Huasoft Technology has suffered consecutive losses for five years, attempting to transform through cross-industry mergers and acquisitions. The target company had two years of IPO guidance before abandoning the process. Profit growth remains sluggish.

Produced by: Sina Finance Listed Company Research Institute

Author: Guangxin

On March 6, 2026, Huasoft Technology (rights protection) announced its plan to acquire a 67.411% stake in Shandong Laineng Optoelectronics Technology Co., Ltd. (“Laineng Optoelectronics” or “Target Company”) for RMB 324 million. If this transaction is successfully completed, Laineng Optoelectronics will become a controlled subsidiary of Huasoft and will be included in the company’s consolidated financial statements.

Huasoft’s main business is fine chemicals. In recent years, due to intensified competition and rising raw material costs, its net profit attributable to the parent has been loss-making year after year. Laineng Optoelectronics mainly manufactures safety light curtains and other electronic instruments. It is a national-level specialized and innovative “Little Giant” enterprise and a Shandong Province Gazelle enterprise.

The combination of the two represents a typical cross-industry merger: “traditional struggling enterprises seeking development + specialized and innovative enterprises seeking platforms.”

Huasoft previously acquired Odyssey Chemical, attempting to strengthen its fine chemical main business to escape losses, but ultimately ended with an impairment of RMB 861 million in goodwill. Although Laineng Optoelectronics is profitable and stable, its net profit attributable to the parent has been less than RMB 40 million annually, which may be insufficient to offset Huasoft’s losses of over RMB 100 million. How will Huasoft’s financial situation improve after the transaction? Caution is advised.

Huasoft Falls into the Chemical Industry Price War and Fails to Return to Main Business

Huasoft’s predecessor was Tianma Fine Chemicals.

Tianma Fine Chemicals was listed in 2010, mainly engaged in paper-making chemicals. However, poor management led it to become a “shell resource.”

In 2016, Huasoft Holdings acquired all shares of Tianma Group for about RMB 1.3 billion. At that time, the fintech wave was booming. Tianma Fine Chemicals expanded through acquisitions, including Yinkang Technology, Zhongke Electronics, Shandong Digital Intelligence, and Yinjia Financial Services, and was renamed “Huasoft Technology.”

However, these acquisitions did not improve the company’s fundamentals. In 2019, Huasoft suffered significant losses again. That same year, Huasoft sold all its fintech assets, and Huasoft Holdings (now “Wufu Technology”) transferred 100% equity to Badachu Technology for RMB 3.09 billion, once again changing its actual controller.

The new controller’s first move was to steer Huasoft back to its core fine chemical business.

In 2020, Huasoft successfully acquired 98.94% of Beijing Odyssey Chemical for RMB 1.346 billion, creating RMB 861 million in goodwill. Odyssey Chemical had made profit commitments: RMB 62 million, RMB 107 million, and RMB 129 million for 2020-2022.

However, actual results fell far short of these commitments. Odyssey Chemical’s net profits were RMB 62.09 million, RMB 43.42 million, and RMB 26.62 million, with achievement rates of about 100%, 40%, and 20%, respectively.

The underperformance of Odyssey Chemical led to a significant impairment of RMB 861 million in goodwill over four years.

From 2019 to 2024, Huasoft was profitable only in 2020. From 2021 to 2024, its revenue was RMB 3.942 billion, RMB 2.697 billion, RMB 551 million, and RMB 515 million; net losses attributable to the parent were RMB 227 million, RMB 185 million, RMB 176 million, and RMB 288 million; and net losses after non-recurring gains and losses were RMB 240 million, RMB 400 million, RMB 464 million, and RMB 275 million.

According to Huasoft’s previous forecast, its net profit attributable to the parent in 2025 is expected to be a loss of RMB 26 million to RMB 35 million, with non-recurring net losses of RMB 26.1 million to RMB 35.1 million. This indicates five consecutive years of losses.

Huasoft explained that the losses mainly stem from: 1) increased market competition leading to pressure on sales prices of main products and rising upstream raw material costs, resulting in a decline in gross profit margin; 2) considering internal and external factors, including declining profitability of subsidiaries or assets, impairments were recognized for assets with signs of impairment.

In the midst of a price war in the chemical industry, Huasoft urgently needs new growth drivers. At this point, Laineng Optoelectronics entered its view.

Laineng Optoelectronics’ Two-Year Mentoring Ends with No Profit Breakthrough, Long-Term Profitability in Doubt

Laineng Optoelectronics was founded in July 2004 and was listed on the New Third Board. It was delisted on February 12, 2026, in preparation for this acquisition. The company focuses on R&D, production, and sales of safety light curtains (safety gratings), measurement light curtains, detection light curtains, and safety control products, providing solutions for machinery, automotive manufacturing, electronics, and automation industries.

Additionally, in December 2023, Laineng Optoelectronics submitted a filing for guidance on listing on the Beijing Stock Exchange, entering the mentoring phase, with Zhongtai Securities as the mentor.

During the mentoring period, Zhongtai Securities provided seven guidance sessions. According to the seventh progress report released in October 2025, due to market environment and upstream/downstream impacts, the company’s performance showed some fluctuations, with relatively low scale and slow growth, and no signs of market demand explosion.

On January 5, 2026, Laineng Optoelectronics announced the termination of its guidance.

Looking at the company’s financials, the business scale and market ceiling issues are prominent. From 2022 to 2024, revenue was RMB 130 million, RMB 146 million, and RMB 153 million; net profit attributable to the parent was RMB 36.24 million, RMB 39 million, and RMB 35.87 million. In the first half of 2025, revenue was RMB 85.24 million, up 11.24% year-over-year; net profit attributable to the parent was RMB 19.27 million, down 1.54% year-over-year.

The company’s net profit has consistently hovered around RMB 35-40 million, which is insignificant compared to Huasoft’s loss of about RMB 300 million.

The acquisition set a performance commitment of at least RMB 120 million in cumulative profit over three years, with an annual profit target of about RMB 40 million, indicating modest growth expectations for the target company. The compensation mechanism allows for cash or remaining shares of the target to be used for settlement, offering more flexibility than a purely cash-based approach.

For Laineng Optoelectronics, the RMB 480 million valuation for this transaction is 13.4 times its 2024 net profit, a relatively attractive exit price for a company listed on the New Third Board.

However, this valuation is not cheap for Huasoft, which had only RMB 129 million in cash and cash equivalents at the end of Q3 2025. Whether Huasoft, which has invested heavily in this acquisition, can help it escape its difficulties remains to be seen. Only time will tell.