Hengwei Technology (603496.SH) has recently announced an updated transaction plan, proposing to acquire a 51% stake in Shuheng Technology for RMB 467 million through a combination of equity transfer and capital increase. However, on the announcement day, the company received a regulatory inquiry letter from the exchange.

Securities Star observed that, compared to the preliminary plan, the payment method and acquisition ratio for this deal have been revised. With insufficient funds to cover the transaction price, Hengwei Technology is prepared to take on debt to complete the acquisition. Amidst a nearly sevenfold premium for the acquisition, Hengwei Technology has been under pressure to grow its performance in recent years, with its intelligent system platform business shrinking by nearly 20% and its gross profit margin declining for two consecutive years. In the first quarter of 2026, the company relied on investment gains to stay profitable, and the profitability of its core business remains a concern.

01. Regulatory Inquiry Received, Acquisition Faces Funding Shortfall

The announcement disclosed that Hengwei Technology intends to purchase a 49.37% stake in Shanghai Shuheng Information Technology Co., Ltd. (hereinafter referred to as "Shuheng Technology")—held by Zhang Jisheng, Shanghai Huiheng, Hangzhou Rongteng, and others—for RMB 437 million, using its own and self-raised funds. Additionally, it plans to inject RMB 30 million into the target company's capital. Post-transaction, Hengwei Technology will own 51% of Shuheng Technology's equity, making it a controlled subsidiary.

Hengwei Technology primarily focuses on the research and development, sales, and service of intelligent system solutions. It serves as a provider of network visualization, intelligent system platforms, intelligent computing, network infrastructure solutions, and operation and maintenance technology. Shuheng Technology operates in the downstream AI application sector of Hengwei Technology, specializing in AI engineering implementation and industrialization in vertical scenarios.

Hengwei Technology believes that this transaction will enhance the model and application layers of its product ecosystem, driving the company's AI strategy from the infrastructure layer to the model and application layers.

Securities Star noted that last September, Hengwei Technology planned to acquire a 75% stake in Shuheng Technology by issuing shares and paying cash, while raising matching funds.

After nearly six months of planning, to enhance transaction efficiency, reduce costs, and facilitate the acquisition, Hengwei Technology decided to terminate the share issuance and cash payment plan for asset purchase and matching fund raising. Instead, it opted to acquire controlling equity in Shuheng Technology through cash purchase and capital increase.

This transaction not only modifies the payment method but also reduces the acquisition equity ratio from the initially planned 75% to 49.37%. Notably, Hengwei Technology currently lacks sufficient funds to cover the transaction price. As of the end of March 2026, the company's monetary funds and trading financial assets totaled RMB 388 million, indicating a funding gap. Therefore, the company plans to apply for a merger and acquisition loan from a bank, not exceeding RMB 373 million, to cover part of the equity transaction price.

Securities Star noted that this acquisition involves a premium. The announcement revealed that after negotiation and confirmation by all parties involved in the transaction, the overall estimated value of Shuheng Technology to be purchased this time is RMB 900 million, representing an approximately 6.89-fold increase over its net assets of RMB 114 million. This transaction includes performance commitments, with the promisor (commitment party) pledging that the target company will achieve net profits of no less than RMB 72 million, RMB 96 million, and RMB 114 million for the years 2026 to 2028, respectively. Meanwhile, the performance commitment party has committed to using the second installment of the equity transfer payment from Hengwei Technology to purchase Hengwei Technology's stocks, with the increased holding amount (increased amount) not less than RMB 110 million.

Considering the target company's performance, although Shuheng Technology's revenue scale is smaller than Hengwei Technology's, it demonstrates strong profitability. From 2024 to 2025, Shuheng Technology's revenues were RMB 134 million and RMB 269 million, respectively, with net profits of RMB 14.6369 million and RMB 48.4051 million, showing a growth trend. In contrast, Hengwei Technology's revenue last year was RMB 1.047 billion, with a net profit of only RMB 34.938 million. It is evident that this acquisition will help increase the net profit of the listed company.

Notably, on the announcement day (June 23), Hengwei Technology received a regulatory inquiry letter from the exchange, requesting clarification on regulatory requirements regarding the company's asset acquisition.

02. Declining Gross Profit Margins in Two Core Businesses, Q1 Net Profit Excluding Non-Recurring Gains and Losses Continues to Decline

Securities Star noted that behind the acquisition of Shuheng Technology, Hengwei Technology has faced fluctuating pressure on revenue and net profit attributable to shareholders in recent years.

Currently, the company's business is mainly divided into network visualization and intelligent system platform businesses. The network visualization business primarily includes integrated software and hardware network equipment, such as plug-in and box-type products. The intelligent system platform business mainly comprises network products, computing products, and intelligent computing products.

In 2024, affected by factors such as the transformation and upgrading of the intelligent system platform business, increased credit impairment losses, and decreased investment gains, the company experienced revenue growth but a net profit decline, with revenue and net profit attributable to shareholders reaching RMB 1.117 billion and RMB 26.8491 million, respectively, representing year-on-year changes of 44.83% and -65.92%. In 2025, although Hengwei Technology's profitability showed some recovery, its revenue scale declined. During the reporting period, the company achieved revenue of RMB 1.047 billion, a year-on-year decrease of 6.31%, and net profit attributable to shareholders of RMB 34.938 million, a year-on-year increase of 30.13%.

The shrinking revenue from the intelligent system platform business dragged down Hengwei Technology's overall revenue performance. In 2025, due to reduced orders from major customers and a decline in revenue from computing integrated machine products, the company's intelligent system platform business achieved revenue of RMB 598 million, a year-on-year decrease of 19.04%, accounting for 57.12% of the total revenue for the period. During the same period, the gross profit margin of this business was 15.68%, a year-on-year decrease of 0.15 percentage points.

Although the company's network visualization business revenue maintained growth, its gross profit margin declined significantly. In 2025, the business revenue was RMB 448 million, a year-on-year increase of 18.4%. Meanwhile, affected by market cycles, the revenue from highly customized, high-gross-margin products declined significantly, by over 80%. The products that contributed to revenue growth during the period were mostly standardized products, which face intense market competition and have low gross profit margins, thereby lowering the overall gross profit margin of the network visualization business segment. During the reporting period, the gross profit margin of this business was 47.74%, a year-on-year decrease of 16.62 percentage points.

Against this backdrop, Hengwei Technology's gross profit margin last year was 29.14%, a year-on-year decrease of 2.89 percentage points, marking a second consecutive year of decline.

In the first quarter of 2026, the company's revenue improved, but its core business profitability still faced significant pressure due to comprehensive influences from seasonal industry factors, project delivery, and revenue recognition timing. During the reporting period, the company achieved revenue of RMB 178 million, a year-on-year increase of 42.89%, and net profit attributable to shareholders of RMB 5.817 million, turning from a loss to a profit year-on-year. The gross profit margin was 30.46%, a year-on-year decrease of 5.67 percentage points.

Securities Star noted that Hengwei Technology's profitability in the first quarter was mainly supported by investment gains. During the reporting period, the company received distributions from private equity funds it participated in and increased income from bank financial management. The change in gains or investment gains from the company's holding and disposal of trading financial assets and liabilities was RMB 12.3181 million, accounting for 211.8% of the net profit attributable to shareholders for the period. If this portion of gains is excluded, the company's net profit excluding non-recurring gains and losses was -RMB 6.6185 million, remaining negative and indicating concerning profitability in its core business. (This article was first published by Securities Star, Author | Li Ruohan)

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