Huacon Saige's Nearly 100 Million Yuan Dispute Concludes: Refund of 50 Million Yuan in Allocated Funds, Collection of 48.8909 Million Yuan in Land Payments
Vice Chairman Points Out Risk Exposure in Plan

Ask AI · Vice Chairman Zhou Yang Why Did He Vote Against?

Every Daily Economic News Reporter: Peng Fei Edited by: Xu Shaohang

After more than half a year, the investment dispute involving Huakong Seg (SZ000068, stock price 3.50 yuan, market value 3.523 billion yuan) with a nearly 100 million yuan amount finally reached a conclusion. However, instead of settling peacefully, it revealed cracks within the board and market concerns over subsequent performance risks.

On the evening of March 18, Huakong Seg disclosed that the company had officially received two arbitration awards from the Qitaihe Arbitration Commission. According to the rulings, Huakong Seg and its subsidiaries are required to repay a total of 50 million yuan in support funds to the Xinxing District People’s Government of Qitaihe City in five installments; the Qitaihe Natural Resources and Planning Bureau will recover the involved land at a paid price of 48.89 million yuan and pay compensation in five installments.

However, during the board review of this mediation plan, Vice Chairman Zhou Yang cast the only dissenting vote, directly pointing out that the current settlement plan still carries risk exposure.

The Daily Economic News noted that, according to the details of the arbitration, the first payment date for Huakong Seg’s repayment is a full month earlier than the land recovery payment. This mismatch in timing will test the performance ability of all parties involved. If payments are not made on time, it could trigger new default risks.

Internal Disagreement, The Only Dissenting Vote Signals Potential Risk Exposure

This complex arbitration case originated from an early investment layout by Huakong Seg.

Going back to December 2019, Huakong Seg and its third-tier subsidiary, Heilongjiang Aoyuan New Materials Co., Ltd. (“Heilongjiang Aoyuan”), signed an investment contract for the Qitaihe Lithium-ion Battery Anode Material Project with the Xinxing District People’s Government of Qitaihe City.

However, the project encountered setbacks during its development, eventually leading to legal disputes. In June 2025, Heilongjiang Aoyuan applied for arbitration with the Qitaihe Arbitration Commission over land disputes; in the same month, the Xinxing District Government also filed for arbitration over government support funds.

As the case progressed, both parties reached a preliminary mediation intention before the arbitration tribunal. On March 17, 2026, Huakong Seg held the 21st special meeting of its 8th Board of Directors via teleconference to review the “Qitaihe Idle Land-Related Matters” proposal.

All nine directors participated in the vote. The proposal was approved with 8 votes in favor, 1 against, and no abstentions. The board agreed to adopt the mediation plan as the company’s position in arbitration and authorized management to accept arbitration mediation according to the plan.

However, behind this seemingly smooth approval, management harbored deep concerns about potential crises. In the vote, Vice Chairman Zhou Yang cast the sole dissenting vote. He stated: “Given that the current settlement plan still has risk exposure, we cannot make a reasonable judgment within the notice period of the board.”

The Daily Economic News observed that this clear opposition not only exposed the hidden business risks in the mediation plan but also reflected differences in risk control standards among the company’s decision-makers regarding nearly 100 million yuan in fund arrangements.

Pay 50 Million First, Then Receive 48.89 Million, Arbitration Ruling Reveals Funding Mismatch

On March 18, 2026, Huakong Seg officially received the arbitration awards (Qitaihe Arbitration No. [2026] No. 24 and No. 25) from the Qitaihe Arbitration Commission, marking the legal conclusion of the lengthy arbitration dispute.

According to these final rulings, all parties agreed to implement the spirit of the special meeting minutes of the Qitaihe Municipal Government and to terminate the previously signed “Qitaihe Lithium-ion Battery Anode Material Project Investment Contract” from the date the awards took effect, ceasing any unfulfilled obligations. The “State-owned Construction Land Use Rights Transfer Contract” between Heilongjiang Aoyuan and the Qitaihe Natural Resources and Planning Bureau was also terminated upon the awards’ effectiveness.

Both parties agreed not to pursue breach of contract liabilities. However, regarding core issues of fund repayment and compensation, the arbitration tribunal proposed a “synchronous installment” mechanism. Yet, this mechanism showed a clear “timing mismatch.”

On one hand, Huakong Seg and Heilongjiang Aoyuan are required to repay a total of 50 million yuan in support funds to the Xinxing District Government of Qitaihe City in five installments (each 10 million yuan). The first installment of 10 million yuan must be paid within 30 days of the award’s effective date (by April 17, 2026), and all payments should be completed within three months (by June 17, 2026).

On the other hand, the Qitaihe Natural Resources and Planning Bureau will recover the involved land at a paid price of 48.89 million yuan, also in five installments. The first installment of 10 million yuan is due by May 17, 2026, while the final payment of 48.89 million yuan must be completed by July 17, 2026.

This means that Huakong Seg will pay the first 10 million yuan before receiving the corresponding land payment of the same amount, leaving a gap of about a month. Similarly, the overall payment deadline (June 17) is a month earlier than the final land compensation deadline (July 17).

This timing mismatch effectively shifts the initial cash outflow pressure and credit risk onto Huakong Seg. As the company stated in its announcement: “The progress of fund payments after arbitration depends on the performance ability of all parties involved. Delays in payment could lead to breach risks.”

This may explain why Vice Chairman Zhou Yang voted against the plan, directly pointing to “risk exposure.”

The Daily Economic News noted that, despite the cash flow mismatch, the arbitration ruling could bring certain accounting benefits. Huakong Seg stated: “Since the involved land has been amortized, the recovered amount exceeds the book value, and an asset disposal gain of approximately 4 million yuan is expected. Final confirmation depends on implementation and audit results.”

Daily Economic News