How does AI and Wu Cheng’s financial knowledge influence this capital operation?

Produced by | Entrepreneur’s Frontline

Author | Duan Nannan

Editor | Feng Yu

Designer | Qian Qian

Reviewer | Song Wen

On March 7, Guocheng Mining announced that the company and its consolidated subsidiaries would provide loan guarantees not exceeding 5.56 billion yuan. This also means that Guocheng Mining will further increase its external expansion efforts in the future.

As a mining enterprise, Guocheng Mining itself possesses various mineral products, including iron concentrate, zinc concentrate, and copper concentrate. Previously, after acquiring 60% of Guocheng Industrial, Guocheng Mining expanded its business scope to include molybdenum concentrate.

With the acquisition and consolidation of Guocheng Industrial, the company is expected to achieve a net profit attributable to the parent of 1.076 billion yuan by 2025. However, excluding the gains from the restructuring, Guocheng Mining is expected to have a non-recurring loss of 257 million yuan.

In the context of continuously rising prices for non-ferrous metals, why does the company that possessed iron concentrate, zinc concentrate, and copper concentrate continue to incur losses before the restructuring? Can Guocheng Mining’s profitability improve after the restructuring?

1. Interest expenses and falling titanium dioxide prices devour profits, leading to two consecutive years of non-recurring losses

Public information shows that Guocheng Mining was established in 1978, and its predecessor was Fuling Building Ceramics Co., Ltd., which mainly dealt in building ceramics.

In 1997, just a few years after its establishment in the A-share market, Guocheng Mining completed its listing on the Shenzhen Stock Exchange, becoming the first listed company in the Three Gorges Reservoir area.

From 1997 to 2013, Guocheng Mining began to diversify its operations, involving technology, trade, and other fields. However, due to unstable operations, the company often incurred losses and its stock was frequently put under special treatment (ST), during which the company underwent several name changes.

In 2013, Guocheng Mining began a complete transformation toward the mining sector by undergoing significant asset restructuring, divesting inefficient assets, and injecting lead and zinc mining assets such as Inner Mongolia Dongshengmiao Mining.

In 2018, the original controlling shareholder, Jianxin Group, was declared bankrupt by the court due to debt issues. The current controlling shareholder, Guocheng Group, became the controlling shareholder of Guocheng Mining by participating in the restructuring of Jianxin Group.

With the support of Guocheng Group, Guocheng Mining has continued to invest and acquire, and the company’s operational scale has been expanding year by year, involving mineral products including iron, zinc, copper, and lead. Subsequently, Guocheng Mining also laid out production for titanium dioxide and spodumene.

With ongoing external expansion, Guocheng Mining’s revenue scale is also increasing. In 2024, the company’s revenue before adjustments reached 1.918 billion yuan, a historical high.

Although revenue has continued to rise, the company incurred a non-recurring net loss of 90.18 million yuan, which further expanded to 257 million yuan in 2025.

The continuous non-recurring losses of Guocheng Mining are closely related to its later expansion into the titanium dioxide business and high interest expenses.

Due to years of ongoing external investments, Guocheng Mining’s interest-bearing liabilities have continued to expand, with a balance of nearly 1.399 billion yuan in various interest-bearing liabilities by the end of 2023, a significant increase from 904 million yuan at the end of 2022.

Under this impact, Guocheng Mining’s interest expenses have risen sharply, with interest expenses of 129 million yuan in 2024, an increase of over 88 million yuan from 40.85 million yuan in 2023. By 2025, interest expenses are expected to rise to 160 million yuan.

Additionally, the heavy investment in expanding the titanium dioxide business is facing industry downturn, resulting in ongoing losses. In 2024, the average annual price of titanium dioxide was approximately 15,716 yuan/ton, a year-on-year decrease of 9.61%. Under this impact, the impairment of inventories primarily related to titanium dioxide reached 62.53 million yuan in 2024, compared to 872,900 yuan in the same period of 2023.

The average price of titanium dioxide in 2025 is expected to be 13,677 yuan/ton, again down about 12% year-on-year. Therefore, even though the spot prices of copper, aluminum, lead, and zinc continue to rise, Guocheng Mining still incurred losses for two consecutive years due to the falling titanium dioxide prices and substantial interest expenses.

2. Acquiring assets under the controlling person through debt, with the target company’s valuation growing over 80% in two years

In the context of sustained losses, Guocheng Mining still completed a “snake swallowing elephant” restructuring in 2025.

On November 2025, Guocheng Mining announced its plan to acquire 60% of Inner Mongolia Guocheng Industrial Co., Ltd. held by its controlling shareholder, Guocheng Holdings Group Co., Ltd., for 3.168 billion yuan.

On December 30, 2025, Guocheng Mining announced that the payment for the transaction had been completed and all asset transfer procedures had been finalized, marking the official completion of the acquisition. With this acquisition, Guocheng Mining successfully consolidated Guocheng Industrial, resulting in a turnaround to profitability in 2025.

On March 24, Guocheng Mining disclosed its annual report, showing that Guocheng Industrial achieved revenues of 4.806 billion yuan and a net profit attributable to the parent of 1.076 billion yuan in 2025. In contrast, the company’s revenue before adjustments in 2024 was only 1.918 billion yuan, with a net profit attributable to the parent showing a loss of 113 million yuan.

It is reported that Guocheng Industrial’s core asset is a large molybdenum mine, with a reserve of 124 million tons of ore and 144,800 tons of molybdenum metal. It is advancing the mining scale from 5 million tons/year to 8 million tons/year, with an average ore grade of 0.117%, ranking among the top in the industry.

Although the overall quality is relatively high, unlike copper and other bulk metals used for power grids, molybdenum is a major raw material for various steels, with over 80% of molybdenum used in the production of alloy steel, stainless steel, tool steel, and high-speed steel.

Therefore, although Guocheng Industrial has strong profitability, this acquisition has still sparked considerable controversy in the market. As early as April 2022, Guocheng Mining planned to acquire 100% of Guocheng Industrial. However, due to Guocheng Industrial providing guarantees for a 2.9 billion yuan loan from Guocheng Group, this acquisition ultimately failed.

The controversy lies in the fairness of the acquisition valuation. In June 2023, Guocheng Group purchased 8% of Guocheng Industrial from Wukuang Trust for 231 million yuan, which indicates that the valuation of Guocheng Industrial at that time was only 2.888 billion yuan.

It is noteworthy that in 2023, Guocheng Industrial’s revenue and net profit attributable to the parent were 2.612 billion yuan and 1.449 billion yuan, respectively. By 2025, these figures are expected to decline to 2.442 billion yuan and 1.146 billion yuan.

In the past two years, amid the Federal Reserve’s interest rate cuts, prices of metal commodities surged, but molybdenum was not included. Molybdenum’s primary use is in the manufacturing of various steels, and due to the continuous decline in real estate sales, the demand for steel has also been shrinking.

As a result, the sales price of Guocheng Industrial’s molybdenum products continued to decline, with a selling price of 316,800 yuan/metal ton in 2023, dropping to 311,800 yuan/metal ton in the first half of 2025.

In the context of declining performance and falling product sales prices, the valuation of Guocheng Industrial has not decreased but rather increased. In this acquisition, Guocheng Mining spent 3.168 billion yuan to obtain a 60% stake, calculating the overall valuation of Guocheng Industrial at 5.28 billion yuan, an increase of over 80% from the 2.888 billion yuan valuation in June 2023.

It is important to note that this acquisition was primarily funded by cash, leading Guocheng Mining to significantly increase its external borrowing. As of December 31, 2025, Guocheng Mining’s long-term loans, short-term loans, and non-current liabilities due within one year totaled over 3.9 billion yuan, while on September 30, 2025, these amounts were only 1.5 billion yuan.

Under this impact, the company’s debt-to-assets ratio rose from 58.82% on September 30, 2025, to 69.55%. As the original controlling shareholder of Guocheng Industrial, Guocheng Group successfully obtained 3.168 billion yuan in cash.

3. Tsinghua Wudaokou Financial PhD drives the restructuring, with personal investment gains of approximately 24 billion yuan

From the disclosed information about Guocheng Mining’s asset restructuring, its controlling shareholder Guocheng Group also faces significant debt pressure. The acquisition of these funds has somewhat alleviated Guocheng Group’s debt burden.

By the end of 2024, Guocheng Group’s total liabilities reached 2.189 billion yuan. Due to incomplete disclosure of financial data, the specifics regarding the short-term liabilities that Guocheng Group needs to repay in the short term are unknown to the public. Currently, the received equity transfer payment of 3.168 billion yuan has already fully covered the company’s liabilities by the end of 2024.

However, from the perspective of its 100% pledged equity and the need for the listed company to guarantee loans, the debt situation does not appear optimistic. Wind data shows that Guocheng Group and its 100% controlled Gansu Jianxin Industrial Group Co., Ltd. (hereinafter referred to as “Jianxin Industrial”) collectively hold 784 million shares of Guocheng Mining, accounting for 66.18% of the company’s shares.

Currently, the total number of pledged shares held by Jianxin Industrial and Guocheng Group is as high as 699 million shares, accounting for 89.13% of their holding ratio, particularly the 318 million shares directly held by Guocheng Group, which are almost 100% pledged.

From May 19, 2020, to December 30, 2020, Guocheng Group also illegally occupied 30.4132 million yuan from the listed company Guocheng Mining. In addition, Guocheng Group borrowed 200 million yuan from Anhui Rongheng Commercial Management Co., Ltd., which was also guaranteed by Guocheng Mining.

Due to the failure to fulfill information disclosure obligations regarding this guarantee, Guocheng Mining, Guocheng Group’s actual controller Wu Cheng, then Chairman Wu Jianyuan, then General Manager Yin Chunguang, then Chief Financial Officer Wu Binhong, General Manager Li Wubo, and Chief Financial Officer Guo Wei were criticized by regulators.

It is worth noting that in January 2018, Guocheng Group invested 5 billion yuan to participate in the bankruptcy restructuring of Jianxin Industrial. Moreover, Guocheng Group was established in September 2017, seemingly specifically for the bankruptcy restructuring of Jianxin Industrial.

From the perspective of the equity structure, Wu Cheng is the actual controller of Guocheng Group, directly and indirectly controlling 77% of the equity of Guocheng Group, making Wu Cheng the actual controller of Guocheng Mining as well.

(Chart / Guocheng Industrial equity structure relationship diagram)

Previously, according to reports by Caixin, it was noted that in an 11 billion yuan loan from Gansu Bank, some relevant guarantors believed that this loan was actually Guocheng Group’s way to participate in the bankruptcy restructuring of Jianxin Industrial, and they obtained loans from Lanzhou Bank through third-party shell companies. Although this has not been confirmed, it has placed Wu Cheng in the spotlight.

From Wu Cheng’s professional experience and his handling of Jianxin Industrial’s restructuring, as well as the high-priced sale of Guocheng Industrial, which he actually controls, to Guocheng Mining, it is clear that Wu Cheng is undoubtedly an expert in capital operations.

Public information shows that Wu Cheng is a PhD in finance from Tsinghua University Wudaokou Financial School. According to Tsinghua Wudaokou Financial School, the Global Financial GSFD program (referred to as the Global Scholar Program) is one of the most prestigious and highest quality educational programs offered by Tsinghua Wudaokou, integrating top educational resources from both within and outside Tsinghua University.

Just from his academic career, Wu Cheng possesses a high level of knowledge and a broad network in the field of finance.

As a result, Wu Cheng’s involvement in the restructuring of Jianxin Industrial and the sale of Guocheng Industrial to a listed company has indeed allowed him to reap substantial profits.

When Guocheng Group was established, Wu Cheng personally invested 3.5 billion yuan to hold 75% of the company. Subsequently, through equity transfers and other methods, his direct and indirect shareholding ratio rose to 77%.

The most valuable part of Guocheng Group is undoubtedly its holding of Guocheng Mining’s shares. As of March 27, Guocheng Mining’s stock price was 42.44 yuan/share, having risen over 300% from its low point in April 2025. Currently, Guocheng Group directly and indirectly holds 784 million shares of Guocheng Mining, and calculating based on Wu Cheng’s control of 77% of Guocheng Group’s shares, his personal indirect holding in Guocheng Mining has gained approximately 22 billion yuan.

If including the cash obtained from the previous sale of Guocheng Industrial’s shares and the remaining equity in Guocheng Industrial, Wu Cheng’s profit from participating in Jianxin Industrial’s restructuring amounts to approximately 24 billion yuan.

From an external perspective, Wu Cheng, the actual controller of Guocheng Mining, is undoubtedly an expert in capital operations. Under his control, Guocheng Mining has achieved a net profit attributable to the parent exceeding 1 billion yuan and a market value exceeding 50 billion yuan. He himself has also gained substantial profits from his stake in Guocheng Mining. However, whether Guocheng Mining can reach new heights will depend on whether the management can seize this round of commodity bull market to further increase metal extraction to achieve performance growth.

Note: The cover image and uncredited images in this article are from Shetu Network, based on the VRF protocol.