A subsidiary acquired over a year ago was named and shamed at the "3.15" gala! Duofuduo "hit a landmine," and the equity relationship actually originated from related-party transactions.

(Source: Beijing Business Today)

Over a year ago, Duofuduo (002407) invested over 28 million yuan to acquire a 54% stake in Henan Yifeng Electronic New Materials Co., Ltd. (hereinafter referred to as “Yifeng Electronics”), becoming the company’s major shareholder. Unexpectedly for investors, Yifeng Electronics has now appeared on CCTV’s “3.15” Evening Gala, being named as a targeted company. What’s more worth pondering is that the 54% equity transfer from Duofuduo at that time was a related-party transaction, with the counterparty being Duofuduo Group, controlled by Duofuduo’s major shareholder, Li Shijiang.

On the evening of March 15, CCTV’s “3.15” Gala exposed issues with bleached chicken claws, mentioning the use of hydrogen peroxide for processing chicken claws and disinfecting equipment. Yifeng Electronics was also investigated for illegal provision of unlabeled food additives and violations of hazardous chemical management regulations. By reviewing the shareholding relationships, Beijing Business Today reporters quickly found that Yifeng Electronics is a subsidiary of Duofuduo, listed on the A-shares.

According to business registration information from Tianyancha, Duofuduo, Henan Xingtu Enterprise Management Consulting Partnership (Limited Partnership), Sun Xiaofeng, Henan Jufuxing New Material Technology Co., Ltd., and Cui Social Security hold 54%, 25.6%, 14.4%, 4%, and 2% of Yifeng Electronics, respectively.

Reviewing Duofuduo’s historical announcements, its holding period of Yifeng Electronics’ shares has not been long.

On January 22, 2025, Duofuduo issued a merger and acquisition announcement stating its plan to acquire a 54% stake in Yifeng Electronics. At that time, Duofuduo described Yifeng Electronics as a company producing and selling ultra-pure chemical materials and other fine chemical products for the microelectronics industry. The company would use its own funds of 28.45 million yuan to acquire the 54% stake, which would help enrich its electronic chemicals product portfolio.

Based on the acquisition price at that time, evaluated using the asset-based approach, as of the benchmark date October 31, 2024, Yifeng Electronics’ net asset book value was 40.04 million yuan, and the total equity value was 42.70 million yuan, with an appreciation rate of 6.64%.

It should be noted that Duofuduo’s investment in Yifeng Electronics was a related-party acquisition. The 54% stake originally belonged to assets of Duofuduo Group, and the actual controller of Duofuduo Group is Li Shijiang, the controlling shareholder of Duofuduo.

This related-party acquisition involved a slight premium. Just over a year later, Yifeng Electronics was named on the “3.15” Gala, and Duofuduo’s transaction is undoubtedly attracting market attention.

Additionally, according to Duofuduo’s January 2025 acquisition announcement, Yifeng Electronics’ performance is not optimistic. From January to October 2024, it still reported losses. Specifically, as of October 31, 2024, Yifeng Electronics had total assets of 64.82 million yuan and net assets of 40.04 million yuan; revenue for January-October 2024 was 36.26 million yuan, with a net loss of 180,100 yuan. Looking at 2023 financial data, as of December 31, 2023, Yifeng Electronics had total assets of 53.94 million yuan, net assets of 32.52 million yuan; annual revenue was 53.98 million yuan, with a net profit of 295,600 yuan.

Duofuduo is a leading company in the lithium hexafluorophosphate market in A-shares. Its main business involves R&D, production, and sales of high-performance inorganic fluorides, electronic chemicals, lithium-ion batteries, and related materials.

From a fundamental perspective, in 2024, Duofuduo achieved approximately 8.207 billion yuan in revenue, a year-on-year decrease of 31.25%; corresponding net profit attributable to shareholders was about -300 million yuan, turning from profit to loss. However, the company’s performance is expected to recover in 2025. The 2025 earnings forecast indicates the company expects to achieve a net profit attributable to shareholders of 200 million to 280 million yuan, turning losses into profits.

In the secondary market, as of the close on March 13, Duofuduo’s stock price was 30.85 yuan per share, with a total market capitalization of 36.72 billion yuan. The Beijing Business Today reporter will continue to monitor the development of this incident.

Beijing Business Today Reporter Wang Manlei