Produced by | Ruisi Network

In 2026, investment enthusiasm in the AI computing power sector continues to rise, with a large number of traditional industrial enterprises listed on the A-share and Hong Kong stock markets accelerating their cross-border layout (layout) in IDC and intelligent computing leasing sectors.

Jin Jing New Energy (01783) saw significant divergence in its stock price today, surging to a high of HK$6.420, up 6.12% at its peak, before closing up 0.33% at HK$6.070, with a full-day trading volume of HK$169 million. The company's total market capitalization at closing stood at HK$17.538 billion, with the acquisition consideration capped at HK$2.5 billion, representing approximately 14% of the company's total market value.

Behind the stock price's surge and subsequent decline lies the company's disclosure on June 29 of a major industrial acquisition with significant implications. According to the Hong Kong Stock Exchange's Listing Rules, this acquisition constitutes a major transaction, requiring subsequent shareholder approval at a general meeting.

This Hong Kong-listed company, primarily engaged in power battery recycling and building renovation in Hong Kong, plans to acquire the entire equity of offshore holding platform YV CLOUD Limited and its domestic counterpart, Shanghai Ucloud Computing. By leveraging asset restructuring and a VIE contractual structure, it aims to take over Shanghai Ucloud's core IDC and AI intelligent computing leasing assets, entering the computing power sector.

The acquisition consideration is capped at HK$2.5 billion, with a multi-tiered payment and performance clause structure. However, a series of practical issues, including foreign investment licensing compliance, declining profitability of the target, cross-industry integration, and capital allocation, remain highly uncertain.

‌HK$2.5 Billion Acquisition Sets Performance Thresholds, Valuation of Loss-Making Target Relies on Future Growth Narratives‌

The base consideration for this acquisition is HK$2.2 billion, with adjustments based on the target's book cash, payable debts, and working capital differences at closing. The agreement specifies an overall payment cap of HK$2.5 billion.

Funds will be disbursed in four installments: a HK$100 million deposit within 10 working days of signing the transaction; transfer of HK$560 million in escrow funds upon fulfillment of all closing conditions; a third installment of HK$660 million in cash subject to specific performance thresholds; and the remaining balance settled with 33.0579 million consideration shares at an issue price of HK$6.05, representing a 24.13% premium over the average stock price in the five trading days prior to the announcement. These shares will account for only 1.13% of the enlarged total share capital upon issuance, with the seller's shares subject to a six-month lock-up period after listing, eliminating short-term concentrated selling pressure.

Performance metrics focus solely on the newly added computing power business post-acquisition, excluding the target's existing data center leasing revenue. The agreement stipulates that the cooperation contracts implemented at closing must achieve an annualized EBITDA of no less than RMB 480 million, corresponding to a total contract value of RMB 2.4 billion. If the incremental business targets are not met, the listed company has the right to defer payments for the third and fourth installments, providing a buffer against downside risks.

The target's unaudited financials for the past two years, as disclosed in the announcement, show revenue of RMB 995 million in 2024 with a pre-tax net profit of RMB 6.004 million; revenue declined to RMB 770 million in 2025, with a full-year pre-tax loss of RMB 38.772 million and EBITDA of RMB 563.31 million, down 23% year-on-year.

The target's book net assets stand at just RMB 43.3 million, with a DCF equity valuation of HK$2.47 billion for this transaction. Compared to third-party IDC operators listed on the A-share and Hong Kong stock markets in 2026, the industry commonly uses EV/EBITDA as a valuation reference, with a central range of 16 to 22 times. The HK$2.47 billion valuation here is solely for equity and does not include the target's net liabilities, making it incomparable to the industry's EV valuation framework. Moreover, with the target already incurring operating losses in 2025, ‌all valuation premiums hinge on future expansion of newly added computing power business, with existing assets unable to provide valuation support.‌

Based on EBIT calculations, the annualized EBIT output per P of computing power ranges from approximately RMB 80,000 to RMB 150,000. Considering server depreciation and amortization (typically accounting for 25%-35% of costs), the corresponding EBITDA output ranges from RMB 110,000 to RMB 220,000. To achieve the annual incremental EBITDA target of RMB 480 million, approximately 22,000 to 44,000 P of computing power would need to be deployed, with long-term capital expenditures on data centers and servers continuously diverting the group's operating cash flow.

‌Controlling Shareholder Cashes Out En Masse, Company's Cash Insufficient to Cover Initial Closing Expenses‌

The seller in this transaction, Yovole Cayman (the upper-tier parent company holding 100% of the offshore holding platform YV CLOUD Limited mentioned earlier), is controlled by An Ke, who is also the founder and largest shareholder of Shanghai Ucloud, directly holding 57.81% of the company's equity.

Founded in 2001, Ucloud has deep cultivation (deeply cultivated) the IDC industry for over two decades, operating self-owned data centers in Beijing, Shanghai, Guangzhou, and Shenzhen. In February 2026, it launched a RMB 1.618 billion real estate ABS for its Lingang data center, with underlying self-owned data centers generating stable, standardized rental cash flows, providing a foundation for capital market financing.

In essence, this transaction represents the founder's overall divestiture of the computing power operation support sector through an offshore SPV. Prior to closing, an internal asset restructuring within the group must be completed, transferring all data centers, telecommunications licenses, and government and enterprise clients to a newly established operating entity. The announcement stipulates that the overall transaction should strive for closing within 45 days of signing.

As of the end of March 2026, Jin Jing New Energy had only HK$230 million in cash on hand. The first two closing payments, totaling HK$660 million, far exceed the company's existing cash reserves.

The company returned to profitability in FY2026, with adjusted EBITDA of HK$98 million and an asset-liability ratio of just 0.7%, with no long-term rigid bank liabilities. However, its power battery disassembly production lines and domestic and overseas environmental protection parks are still in an expansion phase, requiring fixed capital investments. Over the past two years, multiple rounds of share placements have raised less than HK$500 million in total. The announcement does not disclose plans for matching (supporting) bridge loans or private placements, ‌meaning large cash outlays will directly squeeze the budget for expanding its original green industries.‌

Supplementally, An Ke, the controlling shareholder, had just packaged and issued a holding-type real estate ABS for his core data centers in February 2026 to prematurely recoup capital from heavy assets. A few months later, he divested the operating support entity, forming a coherent capital operation of "data center asset securitization + overall sale of operating business." Given the current high valuation window in the computing power sector, ‌An Ke's choice contrasts with the market's medium- to long-term outlook on the industry.‌

It is worth noting that the company's existing management team has deep expertise in building construction and power battery recycling but lacks operational and management experience in the IDC and AI computing power industries.

‌Foreign Shareholding Faces Policy Red Lines, VIE Structure and Cross-Border Synergies Under Dual Pressure‌

According to China's current Negative List for Foreign Investment Access, without special pilot approvals, IDC and value-added telecommunications enterprises providing internet access services with nationwide coverage cannot be directly wholly owned by foreign entities. Responses from the Ministry of Industry and Information Technology also clarify that IDC liberalization policies under CEPA and free trade zones apply only to limited geographical operating scenarios and cannot accommodate Ucloud's nationwide multi-city data center network business model.

The transaction can only be completed through a multi-tiered offshore + domestic VIE structure for consolidated financial reporting: Jin Jing New Energy's wholly-owned BVI platform will establish a Hong Kong intermediate company and a domestic wholly foreign-owned enterprise (WFOE); the WFOE will then sign a full set of contracts with domestic registered shareholders and a newly established licensed company, including five types of agreements: exclusive consulting services, equity pledges, exclusive purchase options, full shareholder authority, and spouse rights waivers, thereby obtaining complete operational, dividend, and personnel control over the licensed company.

The accompanying legal opinion in the announcement lists multiple potential risks. In existing domestic judicial precedents, similar VIE agreements circumventing foreign investment access restrictions have been deemed invalid. If the domestic registered shareholders unilaterally breach the contract, arbitration awards or court rulings issued by overseas arbitrators or foreign courts would be difficult to enforce domestically. Additionally, if subsequent telecommunications or foreign investment regulatory policies tighten, regulatory authorities could revoke telecommunications licenses, confiscate operating revenue, or require the dismantling of the structure.

At the tax level, internal VIE-related service fees are prone to transfer pricing scrutiny, potentially triggering additional tax payments and late fees, with the group having not allocated special project (special) hedging insurance against these risks.

The asset transfer process also faces uncertainties. The target directly acquired in this transaction is only responsible for cloud computing hardware sales support, with core data centers, telecommunications licenses, and long-term government and enterprise clients belonging to the parent company, Ucloud. ‌If asset restructuring progress lags before closing or core clients are lost, the RMB 480 million incremental performance target will lose its foundation for implementation.‌

Even setting aside compliance uncertainties, the company's proclaimed synergy logic of energy storage recycling + computing power faces significant practical challenges.

The transformation logic articulated by the listed company involves leveraging energy storage for peak-shaving to reduce data center electricity costs while recycling UPS and retired server metal resources. Electricity costs typically account for 40%-60% of data center operating costs, theoretically offering cost-saving potential, but practical constraints abound.

The company's energy storage and green power resources are primarily concentrated in Hong Kong, while Ucloud's core data centers are located in mainland China, making cross-regional power allocation and direct supply cooperation difficult to implement in the short term. Server- matching (supporting) energy storage batteries and vehicle power battery disassembly processes and residual values differ significantly, with existing production lines unable to be directly repurposed, necessitating additional transformation costs.

These two business lines will also amplify group performance volatility: the recycled metal (recycled metals) business tracks copper and lithium commodity price fluctuations, while the AI computing power industry is influenced by tech companies' capital expenditures, making it difficult to achieve the management's claimed earnings smoothing.

As previously mentioned, management lacks computing power operation experience, with data center maintenance, government and enterprise cloud services, and battery recycling belonging to entirely different sectors. ‌Cross-team integration will require at least two to three years, making it difficult to generate reported profit contributions in the short term.‌

‌Divergence in Cross-Border Computing Power Trends, High-Premium Acquisitions Prone to Stock Price and Goodwill Implosions‌

In 2026, traditional enterprises are flocking to the computing power sector, but their entry paths and fundamentals vary widely. Dongyangguang and Jinko Technology leverage their self-owned power plants and photovoltaic assets to create integrated green power and computing power parks, with energy support having a physical foundation. Yuegangwan Holdings relies on idle land to enter computing power leasing, with weaker energy synergy capabilities. Some companies merely procure GPUs for leasing on a light-asset basis, lacking self-owned data center assets.

Market skepticism toward cross-border computing power themes has been persistently reflected in the secondary market.

Earlier this year, Markor Home Furnishings, suffering four consecutive years of losses in its main business with two major production bases halted, saw its stock price quickly hit the daily limit. Subsequent announcements of computing power asset acquisitions failed to reverse pessimistic expectations. In mid-June 2026, Gole share disclosed a RMB 3.557 billion five-year computing power service contract, but the counterparty, established less than a year ago with no paid-in capital and only three insured employees, raised doubts about order fulfillment capabilities. The stock price gapped up to the daily limit on the news but quickly fell back the next day, touching the daily limit intraday the following day, underscoring the market's difficulty in accepting cross-border narratives.

Most manufacturing and consumer companies that engaged in cross-border mergers and acquisitions of tech assets in earlier years subsequently incurred significant goodwill impairments, primarily due to cross-industry management disconnections and lower-than-expected downstream computing power demand.

From a long-term industry trend perspective, the integration of green power support, equipment recycling, and computing power infrastructure is the industry's development direction (development direction). However, this HK$2.5 billion acquisition must overcome several short-term practical hurdles.

First, the transaction requires shareholder approval, and whether asset restructuring can be smoothly completed within the 45-day closing window, with data centers, licenses, and core clients fully transferred into the VIE structure, remains uncertain. Second, the RMB 480 million annual incremental EBITDA target relies on downstream AI companies' computing power procurement willingness, which will be challenging to achieve during industry downturns. Moreover, the direction of foreign investment IDC-related regulatory policies is a core variable determining the long-term value of computing power assets, as the target's core business involves value-added telecommunications licenses, with foreign acquisition compliance approvals for such businesses facing uncertainties. Coupled with management's lack of computing power operation experience, the company's original power battery recycling and environmental protection park expansion plans will be forced to cede resources amid large cash outlays, with simultaneous challenges in capital allocation and team integration.

‌Merely hyping the "energy storage + computing power" industrial closed loop (closed loop) narrative lacks sufficient practical support. Asset restructuring completion, quarterly incremental computing power contract signings, telecommunications regulatory dynamics, and the listed company's financing plans are the core indicators for assessing the true quality of this acquisition.

Disclaimer: All information and data in this article are sourced solely from public announcements by the listed company and publicly available secondary market data. The content is provided as an objective comb, sort out, organize, arrange, streamline (collation) of industry information and industrial logic analysis and does not constitute any stock trading or investment financing recommendations.

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