After Resumption of Trading, Initial Rise Followed by Decline: What Are Dongyang Guanghua's Odds of Acquiring Chindata?

Log in to Sina Finance App and search for [Information Disclosure] to see more evaluation levels

Reprinted from China Business Network

Reporters Gu Mengxuan and Li Zhenghao, Guangzhou and Beijing

Dongyangguang (600673.SH) has recently made new progress in acquiring leading IDC company Qinhuai Data. Recently, Dongyangguang released the “Plan for Issuance of Shares to Purchase Assets and Raise Supporting Funds and Related Party Transactions” (hereinafter referred to as “Transaction Plan”), providing further details about the acquisition. After the disclosure of the plan, Dongyangguang’s stock resumed trading on March 9.

The China Business Journal reporter noted that after the plan was released, on March 9, Dongyangguang’s stock price rose by 5.82%. On the following day, March 10, the stock price declined by 2.73%.

In previous reports, the reporter interviewed Dongyangguang regarding the motivation for the acquisition, reasons for moving from a shareholding to a controlling stake, and the synergistic effects. Recently, a relevant person in charge of Dongyangguang responded to these questions one by one.

Performance after trading resumption

Regarding Dongyangguang’s recent stock performance, a relevant person from Dongyangguang told the reporter that short-term fluctuations in the company’s secondary market stock price are usually influenced by multiple factors, including market sentiment, sector rotation, and overall market trends. Currently, the work related to the acquisition plan is progressing steadily and in an orderly manner.

Researcher Wan Li from Ji’an Research Institute pointed out that the stock price increase on the first day after the release of the acquisition plan often reflects the market’s valuation of strategic growth potential. By acquiring control of Dongshu No.1, Dongyangguang will gain control of Qinhuai Data, which suggests the company may further extend from traditional manufacturing into the field of computing power infrastructure operations. In the context of growing AI computing power demand, such industry upgrade narratives tend to attract capital attention, providing short-term support for the stock price.

Regarding the stock price correction on the second day, Wan Li believes it more likely reflects the market’s rational digestion of transaction details. After major M&A disclosures, investors often need to reassess multiple factors, such as the dilutive impact of issuing shares, asset quality, future integration challenges, and transaction structure arrangements. “Meanwhile, some short-term funds may take profits after positive news, which can also exert certain pressure on the stock price.”

Wan Li also pointed out that the decline in Dongyangguang’s stock price on the second day does not necessarily mean the market is rejecting the acquisition itself. It may more likely reflect two aspects: one is short-term profit-taking by funds; the other is investors re-pricing the details of the acquisition. Historically, stock prices after large M&A announcements often do not move in a single direction but go through an “information digestion—revaluation” process.

Zhang Siyuan, a special researcher at Sushang Bank, told the reporter that this rise and fall in stock price reflects the market’s complex emotions and rational return process regarding this major asset acquisition.

From Dongyangguang’s performance on the second day, the market may be concerned about the following factors: first, changes in Dongyangguang’s asset-liability structure after the transaction; second, the potential dilution effect caused by issuing shares; third, the high customer concentration risk of Qinhuai Data; fourth, as a heavy asset industry, data centers will face significant capital expenditure pressures in the future. “This decline is a normal adjustment after positive news realization and a natural market reaction to the transaction’s complexity and uncertainty,” Zhang Siyuan said.

Reasonable issuance price

The Transaction Plan shows that after this transaction, the listed company is expected to directly and indirectly hold 100% of Dongshu No.1’s equity, thereby indirectly holding 100% of the target asset Qinhuai Data.

On January 16, 2026, Dongyangguang just completed its equity participation in Qinhuai Data. Now, from a shareholding to control, what considerations did Dongyangguang have?

A relevant person from Dongyangguang told the reporter that both the previous equity participation and this transaction are based on independent commercial judgments according to the market environment at the time, are mutually independent, and conform to business and transaction logic.

Regarding the impact of this acquisition on Dongyangguang, the relevant person said that this transaction helps the company quickly enter the high-growth data center sector, optimizing asset and resource allocation. Meanwhile, through industry synergy with Qinhuai Data, the company aims to achieve technological breakthroughs and market expansion in core areas such as liquid cooling technology, electronic components, and embodied intelligence, further strengthening its core competitiveness in the digital economy infrastructure industry chain and building a solid industry moat for long-term development.

“Future efforts will promote the listed company and the target asset to become a digital infrastructure and computing power service provider with a ‘green energy—advanced manufacturing—computing power operation—AI application’ four-in-one competitive barrier, accelerating the company’s transformation into a high-tech enterprise in the AI field,” the person said.

The Transaction Plan shows that, according to the “Reorganization Management Measures,” the issuance price of the company’s shares must not be lower than 80% of the market reference price; the market reference price is one of the average trading prices of the company’s stock over the 20, 60, or 120 trading days prior to the pricing date. The current issuance price is 19.68 yuan per share, not lower than 80% of the average trading price over the 120 trading days before the pricing date, complying with relevant regulations.

Regarding the issuance price, Wan Li pointed out that from a regulatory perspective, the method of determining this price complies with current rules.

However, from the perspective of capital market practice, Wan Li said that such pricing arrangements may still trigger discussions among investors about transaction fairness. When the long-term average price is rising, the issuance price tends to be relatively lower. Since issuing shares to purchase assets causes some dilution, investors usually pay close attention to whether the transaction price reasonably matches the value of the target assets.

“Therefore, the market is more concerned with a few key issues,” Wan Li further explained: first, whether the final valuation of the target assets can fully reflect their true value; second, whether the transaction counterparties have related-party relationships and whether the transaction has been fully disclosed and reviewed by independent opinions; third, whether the issuance price maintains a reasonable match with the final asset valuation.

“Overall, the issuance price is defensible under legal rules, but its economic rationality still needs to be further observed based on subsequent disclosures of valuation results and transaction details,” Wan Li said.

Expert warns investors to be cautious

The reporter noted that the Transaction Plan includes risk warnings from Dongyangguang, covering eight transaction-related risks, four risks related to the target assets, and two other risks. Transaction risks include approval risk, integration risk, and goodwill impairment risk; risks related to target assets mainly include intensified market competition, policy changes, and high customer concentration.

Regarding the risks faced by this acquisition, Wan Li pointed out that the most concerning are the risks related to corporate governance and transaction fairness under related-party transactions.

Wan Li said that this is not a typical market-oriented acquisition. Dongshu No.1 is strongly related to Dongyangguang’s controlling shareholder system, and the listed company acquires its equity through share issuance, ultimately controlling Qinhuai Data’s China operations.

“In such a structure, the market’s main concern is not whether the direction is correct but whether the price is fair, procedures are transparent, and interests are balanced,” Wan Li explained. In such transactions, regulators usually focus on core issues: whether the transaction price is reasonable, whether asset valuation is sufficient, whether related-party disclosures are complete, and whether independent directors, financial advisors, and auditors have played their roles in checks and balances.

Second, Wan Li pointed out that under the framework of issuing shares to purchase assets, governance risks can further translate into issues of protecting minority shareholders. If the transaction price, valuation results, or subsequent operational performance deviate from expectations, public shareholders will face dilution and revaluation pressures. Therefore, these risks are not just procedural but ultimately impact the company’s long-term value and minority shareholders’ interests.

“This acquisition has strategic appeal, but whether it can create long-term value for the company depends primarily on whether the transaction is fair, governance is proper, and integration is effective, not just on hype,” Wan Li summarized. Among these, governance and fairness risks under related-party transactions remain the most critical.

Zhang Siyuan believes that among the various risks mentioned in the plan, the risk of goodwill impairment deserves particular attention.

The plan states that because the operating conditions of the target assets are affected by policy environment, market demand, and post-acquisition integration, if the future performance of the assets does not meet expectations, there is a risk of goodwill impairment, which could adversely affect the company’s future operations.

This risk is significant for several reasons. Zhang Siyuan pointed out that first, the transaction price is as high as 28 billion yuan, which will generate substantial goodwill. If Qinhuai Data’s future performance falls short, goodwill impairment could significantly impact Dongyangguang’s net profit.

Second, the data center industry is cyclical, influenced by macroeconomic factors, technological changes, and policy adjustments, with high performance volatility. Although Qinhuai Data is currently performing well, its sustained high growth in the future remains uncertain.

From a legal perspective, senior partner Sun Yuhao of Shanghai Hanhua Yongtai Law Firm told the reporter that, based on the “Company Law” regarding capital maintenance principles and the “Securities Law” requirements for disclosure of major asset reorganizations, Dongyangguang’s high debt ratio (65.52% as of Q3 2025), high share pledge ratio of controlling shareholders, and the potential for high goodwill from this transaction could pose risks. If future cash flows cannot cover the repayment of M&A loans or trigger goodwill impairment, it could directly affect the company’s ongoing operations and even lead to control rights changes due to stock price fluctuations and pledge margin calls, which relates directly to whether the transaction aligns with the core requirements of major asset restructuring to enhance sustainable operations.

Regarding the risks faced by this acquisition, Dongyangguang’s relevant person said that the company will conduct thorough due diligence, ensure proper information disclosure and compliance, and actively promote the reporting and approval process according to regulations. The company will continue to disclose the progress of the restructuring in a timely and accurate manner as required by relevant laws and regulations.

(Edited by Wu Qing; Reviewed by Li Zhenghao; Proofread by Yan Yuxia)