risks are also difficult to quantify.

Ultimately, based on an appraisal date of December 31, 2025, the valuation of 100% equity of Anhui Jiaqing was 16.88 million yuan, with an appreciation rate of 19.51%; Wuhu Minghao’s 100% equity was valued at 30 million yuan, with a negligible appreciation rate of 0.04%. After negotiations, the transaction prices for 68% stakes were set at 11.5 million yuan and 20.45 million yuan, respectively.

The reporter also noted that no performance commitment clauses were included in this transaction.

Regarding potential risks of this cross-industry merger, Wandes admitted in the announcement: “After the transaction, the target companies may face risks of not achieving expected operational performance due to macroeconomic factors, industry competition, or policy changes.”

According to Wandes’ previous performance brief, in 2025, the company achieved total revenue of 505 million yuan, a year-on-year decrease of 18.64%; net loss attributable to shareholders was 114 million yuan.

(Source: Daily Economic News)