Sensitive period capital increase! How substantial is Mingyang Smart's acquisition target?

【Intro】Capital increase during a sensitive period! What’s the quality of Mingyang Smart’s acquisition target?

Intern reporter Liu Mo

After the UK government rejected Mingyang Smart (601615)’s investment of 1.5 billion British pounds in a Scottish offshore wind power project, the company has drawn widespread attention from the market. As a leading player in China’s offshore wind power sector, Mingyang Smart is known for its big-ticket investment in offshore wind power projects. Regarding the project’s rejection, Mingyang Smart said that as of March 27, it had not投入 funds into the above project.

In fact, what has truly sparked market controversy for Mingyang Smart is the related-party transaction acquisition plan it released on January 23. The plan involves a target that is not only in loss, but also includes capital increase behavior during a sensitive period.

Capital increase during a sensitive period

On January 23, Mingyang Smart released a preliminary plan for a related-party transaction, in which it would issue shares and pay cash to acquire assets and raise supporting funds, intending to acquire a total of 100% equity of Zhongshan Dehua Chip from the transaction counterparty by issuing shares and paying cash, and issue shares to no more than 35 specific investors to raise supporting funds. The issuance price for the shares used to acquire assets is 14.46 yuan per share.

According to the latest information disclosed by Mingyang Smart, the timeline for planning this major asset restructuring before the suspension started on January 8, 2026 and ended after the preliminary plan was disclosed on January 23. This period is within the “sensitive period for inside information.”

Figure 1:

Notably, during the sensitive period, the Zhongshan Dehua Chip company completed a capital increase on January 21. With capital contributions of 2.2637 million yuan and 1.3205 million yuan respectively, Anhui Huiyuan, which has a state-owned-asset background, and Zhongshan Guoyuan Venture Capital obtained 2.31% and 1.35% equity in the Zhongshan Dehua Chip company. Meanwhile, according to the preliminary plan published by Mingyang Smart, Anhui Huiyuan and Zhongshan Guoyuan Venture Capital will withdraw in cash from this acquisition, rather than holding shares of Mingyang Smart through a share-swap.

Figure 2: On January 21, the completion of industrial and commercial registration changes for the new shareholders of Zhongshan Dehua Chip

A former investment banker who has long followed major asset restructurings in the capital markets, in an interview with reporters, said that a capital increase by the target company during a sensitive period does not necessarily mean insider trading, because it is not directly trading the listed company’s shares. However, the target company’s capital increase in this case occurred within the sensitive period of the listed company’s acquisition, and in terms of timing it is highly consistent with the acquisition announcements. That being the case, the motivation for this capital increase, the fairness of the price, and the independence of the decision-making are all worth scrutiny—especially since such a capital increase usually implicitly endorses the valuation of the target company.

The target company’s previous capital increase took place in July 2022, and there is a clear gambling (performance) agreement. The target company must achieve a qualified IPO, or a qualified backdoor listing, or a qualified overall sale by December 31, 2026; otherwise, the controlling shareholder, Ruide Venture, or a designated third party will need to assume the share repurchase obligations. Although this capital increase also signed a gambling agreement, in substance, because the new shareholders sell the equity in the target company that they just obtained through a cash method to the listed company, the short-term arbitrage characteristics are more obvious.

What’s the quality of the Zhongshan Dehua Chip deal?

Why didn’t the target company increase capital for four years, but completed a capital increase 48 hours before the acquisition announcement? In a loss situation, why were the new shareholders willing to move in quickly—did they know in advance about the cash acquisition arrangement?

First, let’s take a look at what kind of company Zhongshan Dehua Chip really is.

According to information disclosed by Mingyang Smart, Zhongshan Dehua Chip was established on August 27, 2015, with a registered capital of 97.90416 million yuan, and the actual controller is Zhang Chao. Zhang Chao also serves as a director and vice president of Mingyang Smart, and is a near relative of Zhang Chuanwei, the actual controller of Mingyang Smart.

As introduced, the main products of Zhongshan Dehua Chip include gallium arsenide solar cell epitaxial wafers, rigid and flexible gallium arsenide solar cell chip wafers, solar arrays and solar wings, etc. It has epitaxial wafer technology for solar cells, and full-process capabilities covering the entire workflow of power system design, production, verification, and assurance. It can conduct full-process management of the quality and cost of power system production, and has advantages in rapid response and customized development. Mingyang Smart stated that the company’s epitaxial wafers and power chip wafers have achieved mass supply, power system products have been supporting multiple tasks and have completed verification, and customer coverage includes multiple well-known manufacturers.

However, the financial data of Zhongshan Dehua Chip does not reflect the competitiveness described by these products.

In 2024 and the 1–9 months of 2025, the company’s operating revenue was 52.9787 million yuan and 90.5969 million yuan, respectively, and its net profit was -42.5750 million yuan and -20.2262 million yuan, respectively. Downstream customers are highly concentrated. Among them, main customer A contributed 94.35%, 92.64%, and 70.30% of operating revenue in 2023, 2024, and the 1–9 months of 2025, respectively.

Figure 3:

Figure 4: Main customer cooperation situation of Zhongshan Dehua Chip

Mingyang Smart stated that at present, because downstream customer orders have not yet expanded in large scale, the target company’s revenue scale is small. At the same time, by continuously increasing production line construction and R&D investment, the target company has incurred losses during the reporting period, and in the short term it does not yet have the ability to generate stable and sustainable profits. With the rapid development of downstream industries, the target company’s profitability is expected to improve.

As of now, the audits, valuations, and legal due diligence related to the assets involved in this transaction by Mingyang Smart are still being carried out, and the parties to the transaction have not yet signed formal transaction agreements.

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