Failed to Achieve Performance Commitments After Acquisition at Nearly 7 Times Premium, *ST Mubang Claims 980 Million in Compensation from Transaction Party

After the disclosure of its 2024 financial report, Mubang Hi-Tech was officially "stamped with a warning" (a designation for companies facing financial distress in China's stock market), and its stock ticker was changed to *ST Mubang (603398.SH). Inner Mongolia Haoan Energy Technology Co., Ltd. (hereinafter referred to as "Haoan Energy"), the target of the highly anticipated restructuring, failed to help the company find a second growth curve and instead became a burden on its performance. An announcement on the evening of May 12 revealed that due to Haoan Energy's failure to meet its 2024 performance commitments, the counterparty should compensate the publicly listed firm 980 million yuan.

In 2022, during the period of significant expansion in PV capacity, *ST Mubang purchased 100% of Haoan Energy's shares held by Zhang Zhong'an and Yu Jumei (the "performance commitment obligors") by paying in cash, with a transaction price of 980 million yuan. According to the report at that time, the net asset premium rate upon the acquisition of Haoan Energy reached 694%, more than three times the average net asset premium rate of comparable transaction cases.

The two parties further agreed on a four-year performance commitment period from 2022 to 2025, with targets of 140 million yuan, 160 million yuan, 180 million yuan, and 200 million yuan, respectively. In 2022 and 2023, although Haoan Energy failed to achieve these targets, its performance commitment completion rate exceeded 90%, so the compensation was waived.

However, in 2024, amidst a sharp downturn in the PV market, Haoan Energy's performance began to incur significant losses. According to calculations, the target company achieved a net profit of -325 million yuan in 2024, and a net profit after deducting non-recurring gains and losses of -3.26 yuan. Following the principle of taking the lower of the two figures before and after deducting non-recurring gains and losses, the target company achieved a performance of -3.26 yuan in 2024, failing to meet its performance commitment for the year.

Based on the formula stipulated in the agreement and the upper limit of the cumulative compensable amount, the compensable amount for the current period is 980 million yuan, which is exactly the acquisition price at that time. The equity transfer price that the company has yet to pay is 239 million yuan. After deducting this portion, the target company's counterparty still needs to pay 741 million yuan to the publicly listed firm.

It is worth noting that there are uncertain risks regarding Haoan Energy's ability to pay the compensation. In its verification opinion, Sinolink Securities mentioned that Mubang Hi-Tech had used the equity acquisition funds that had not yet been paid to offset part of the performance compensation in accordance with the performance commitment compensation agreement, but no agreement had been reached with the performance commitment obligors on the specific settlement and implementation arrangements for the remaining performance compensation.

The report mentioned that due to the significant amount of the remaining performance compensation and its notable impact on the company's profits, there remains objective uncertainty regarding the future arrangements of the performance commitment obligors for paying the remaining performance compensation. Investors are advised to pay attention to the relevant risks.

Haoan Energy's products primarily consist of PV wafers. According to data from the China Photovoltaic Industry Association, the national production of wafers reached approximately 753GW in 2024, up 12.7% YoY. The surplus in capacity, coupled with significant inventory pressure, led to a prolonged slump in wafer prices.

In 2024, *ST Mubang achieved operating revenue of 277 million yuan, down 83.24% YoY. Net profit attributable to shareholders of publicly listed firms was -1.162 billion yuan, turning from a profit to a loss YoY. Among these, operating revenue from wafers, silicon rods, and other products was 219 million yuan. The gross profit margin of the PV business was -65.98%, a decrease of 74.22 percentage points compared to the previous year.

On April 30 this year, in the opinions and key measures regarding the board of directors' efforts to revoke the delisting risk warning, the company mentioned that in 2025, it will continue to consolidate its core business, complete and commence production of the Wuzhou project as planned, enhance the company's sustainable operational capabilities and main business revenue, and strive to maximize shareholders' interests. This project mainly includes a capacity of 10GW for N-type high-efficiency cells.