Huakong Saige's Nearly 100 Million Yuan Dispute Concluded: 50 Million Yuan in Funds Withdrawn, 48.8909 Million Yuan in Land Payments Received Vice Chairman Points Out Risk Exposure in Plan

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Daily Economic News Reporter | Peng Fei Daily Economic News Editor | Xu Shaohang

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

On the evening of March 18, Huakong Saige disclosed that the company had officially received two “Arbitration Awards” issued by the Qitaihe Arbitration Commission. According to the awards, Huakong Saige 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 4.88909 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 there are still risks in the current settlement plan.

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

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

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

However, the project encountered setbacks during its development, ultimately 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 People’s Government of Qitaihe City also filed for arbitration with the same commission over government support funds.

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

Nine directors participated in the vote, and all nine cast their votes. The proposal was approved with 8 votes in favor, 1 against, and none abstaining. 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 only dissenting vote. He stated: “Given that the current settlement plan still involves risk exposure, we cannot make a reasonable judgment within the notice period of the board.”

The Daily Economic News reporter 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 financial arrangements.

On March 18, 2026, Huakong Saige officially received the “Arbitration Awards” (Qitaihe Arbitration No. [2026] No. 24 and No. 25) from the Qitaihe Arbitration Commission, marking the end of a more-than-half-year arbitration dispute in legal terms.

According to these final awards, all parties agree to implement in accordance with the spirit of the Qitaihe Municipal Government’s special meeting minutes, and from the date the awards take effect, terminate the previously signed “Investment Contract for the Lithium-ion Battery Anode Material Project” in Qitaihe, with unfulfilled obligations to be terminated. Additionally, the “State-owned Construction Land Use Rights Transfer Contract” between Heilongjiang Aoyuan and the Qitaihe Natural Resources and Planning Bureau will also be terminated from the effective date of the awards.

The parties will not pursue breach of contract liabilities, but regarding the core issues of fund repayment and compensation, the arbitration tribunal proposed a “synchronous installment” mechanism. However, this mechanism shows a clear “dislocation” in timing.

On one hand, Huakong Saige 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 4.88909 million yuan, divided into five installments. The first installment of 10 million yuan in compensation is due by May 17, 2026, while the final payment of the full 48.8909 million yuan is due by July 17, 2026.

This means that Huakong Saige will have a “gap” of nearly a month between paying the first 10 million yuan and receiving the land payment of the same amount. Similarly, the overall payment deadline (June 17) is a month earlier than the overall receipt deadline (July 17).

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

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

The Daily Economic News reporter noted that despite the cash flow mismatch, from a financial statement perspective, this arbitration award actually brought some accounting benefits to the company. Huakong Saige stated: “Since related land has been amortized, the recovered price exceeds the book value, and an asset disposal gain of approximately 4 million yuan is expected. Final confirmation depends on implementation and audit results.”

Cover image source: Daily Economic News Media Library