When share prices hit an all-time highGameroomnearme, Huitong Energy (600605Gameroomnearme(.SH) the controlling shareholder intends to transfer more than 25% of Huitong Energy. And this is not the first time its controlling shareholders want to sell shares to cash out.

Previously, the plan to change ownership failed.

May 7, Huitong Energy announced that its controlling shareholder Xizang Dejin Enterprise Management Co., Ltd. (referred to as "Xizang Dejin") signed share transfer agreements with Shanghai Nat Asset Management Co., Ltd., Shanghai Hongsheng Investment Management Co., Ltd., Xiamen Hanyun Investment Management Co., Ltd., Ningbo Hutong Private Equity Fund Management Partnership, and Xizang Dejin signed share transfer agreements with 25%.GameroomnearmeThe price of 74 yuan per share transferred 12.37 million shares, 10.9 million shares, 16.5 million shares and 12.37 million shares respectively, accounting for 5.9966%, 5.2840%, 7.9987% and 5.9966% of the total share capital of Huitong Energy respectively.

Prior to the completion of the transfer, Xizang Dejin and his concerted actor Zhengzhou Tongtai Wanhe Enterprise Management Center (Limited Partnership) (referred to as "Tongtai Wanhe") had absolute control over Huitong Energy and held a total of 120 million shares of Huitong Energy, accounting for 58.25% of the company's total share capital. After the completion of the transfer, Xizang Dejin and his concerted actors Tongtai Wan hold a total of 68.0242 million shares of Huitong Energy, accounting for 32.98% of the total share capital, which is still the actual controller of Huitong Energy.

Through this transfer, the controlling shareholder Xizang Dejin will also cash out as much as 1.342 billion yuan. As of May 7, Huitong Energy closed at 29.74 yuan per share, with its share price at an all-time high.

The market is no stranger to Xizang Dejin's "cash heart". As early as September 2022, Xizang Dejin planned to sell Huitong energy control.

At that time, Huitong Energy planned to sell its 100% stake in Shanghai Lutai to Nanchang Hongdu Real Estate Co., Ltd. (referred to as "Hongdu Real Estate"), which was controlled by Tang Yuxiang, the actual controller of the company. After this transaction, Huitong Energy spun off the real estate development and sales business, leaving only the real estate leasing and property management business.

Then, Xizang Dejin and his actors sold 61.83 million shares, or 29.97 percent, to Tongxiang Shengshi Trading Co., Ltd., and Tongxiang Wenshi Trading Partnership (limited partnership) controlled by Zhenshi holding Group, at a price of 19.27 yuan per share. 110.37% premium to the market price. In addition, Tongxiang Shengshi Trading Co., Ltd. is also about to acquire 5% of the shares, with an offer price of 19.28 yuan per share.

In this "shell selling" plan, Huitong Energy sells a 100% stake in Shanghai Lutai Real Estate Co., Ltd. (referred to as "Shanghai Lutai") to Hongdu Real Estate and Tongxiang Shengshi Trading Co., Ltd. to take ownership of Huitong Energy is a prerequisite for each other.GameroomnearmeAfter the change of ownership, the real estate business needs to be spun off.

But the change of ownership came to an end after a month, and the divergence was that the parties could not agree on commercial arrangements such as the sale of 100 per cent stake in Shanghai Lutai. Tianyan survey data show that two Tongxiang Shengshi Trading Co., Ltd. and Tongxiang Wenshi Trading Partnership (limited partnership), which were set up specifically for the change of owners, have been cancelled in March 2023.

Revenue plummeted after divestiture of wind power business

Just in January this year, Huitong Energy successfully sold a 100% stake in Shanghai Lutai to Hongdu Real Estate and spun off its real estate development and operation business. In March this year, Huitong Energy revised the company's business scope, which does not involve real estate development and operation.

The market generally believes that Xizang Dejin has cleared the way for "selling shells".

Xizang Dejin is controlled by Tang Yuxiang, the head of Yutong Department. In 2019, Tang Yuxiang won up to 60% of Huitong Energy through a series of capital operations such as agreement transfer, tender offer and increase of holdings, and became the absolute controller of Huitong Energy. Since then, Huitong Energy has spun off wind power and other businesses, leaving housing rental and property services.

The entry of Xizang Dejin did briefly bring a significant increase to Huitong's energy performance. In 2020 and 2021, Huitong's net profit was 49.7216 million yuan and 60.2674 million yuan respectively, an increase of 115.53% and 21.21% over the same period last year, achieving the highest profit in a decade. The net profit of Huitong Energy fell to 9.268 million yuan in 2022 and rebounded to 56.454 million yuan in 2023.

The performance seems stable, but the operating income "betrays" the strength of Huitong Energy. Before 2018, Huitong Energy could steadily achieve annual revenue of 2 billion yuan. Since Xizang Dejin entered the business of divesting wind power and other businesses, Huitong Energy's annual revenue has never exceeded 200 million yuan at the level of 100 million yuan.