Zhangzidao surges after ownership change, new 'owner' records over 160 million yuan in floating profits

On the morning of March 28,Zhoushan Island (002069.SZ)rose sharply by the daily limit at the opening. As of press time, the stock was trading at 4.58 yuan per share with over 180,000 lots locked in buy orders,bringing the total market value to 3.2 billion yuan。

In terms of news, on March 26, the 'Online Bidding Success Confirmation' published by the Beijing Property Rights Exchange showed that the Changhai County Zhoushan Island Investment Development Center (hereinafter referred to as 'Zhoushan Island Investment') sold 109.96 million shares of Zhoushan Island for 343 million yuan. The buyer was Dalian Salt Industry Group Co., Ltd. (hereinafter referred to as 'Dalian Salt Industry'). Calculations show that Dalian Salt Industry's cost for purchasing these Zhoushan Island shares was approximately 3.12 yuan per share. If calculated based on the current stock price of 4.58 yuan per share,Dalian Salt Industry's unrealized profit has exceeded 160 million yuan。

According to Dalian Salt Industry’s official website, the company, originally named Dalian Fuzhou Bay Salt Field, was established in 1848 and is a state-owned enterprise under the jurisdiction of Dalian city. The company is located in Fuzhou Bay, covering an area of more than 140 square kilometers. It is one of the four largest sea salt fields in the country, among the top ten enterprises in China's light industry salt production industry, and rated AAA by the national credit system evaluation. The group employs 2,000 people and has total assets of 5 billion yuan.

It is reported that upon the completion of this auction, Zhangzidao Investment will lose its position as the controlling shareholder of Zhangzidao. Previous announcements by Zhangzidao indicated that the shares being auctionedaccount for 68.7384% of all shares held by Zhangzidao Investmentand represent 15.4631% of the company's total shares.The conclusion of this auction transaction will lead to changes in the company’s controlling shareholder and actual controller.。

Notably, this is not the first time Zhangzidao Investment’s shares have been auctioned. From June 28, 2021, to October 6, 2021, shares auctioned, sold, or used to offset debts by Zhangzidao Investment have exceeded 58 million.

On the other hand, Zhangzidao’s non-GAAP net profit may post a loss for the third consecutive year. According to an earnings forecast released on January 21, the company expects its attributable net profit for 2021 to reach RMB 6 million to RMB 9 million, down 39.39% to 59.59% year-on-year, with the non-GAAP net profit expected to show a loss of RMB 80 million to RMB 120 million, compared to a loss of RMB 144 million in the previous year.

Zhangzidao noted that its audited non-GAAP net profit for 2019 and 2020 was negative, and the auditor's opinion included significant uncertainties that could raise substantial doubts about the company’s ability to continue as a going concern. The company expects the 2021 non-GAAP net profit to also be negative, though the specific data has yet to be audited, potentially leading to the imposition of other risk warnings (ST).

Regarding the significant losses, Zhangzidao pointed out that the main reasons include: the impact of the COVID-19 pandemic and international trade conditions on the company's import and export business, incomplete recovery of input-output capacity in marine ranches, continued appreciation of the Renminbi resulting in foreign currency asset exchange losses, settlement payments and estimated liabilities from shareholder lawsuits, impairment of certain assets, which collectively dragged down the company’s overall performance.

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