15 days, 8 limit-ups! Zhongnan Culture's "Snake Swallowing Elephant" merger and acquisition of thermal power assets sparks a frenzy. Which funds have been quietly accumulating beforehand?

Image source: TuChong Creative

On March 27, Zhongnan Culture (002445.SZ) rapidly locked the daily limit up, securing 8 consecutive limit-ups over 15 trading days, closing at 4.44 yuan per share. Since March, Zhongnan Culture’s share price has risen by nearly 60%.

Behind the sharp surge in the stock price is a high-profile “vulture-like” asset reorganization, as well as a new industry narrative reshaping the value of electricity driven by AI computing power demand.

“Beyond computing power lies electricity.” At present, with the explosive growth in AI and computing power demand, it may be poised to create an electricity super-cycle. And Zhongnan Culture, which is about to enter the electricity sector, has also become a target of funds chasing it.

Before the release of the reorganization plan, Zhao Yan, known as the “Hyaluronic Acid Queen,” had already laid groundwork in advance. She added 11.8926 million shares, moving into the top ten shareholders of Zhongnan Culture.

The龙虎榜 (top traders list) shows that since March, Zhongnan Culture has appeared on the龙虎榜 four times, with appearances from both institutions and retail funds. According to Tonghuashun, the retail-fund seat Guotai Huarong (Beijing Zhixing Road) sold net purchases of 60.05 million yuan, while the “Foshan” faction’s seat at Everbright Securities (Foshan Lujing Road) net bought 51.83 million yuan; meanwhile, an institution seat at Huayuan Securities (Jiangsu branch) that appeared three times累计 net sold 36.12 million yuan.

“Vulture-like” M&A reorganization plan released

On March 8, Zhongnan Culture’s “vulture-like” M&A reorganization plan was officially released. The company plans to acquire 57.30% of the equity interest in Jiangyin Sulong Thermal Power Co., Ltd. (abbreviated as “Sulong Thermal Power”), held by Jiangyin Electric Power Investment Co., Ltd. (abbreviated as “Electric Power Investment”). After the transaction is completed, this “benchmark power plant” primarily engaged in thermal power generation and heat supply will become Zhongnan Culture’s controlling subsidiary.

This transaction has several points of interest. First, the issue price is set at 2.16 yuan per share, which is more than 20% at a discount compared with the closing price on the day it first disclosed the asset reorganization plan (February 12).

Second, this is a typical “vulture-like” acquisition. By the end of September 2025, Zhongnan Culture’s total assets and net assets were only 2.963 billion yuan and 2.364 billion yuan, respectively. By the end of 2025, however, Sulong Thermal Power’s total assets and net assets were 8.343 billion yuan and 4.057 billion yuan, respectively—far larger in scale than Zhongnan Culture.

In terms of performance, in the first three quarters of this year, Zhongnan Culture achieved operating revenue and net profit attributable to the parent of 910 million yuan and 82.2257 million yuan, respectively. Last year, the same indicators were 921 million yuan and 57.4217 million yuan, respectively—its profit scale was also inferior to Sulong Thermal Power. In 2024 and 2025, Sulong Thermal Power’s operating revenue was 3.780 billion yuan and 3.095 billion yuan, respectively, with net profits of 621 million yuan and 347 million yuan, respectively.

It is worth noting that Sulong Thermal Power plans in the future to build two 660,000 kW ultra-supercritical second-time reheated clean and efficient flexible coal-fired power generation units. This project has already been approved by the Jiangsu Provincial Development and Reform Commission, and is expected to further enhance power generation efficiency.

Meanwhile, Zhongnan Culture’s current core business includes machinery manufacturing, with a focus on industrial metal pipe fittings. Its downstream key customers include power companies; thermal power plants are one of the core demand scenarios for industrial metal pipe fittings. The company expects that after the transaction is completed, it will expand into the combined heat and power business on top of its existing operations, and the business scale of industrial metal pipe fittings in the power-plant domain will also further increase.

“The Hyaluronic Acid Queen” enters the scene

In addition to expectations for the asset reorganization, the power sector has remained active recently. Over the past month, the Wind Power Index has risen by more than 10%, providing support for Zhongnan Culture’s share-price surge.

The explosive growth of computing infrastructure represented by AI is greatly increasing demand for stable, efficient electricity, reshaping the industry’s value expectations. Zhongnan Culture, which is about to enter the power sector, naturally becomes a target of fund chasing.

The market’s sharp sensitivity can be seen from changes in shareholders. Before the reorganization plan was released, Huaxi Xingyu Investment Co., Ltd., which is actually controlled by “Hyaluronic Acid Queen” Zhao Yan, had quietly entered the market. It newly became one of the top ten shareholders of Zhongnan Culture, holding 11.8926 million shares. Based on the closing price on March 27, the value of her stake has grown by nearly 20 million yuan compared with February 12.

It is also worth mentioning that Zhongnan Culture’s cross-sector acquisition this time is another key step in its long transformation journey.

Zhongnan Culture’s predecessor was Zhongnan Heavy Industry. It was once the first listed company in China in the field of industrial metal pipe fittings. In 2015, Zhongnan Heavy Industry acquired 100% of Datang Huihuang’s equity interests, officially crossing into the film and television industry. It then successively acquired artist agency companies Qianyi Zhicheng, copyright operations company Xinhua Pioneer, game company Zhishang Interactive, and Jiguang Network, among others, attempting to transform from machinery manufacturing into cultural media.

However, the film and television winter in 2018, combined with the deleveraging policy, led to a cliff-like drop in Zhongnan Culture’s net profit; it suffered a huge loss of more than 2 billion yuan. Problems such as the original actual controller and related parties misappropriating listed company funds and freezing shares then broke out, further intensifying the company’s debt crisis. Zhongnan Culture’s asset-liability ratio surged from 57.20% at the end of 2018 to 93.30% at the end of 2019. The company was also put under a risk warning for delisting in 2020 and entered bankruptcy reorganization.

In May 2020, Jiangyin Chengbang Enterprise Management Development Center (Limited Partnership) obtained 340 million shares of the company held by the company’s former controlling shareholder, Jiangyin Zhongnan Heavy Industry Group Co., Ltd., through a judicial auction, becoming the company’s controlling shareholder. The actual controller of Zhongnan Culture was also changed to Jiangyin State-owned Assets Administration Commission.

Under the dominance of state-owned capital, Zhongnan Culture gradually returned to its main business in high-end manufacturing, and in the second half of 2022 it began to venture into the new energy business. Through its controlling subsidiary, Jiangyin Guolian New Energy Co., Ltd. (abbreviated as “Guolian New Energy”), it operates photovoltaic power station business.

However, currently Zhongnan Culture’s new energy business scale remains small. The 2025 semiannual report shows that its photovoltaic power business revenue was only 10.6079 million yuan, accounting for 1.90% of total revenue. Machinery manufacturing still remains the company’s main source of revenue, with revenue of 543 million yuan, accounting for 97.08%. Meanwhile, its cultural media business, which had once been booming, shrank to 1.02%, with revenue of only 5.6954 million yuan.

From a cross-sector failure on the brink of delisting to a “bull” stock whose share price soared due to M&A of thermal power and heat assets, Zhongnan Culture’s fate is seeing another turning point. Whether this “vulture-like” reorganization will ultimately be implemented, and how it will further change the company’s fundamentals and valuation logic, has become a focus of attention for the market.

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