Zhongcheng Co. Plans Acquisition of 100% Stake in Zhongji Jiangsu, Expanding into Energy Storage Sector

Involved in the energy storage business! Zhongcheng Co., Ltd. plans to acquire 100% equity of Zhongji Jiangsu

On the evening of May 27, Zhongcheng Co., Ltd. announced its intention to acquire 100% equity of Zhongji Jiangsu Clean Energy Co., Ltd., which is held by China National Technical Import and Export Corporation, through a share issuance. The company will also raise supporting funds from no more than 35 specific investors, marking a significant step in its strategic layout in the green energy sector.

According to the announcement, the price for the asset acquisition through share issuance is set at 11.19 yuan per share, which is approximately 22% lower than the company’s latest closing price of 14.31 yuan. Trading of the shares will resume on May 28.

Zhongji Jiangsu is a wholly-owned subsidiary of China National Technical Import and Export Corporation, primarily engaged in the investment, development, and operation of energy storage projects for commercial users. Its operations span multiple regions, including Liyang in Jiangsu, Dongguan in Guangdong, and Jiyuan in Henan. It provides energy storage solutions to help businesses reduce electricity costs and enhance grid stability through a contract energy management model.

The ownership structure indicates that the counterparty, the Technical Import and Export Corporation, is an enterprise under China General Technology Group, which is an indirect controlling shareholder of Zhongcheng Co., Ltd. This transaction constitutes a related party transaction but is not expected to be classified as a major asset restructuring.

Zhongji Jiangsu, as a state-owned enterprise platform engaged in commercial user-side energy storage, possesses strong commercial credibility and financial advantages. It has undertaken and is currently operating various energy storage projects, such as Jiangsu Shidai (Phase I), Shidai SAIC, Jiangsu Shidai (Phase II), Shidai Guangqi, and Dongguan Base Station.

The target company has received the “Top 100 New Energy Storage Brands in China” award at the sixth Energy Storage Carnival, and its commercial user-side energy storage project, Jiangsu Shidai (Phase I), won the 2022 Energy Storage Industry Application Innovation Gold Vine Award. It has built a solid market reputation and brand advantage in the field of commercial user-side energy storage.

Zhongji Jiangsu has extensive experience in commercial energy storage projects, having developed efficient energy storage solution design capabilities, along with a strong client base and stable operational projects. The primary clients for its operational projects are large commercial enterprises with high and stable electricity consumption. The accumulation of high-quality clients and stable operational projects is one of the core competitive advantages of the target company.

Zhongcheng Co., Ltd. stated that its current business primarily includes complete equipment exports, engineering contracting, environmental technology, and composite material production. Against the backdrop of the national “carbon peak” and “carbon neutrality” strategic goals, the company aims to extend its development into green sectors, creating a second growth curve.

Before the completion of this transaction, the main business of the listed company includes complete equipment exports, engineering contracting, environmental technology, and composite materials production. After the transaction, the listed company and the target company will establish a collaborative and complementary relationship in the construction and operation of energy storage projects, customer resources, and overseas platforms. This will assist in expanding the industrial chain layout based on existing green energy project contracting business and enhancing overall competitiveness.

This transaction aligns with national strategy, facilitating the company’s development in green sectors and enhancing its financial strength and profitability. By optimizing the capital structure, the company aims to improve its ability to withstand operational risks, thus promoting a deep integration of its green development philosophy with high-quality growth.

Upon completion of the transaction, the financial statements of the target company will be consolidated within the listed company’s scope. The implementation of this transaction is expected to improve the listed company’s asset scale, operating revenue, and net profit levels, aiding in further diversifying revenue sources and mitigating overall operational risks.

This transaction represents a proactive step for the listed company to optimize its business layout and enhance sustainable development capabilities. The reorganization will further amplify the company’s business advantages, improve its competitiveness, and increase value recognition from the capital markets and investors, benefiting both the listed company and all shareholders while promoting sustainable and healthy development.