Hengwei Technology suddenly changes its merger and acquisition plan, intending to acquire Shuheng Technology's control with cash, but the funding for the acquisition remains a mystery.

How does AI · Hengwei Technology address the 1 billion yuan funding gap for acquisitions?

Source: Times Weekly Author: Guan Yue, Han Xun

Image source: TuChong

Against the backdrop of rapid industry layout, the payment methods and transaction paths for listed company mergers and acquisitions seem to be changing.

On the afternoon of March 31, Hengwei Technology (603496.SH) held an investor briefing, engaging in interactive communication with investors regarding the company’s adjustment of the acquisition plan. Times Weekly reporters participated throughout and asked questions at the meeting.

Previously, Hengwei Technology announced that it planned to terminate the original transaction scheme of issuing shares and paying cash to purchase 75% of Shanghai Shuheng Information Technology Co., Ltd. (hereinafter “Shuheng Technology”) and raise supporting funds, and instead acquire at least 51% controlling stake through cash purchase of equity plus capital increase, with the target company’s valuation preliminarily not exceeding 1 billion yuan.

Regarding this adjustment of the transaction plan, Hengwei Technology’s Chairman and General Manager Shen Zhenyu stated at the briefing, “Recently, the heat of the AI application market has increased rapidly, and the business of the target company has grown quickly. Therefore, the company believes it is necessary to ‘improve transaction efficiency and reduce transaction costs’ to complete the merger and acquisition as soon as possible.”

However, Times Weekly reporters noted that as of the end of Q3 2025, Hengwei Technology’s cash on hand was only 310 million yuan, with a cash ratio of 0.81, indicating that short-term funds seem insufficient. How to match the funding needs corresponding to a valuation of 1 billion yuan remains a question.

Quickly Locking in the Target

Reviewing the transaction process, Hengwei Technology first announced the above merger plan in September 2025. Since then, it experienced suspension, resumption, and the entry of intermediary agencies for due diligence and auditing.

On February 28, 2026, Hengwei Technology issued an announcement on restructuring progress, stating that due to changes in the market environment and progress in negotiations with the counterparty, adjustments to the specific acquisition scheme are not ruled out.

On the evening of March 26, Hengwei Technology announced that the company’s board of directors unanimously approved the adjustment of the transaction plan, explaining that “considering the current negotiation progress, audit evaluation work, and other factors, in order to ‘improve transaction efficiency and reduce transaction costs’ and better promote the completion of the acquisition, and to protect the interests of all shareholders,” the company decided to change the transaction scheme.

Shen Zhenyu further explained at the above briefing: “Recently, the AI application market, especially in AI marketing, has seen increased market heat; some similar companies have successfully listed in Hong Kong stocks. Meanwhile, the business of the target company has grown rapidly, and technical and business synergies with the listed company have already begun. Therefore, after comprehensive assessment, the company believes it is necessary to ‘improve transaction efficiency and reduce transaction costs’ to complete the merger quickly, which is beneficial to the company’s AI development strategy.”

On March 31, Lu Hong, founder of Mergers & Acquisitions Expert, told Times Weekly that the issuance of shares plus cash scheme generally requires a review period of 6 to 12 months, with slow processes, strict regulation, and high bargaining costs; pure cash mode usually takes only 1 to 3 months, which is faster and has lower thresholds. For this merger, regulatory authorities may adopt a cautious attitude toward AI valuation, and market volatility and pricing negotiations could dilute shareholder rights. Coupled with possible delays in negotiations and audits, the original plan may face significant resistance. “Therefore, adjusting the transaction scheme is conducive to quickly locking in the target and avoiding review uncertainties.”

Comparing the old and new schemes, Times Weekly found that the equity ratio of the target asset to be acquired was lowered from 75% to at least 51% controlling stake.

In response, Shen Zhenyu explained at the briefing: “The core team of the target company has increased confidence in the future and hopes to retain more shares. Meanwhile, the listed company can reduce cash expenditure pressure. After the acquisition, the company will decide whether to further increase holdings based on the future performance commitments of Shuheng Technology, the synergy in AI application scenarios, the integration of teams and corporate culture, and the overall market environment at that time.”

“Performance commitments are reasonable”

From the perspective of the business value of the target asset and strategic synergy, the core value of Shuheng Technology lies in its ability to fill the gaps in Hengwei Technology’s layout in the AI scenario application track.

Tianyancha shows that Hengwei Technology was established in March 2003, located in Xuhui District, Shanghai. It was listed on the Shanghai Stock Exchange Main Board in June 2017. The company mainly engages in the research, sales, and services of intelligent system solutions, serving as a provider of network visualization and intelligent system platforms, as well as infrastructure solutions and operation technology for computing networks.

Image source: Tianyancha

The proposed acquisition target, Shuheng Technology, was founded in December 2017, also located in Xuhui District, Shanghai. It is an enterprise-level scenario-based AI solution provider offering AI RaaS (Result as a Service) mode. Its main AI application products include Qimingxing, Mingsi, Mingshi, Mingtu, and Mingjing.

In the initial acquisition plan, Hengwei Technology stated, “Since 2023, the company has formally formulated and launched an AI development strategy, fully embracing the technological revolution led by large models, focusing on industry transformation trends driven by AI and emerging market opportunities.” The acquisition of Shuheng Technology aims to “fill the application segment in the company’s product ecosystem, promote the extension of the company’s AI strategy from infrastructure to application layer; simultaneously, both parties will deepen collaboration in technology R&D, product integration, and market expansion.”

At the January 2026 brokerage research meeting, Hengwei Technology discussed the synergy effects between the two companies, revealing plans to jointly develop a computing power scheduling platform and integrate Shuheng Technology’s model Agent into Hengwei Technology’s AI integrated machine, with both companies “already testing a joint product on the integrated machine for clients.”

At the same briefing, Shen Zhenyu further disclosed that these projects are “currently being implemented,” and Shuheng Technology’s full-stack AI capabilities and the company’s domestic AI base “are being transplanted and optimized, with progress quite smooth”; both sides are also jointly developing Agent integrated machines for new industry scenarios. The specific implementation and profit rhythm will depend on subsequent disclosures.

However, Wang Peng, associate researcher at the Beijing Academy of Social Sciences, pointed out in an interview with Times Weekly on March 31 that theoretically, the two companies can achieve a closed loop, but the core difficulty lies in the depth of hardware-software adaptation. Hardware companies’ cost thinking conflicts with software companies’ agile iteration, and whether Shuheng Technology’s AI applications can outperform competitors in energy efficiency on Hengwei’s hardware base depends on the underlying compiler and toolchain connectivity.

On March 31, Zhang Xiaorong, director of the Deep Technology Research Institute, also told Times Weekly that Shuheng Technology holds deep industry data assets and compliance qualifications accumulated over many years, which are difficult to replicate in the short term, but data assets pose compliance risks; additionally, RaaS can generate profits to offset Hengwei’s low-margin shortfall, but profit stability is questionable; furthermore, although Shuheng Technology has vertical scenario implementation capabilities, it is difficult in the short term to break the industry common problem of “data hard to monetize and models hard to implement.”

Perhaps due to confidence in the synergy effects, this merger set relatively aggressive performance commitments. The announcement shows that the founder of Shuheng Technology commits that from 2026 to 2028, the cumulative net profit will not be less than 282 million yuan, requiring an average annual net profit of over 90 million yuan.

However, according to the previous merger plan, Shuheng Technology’s net profits for 2023, 2024, and January-August 2025 were 17.2 million, 22.53 million, and 17.87 million yuan respectively, which are significantly below the performance commitment targets.

In response, Shen Zhenyu said at the briefing that based on Shuheng Technology’s current revenue, profit, 2025 performance, market customer base, and growth rate, the company has conducted preliminary calculations and believes that “supporting the performance commitments over the next three years is reasonable. The specific amounts for each year’s net profit target will be disclosed in subsequent related disclosures.”

It is worth noting that the above performance commitments are solely undertaken by the founder of Shuheng Technology, and the other transaction parties are not involved. Wang Xiang, secretary of Hengwei Technology’s board, explained that “the founder is the core decision-maker for Shuheng Technology’s operations and has a decisive influence on performance realization.” Additionally, the founder has committed to purchasing a certain amount of listed company shares and voluntarily locking them. Wang Xiang said this was “based on confidence in the joint development with the listed company, further ensuring the completion of the performance bet.”

Where does the money come from?

Hengwei Technology’s shift to a cash acquisition decision, while advantageous for transaction efficiency, makes funding the target company’s valuation of no more than 1 billion yuan the primary challenge for the deal’s realization.

Financial reports show that as of the end of Q3 2025, Hengwei Technology’s cash on hand was only 310 million yuan, with a cash ratio of 0.81, indicating that short-term funds seem insufficient.

Regarding funding needs, Lu Hong told Times Weekly that based on the valuation ceiling of 1 billion yuan and considering a 5% capital increase plus transaction costs, the total funding requirement is about 570 million yuan, including 510 million yuan for the acquisition price, 50 million yuan for capital increase, and 10 million yuan for related expenses.

As for sources of funds, Hengwei Technology explicitly stated in the announcement that it would use “self-owned and self-raised funds,” with the latter planned to come from bank loans. Qin Fang, the company’s CFO, said at the briefing, “The specific ratio of self-owned funds to bank loans is still in the planning and estimation stage and has not been finalized; the company has initiated preliminary discussions with multiple banks regarding acquisition loans. Since the final acquisition plan has not been announced, detailed negotiations have not yet begun.”

Zhang Xiaorong told Times Weekly that bank approval for Hengwei Technology’s acquisition loan might be cautious overall. “Although the company’s debt ratio is not high on paper, its annual profit scale is small, and the profitability may not support the acquisition price. Large loans could increase debt repayment pressure, and banks are likely to strictly control the quota, increase interest rates, require additional guarantees, and impose performance constraints.”

This path also introduces new financial risks. Qin Fang admitted at the briefing that if the acquisition proceeds, “it will temporarily raise the company’s asset-liability ratio and increase financial expenses.” However, she also stated, “The company’s asset-liability ratio has been kept at a relatively low level over the years. We expect the overall impact to be manageable. The company is also calculating related impacts and will submit the formal transaction plan for board approval. The funds for this cash acquisition come from the company’s coordinated special funds and will not crowd out funds needed for daily operations, R&D, or core business development.”