Shanghai Stock Exchange queries Zhenjiang New Energy Equipment’s US subsidiary sale

Explaining the rationale for the sale, Zhenjiang New Energy Equipment said: “Affected by relevant local US policies, Zhenjiang USA’s core customers have temporarily adjusted their 2026 order arrangements to ensure compliance with the eligibility criteria for project tax incentives. Taking into account the target company’s current operating status, its expected Q1 performance, and the uncertainty surrounding future earnings and cash flow, the company has decided to sell the subsidiary to optimise its overall asset structure, improve project operational quality, and enhance its risk resistance.”

However, on the night the announcement was released, this “risk-averse” move prompted an inquiry from the Shanghai Stock Exchange (SSE). The SSE has requested that Zhenjiang New Energy Equipment address a series of issues, including the quality of the target assets, the buyer’s ability to fulfil the transaction, and being reasonable about the valuation, and to submit a written response within five trading days.

Specifically, the quality of the target company is put into question. It is noted that Zhenjiang USA originated from a fundraising project — “Construction of a Production Line for Large PV Mounting Structure Components” — from Zhenjiang New Energy Equipment’s 2022 non-public stock offering. This project was revised in April 2023 to the “Construction of a US PV Mounting Structure Components Production Line”, with Zhenjiang USA as its implementing entity. Construction was completed and the project was concluded in June 2024, with a cumulative investment of RMB133 million in raised funds.

However, Zhenjiang USA’s operating performance has been underwhelming. While its 2025 revenue rose 118.60% year-on-year to US$33.6 million, it has reported net losses for two consecutive years. As of the end of 2025, its total liabilities stood at US$52.3 million, and its net assets had shrunk to US$9.2 million.

In response, the SSE has requested the disclosure of Zhenjiang USA’s major customers and suppliers for 2024 and 2025, whether those parties have affiliated relationships with the listed company, and an analysis of changes in operating data before and after the enactment of the “One Big Beautiful Bill Act” to explain the reasons for the sustained losses.

Second, there are doubts about Zetwerk’s ability to fulfil the transaction. According to the announcement, Zetwerk is primarily engaged in the custom manufacturing of ferrous and non-ferrous metals, alloys, and industrial components, with an authorised share capital of approximately INR46.8 billion (US$506 million).

In terms of financial performance, Zetwerk reported a net loss of INR6.7 billion in 2024, a 1,272.72% year-on-year increase from 2023. The announcement also noted that the company is currently in the IPO application phase and cannot disclose its 2025 operating data for the time being.

The SSE has questioned whether Zetwerk can pay the full transaction consideration. Public information indicates that Zhenjiang New Energy Equipment’s core business is the manufacturing of wind power equipment and PV equipment components.

In recent years, amid cyclical fluctuations in the entire industry, the company’s performance has come under significant pressure. In the first three quarters of 2025, it recorded operating revenue of RMB2.9 billion, a 1.15% year-on-year decrease; its net profit attributable to the parent company was only RMB43.5 million, a 73.60% year-on-year decline.

Under relevant regulations, Zhenjiang New Energy Equipment is required to disclose and respond promptly upon receiving the inquiry letter. However, as of today (March 13), the company has not yet responded.