Dongyang State-Owned Assets Plans to Invest 800 Million Yuan to Acquire Control of Sichuan's Leading Passenger Transport Company Fulin Transportation, but the stock resumes trading only to hit a limit-down on high volume

Everyday Reporter | Xu Shuai Everyday Editor | Wei Guanhong

Dongyang State-Owned Assets plans to take over Fulin Transportation, a leading passenger transport company in Sichuan (SZ002357, stock price 13.01 yuan, market value 4.078 billion yuan), but the market is not buying it.

On the evening of April 1, the company announced that the Dongyang Municipal People’s Government State-owned Assets Supervision and Administration Office (hereinafter referred to as “Dongyang State Assets Office”) intends to have its affiliated Dongyang Dongwang United Airlines Enterprise Management Partnership (Limited Partnership) (hereinafter referred to as “Dongwang United Airlines”) acquire 18% of the company’s shares held by Yongfeng Group Co., Ltd. (hereinafter referred to as “Yongfeng Group”) for a total consideration of 800 million yuan, becoming the new controlling shareholder. After resuming trading on April 2, the listed company’s share price briefly surged to 14.88 yuan per share, and was then followed by fierce selling pressure from funds, quickly sealing the daily limit-down. On one side is state-owned capital’s desire to acquire; on the other is the secondary market “voting with its feet.” The transaction arrangement may reveal the underlying logic.

Dongyang State Assets plans to acquire

On March 31, Fulin Transportation’s controlling shareholder Yongfeng Group and Dongwang United Airlines signed a share transfer agreement. Yongfeng Group plans to transfer 56.4280 million shares of the company it holds (18% of the company’s total share capital) to Dongwang United Airlines at a price of 14.18 yuan per share, with the total transfer consideration amounting to 800 million yuan. After the completion of this equity change, Yongfeng Group will hold 37.3052 million shares of the company (11.9% of the company’s total share capital) and hold voting rights for 21.6307 million shares (6.9% of the company’s total share capital); Dongwang United Airlines will hold 56.4280 million shares of the company (18% of the company’s total share capital) and hold voting rights for 56.4280 million shares (18% of the company’s total share capital). The company’s controlling shareholder will change from Yongfeng Group to Dongwang United Airlines, and the actual controller will change from Liu Feng to the Dongyang State Assets Office.

According to the transaction arrangement, Dongwang United Airlines, the transferee, was established on January 20, 2026, and its actual controller is the Dongyang State Assets Office. The major partner of Dongwang United Airlines, Dongwang Holdings, is an important industrial investment and operation entity in Dongyang, Zhejiang Province. It mainly engages in the development and operation of Dongyang industrial parks, external investment, grain sales, security services, human resources services, liquefied gas, and sales of civil explosive materials, among others.

Dongwang United Airlines commits that the funds used for this equity change will all be the company’s own legal funds or self-raised funds, with the company’s own funds contribution not less than 50% of the total transaction amount, and that all of them will be used for this equity acquisition. The actual controller of the transferor Yongfeng Group is Liu Feng. Public information shows that Yongfeng Group was established in March 2003. It is a large enterprise with steel smelting as its core principal business, has repeatedly ranked among the top 10 Shandong’s top 100 private enterprises, and in 2022 ranked 99th among China’s top 500 private enterprises.

To promote this transaction and stabilize control, Yongfeng Group commits that within 36 months from the date of share delivery defined in the share transfer agreement, it will forgo the voting rights corresponding to 15.6745 million shares (5% of the company’s total share capital) out of the 37.3052 million shares (11.9% of the company’s total share capital) it holds in the listed company.

Despite Dongyang State Assets throwing out an olive branch, the capital market’s reaction was completely the opposite. Data from April 2 shows that on the day of resumption of trading, Fulin Transportation’s opening price jumped to 14.88 yuan per share, but it then encountered concentrated selling and quickly sealed the limit-down. By the close, the share price was 13.01 yuan per share, down 10.03% for the day, with trading value of about 400 million yuan, and a daily turnover rate exceeding 9%.

Commitment: no asset injection and no management change for three years

In this change of control, the transferee has made clear restrictions on the company’s future asset operations and business management. Within 36 months after the completion of this equity change, the transferee will not inject the relevant assets it holds into the listed company Fulin Transportation. At the same time, both parties have also imposed mandatory constraints on retaining the current operating management team. Within three years after the completion of the change in actual controlling rights of the listed company, the listed company’s original principal business will continue to be led by the original operating management team. Both parties jointly confirmed that within 3 years from the completion date of the board reshuffle, the existing senior management personnel and operating management team related to the existing businesses will be retained.

With respect to the core performance commitments, the standards set have attracted market attention. If within three years after the transaction (from 2026 to 2028), the average operating profit of the listed company’s original principal business is less than 28 million yuan (operating profit refers to profit before total profit minus investment income from Sichuan Santai Rural Commercial Bank Co., Ltd. and Mianyang City Commercial Bank Co., Ltd.; the above performance commitments are based on the current asset business situation of the listed company. If the listed company has major matters such as disposal of assets other than the equity of the above two banks in the future, the impact of such corresponding matters shall also be deducted), then the transferee shall have the right to designate again a new operating management team based on the original principal business, and the original actual controller, as the transferor, will compensate the listed company for the shortfall performance.

Financial data of Fulin Transportation shows that as of September 30, 2025, the company’s net profit was 160 million yuan. Of this, investment income reached 140 million yuan (all from investment income of associates and joint ventures), accounting for as much as 87.5% of net profit. This also explains why the aforementioned performance commitments differ greatly from the company’s current overall profitability level.

According to the company’s “2025 Annual Performance Forecast” released, net profit attributable to shareholders of the listed company is expected to be between 165 million yuan and 196 million yuan, representing an increase of 34.99% to 60.35% year over year compared with the same period of the previous year. Even after excluding non-recurring gains and losses, the net profit after deducting non-recurring items expected to be achieved in 2025 is 71 million yuan to 82 million yuan, representing an increase of 0.31% to 15.85% year over year.

Judging from actions taken in the past two years, Fulin Transportation has also been transforming from a traditional passenger transport industry. Last April, the company’s 2024 annual report mentioned actively seeking change and adopting proactive innovation. By leveraging new productive forces such as autonomous driving and the low-altitude economy, and combining the company’s station resources and regional advantages, it explored the implementation and operational development of low-altitude travel service scenarios, and aimed to build a new pattern for the development of a three-dimensional transportation industry.

For the transfer of equity of the company’s controlling shareholder, the reporter called the company’s Board Secretary Cao Hong this morning (April 2). He stated that the company is currently in a silent period and it is not convenient to respond, “The original shareholder (i.e., the current major shareholder) and the other party are involved.”

Source of cover image: Meiri Media Asset Library

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