The star daily reported on December 5 (Reporter Yu Jiaxin) that mergers and acquisitions on the star continue to be hot.

This evening (December 5), Gaoling Information announced that the company is planning to acquire a total of 71.98% equity held by the shareholders of Shanghai Xinnuo Communication Technology Co., Ltd. (hereinafter referred to as: Xinnuo Communications) through the issuance of shares and cash payments, and at the same time raise supporting funds.

At the same time, the company will further negotiate with other shareholders of Xinnuo Communications to purchase the 28.02% equity they collectively hold after the suspension of trading. "Xie Hu and Li Lin, as actual controllers of Xinnuo Communications, will do their best to facilitate other shareholders to jointly sell Xinnuo Communications equity to the company to achieve the company's acquisition of 100% equity of Xinnuo Communications."

The announcement shows that the main trading counterpart for this issuance of shares and cash purchase of assets is the actual controllers of Xinnuo Communications, namely the couple Xie Hu and Li Lin, as well as four employee stockholding platforms: Shanghai Yifu Enterprise Management Consulting Partnership (Limited Partnership), Shanghai Jinling Enterprise Consulting Partnership (Limited Partnership), Shanghai Fuling Enterprise Consulting Partnership (Limited Partnership), and Shanghai Duochi Enterprise Consulting Partnership (Limited Partnership).

Preliminary calculations estimate that this transaction is likely to constitute a major asset reorganization, but it will not lead to a change in the company's actual controller and does not constitute a restructuring listing.

"The company’s stocks will be suspended from trading starting December 6, 2024, and the suspension is expected to last no more than 5 trading days. The specific plan for this transaction will be separately signed in a formal agreement by the finalized trading parties. This transaction is still in the planning stage, and there is a significant degree of uncertainty regarding its final implementation." the company stated.

The star daily reporter noted that the acquired party Xinnuo Communications had applied for a star listing last June and terminated its star IPO one year later.

In June 2023, Xinnuo Communication submitted a prospectus, sponsored by gtja Securities, initially planning to raise 0.609 billion yuan, which will be used for the construction projects of the communications equipment and cybersecurity product production base, the R&D center construction project, and to supplement working capital of 0.15 billion yuan.

According to the prospectus, Xinnuo Communication is a company providing network communication and cybersecurity product solutions focused on the telecommunications field. The company's network communication products include optical network products and data communication products, while the company's cybersecurity products include data link acquisition products and public internet security governance systems.

On July 23, 2023, the Shanghai Stock Exchange issued an inquiry letter, addressing Xinnuo Communication's products, potential intellectual property disputes, core competitiveness, shareholder equity, and actual controllers, among other aspects. After a round of inquiries, Xinnuo Communication voluntarily withdrew its application on June 25 of this year, leading to the termination of the IPO review.

Looking back at Gaoling Information, in recent years, the company's performance has shown a declining trend. In the first three quarters of this year, the company achieved revenue of 0.118 billion yuan, a year-on-year decrease of 38.05%; net loss of 33.0793 million yuan, a year-on-year decrease of 280.88%. In each quarter of this year, the company reported losses.

Gaoling Information was established on December 29, 1999, engaged in the R&D, production and sales of communications equipment for military telecommunications networks, eco-friendly internet of things applications, and network and information security products, and can provide comprehensive solutions for users as a high-tech enterprise.

In a recent investor survey, the company stated that the main reason for the decline in performance in the first three quarters was the decrease in new contract amounts in 2023, leading to pressure on the overall verifiable performance for 2024; some expected repair equipment ordering tasks in the third quarter were also not issued at the beginning of the quarter, resulting in fewer projects reaching the acceptance phase in the third quarter, thus showing a decline in amounts.

It mentioned that the company's direction for turning losses into profits in the future is twofold: one is military communication, by promoting the implementation of existing military telecommunications network orders and partial pilot applications of military IMS communication networks, actively promote the business of military telecommunications equipment; the second is content security business, where the company actively expands fraud prevention-related business development with the four major operators, continuously expanding the company's revenue channels. The specific time for turning losses into profits is difficult to predict, but based on the company's business characteristics, it is expected that revenue will be concentrated in the second half of 2024.