Cross-industry transformer insulation materials! Zhongying Technology plans to acquire a controlling stake in Yingzhong Electric, with both parties belonging to the same family.

Source: Times Weekly Report Author: Zhao Peng

Source: Tuchong

On the evening of February 27, Zhongying Technology (300936.SZ) announced that it is planning to purchase at least 51% of the shares of Changzhou Yingzhong Electric Co., Ltd. (hereinafter referred to as “Yingzhong Electric”) with cash and acquire controlling interest in the company. This transaction is expected to constitute a major asset restructuring and related-party transaction. Since this transaction does not involve issuing shares, the company’s stock will not be suspended according to the “Rules for Suspension and Resumption of Trading of Listed Company Stocks” and other regulations.

Zhongying Technology stated that if the transaction proceeds smoothly, the company will gain control of the target company, which will be included in the company’s consolidated financial statements. This will have a positive impact, help improve the company’s asset quality and overall competitiveness, expand business scale and profitability, and create value for all shareholders.

This is the second planned acquisition since Zhongying Technology went public. As early as July 23, 2024, Zhongying Technology issued a warning announcement about a major asset restructuring plan to acquire some equity of Suzhou Botemon Electric Motor Co., Ltd. However, due to the failure of both parties to reach an agreement on key terms of the transaction plan, Zhongying Technology announced the termination of the acquisition on December 20, 2024.

In the announcement of the acquisition of Yingzhong Electric, Zhongying Technology also stated that the transaction is still in the preliminary planning stage. The transaction plan and terms still need further discussion and negotiation. The company and the target company need to complete necessary internal and external decision-making and approval procedures, and there is a risk that these procedures may not be approved. Additionally, there is uncertainty in the transaction, and external environmental changes could lead to changes in transaction conditions, potentially resulting in the transaction being terminated.

Times Weekly reporter noted that Yingzhong Electric has three shareholders: Yu Yingzhong, Yu Biao, and Zhu Lijuan. Among them, Yu Yingzhong is the brother of Yu Weizhong, one of Zhongying Technology’s actual controllers, and Yu Yingzhong is the father and husband of Yu Biao and Zhu Lijuan, respectively.

Regarding the source of funds for the acquisition, Times Weekly reporter contacted Zhongying Technology, which stated that no decision has been made yet.

Intended Entry into Transformer Insulation Materials

On February 26, Zhongying Technology signed an “Letter of Intent” with shareholders Yu Yingzhong, Zhu Lijuan, and Yu Biao, proposing to acquire at least 51% of Yingzhong Electric’s shares with cash and gain control of Yingzhong Electric. The specific acquisition ratio will be determined by a formal agreement. After the transaction is completed, Yingzhong Electric will become a controlled subsidiary of Zhongying Technology and be included in the company’s consolidated financial statements.

Before this transaction, Yu Yingzhong held 60%, Yu Biao 30%, and Zhu Lijuan 10% of Yingzhong Electric. Yu Yingzhong and Zhu Lijuan are spouses, and Yu Biao is their son. Yu Yingzhong and Yu Weizhong, one of Zhongying Technology’s actual controllers, are brothers. Therefore, this transaction constitutes a related-party transaction.

Zhongying Technology disclosed that Yingzhong Electric is a professional supplier of insulating fiber materials and their molded products. After years of industry development, its products cover all voltage levels of power transmission and transformation equipment, including medium, low, high, ultra-high, and extra-high voltage AC/DC.

According to Changzhou Daily, Yingzhong Electric mainly produces and processes transformer accessories, switches, and insulators, and is a national-level specialized and innovative “Little Giant” enterprise. Its products are widely used in transformer industries, especially in ultra/high-voltage transformers, with several technologies filling domestic gaps. Major domestic transformer companies such as Shenyang TBEA, Xidian Group, Baoding Tainwei, and Shandong Electric Power are clients of Yingzhong Electric. The company is also a qualified global supplier for well-known enterprises like ABB, Siemens, and GE.

Currently, Yingzhong Electric’s ultra-high-voltage transformer insulation material production base project in Zhonglou Economic Development Zone, Changzhou, is under construction. As a key industry project for private investment in Jiangsu Province in 2026, with a total investment of 500 million yuan, the project aims to achieve independent and controllable domestic production of ultra-high-voltage insulation materials.

Since the Spring Festival this year, four workshops and one administrative building have been basically completed. In the largest insulation paperboard workshop, three production lines are being assembled and used for manufacturing transformer insulation paperboards. Besides this workshop, two others will produce structural parts and special-shaped parts. The entire project will add pulp processing, pressing, and wet forming equipment, ultimately reaching an annual production capacity of 25,000 tons of transformer insulation paperboard.

Zhongying Technology’s Performance Under Pressure

The acquisition of Yingzhong Electric by Zhongying Technology is a cross-industry move. Zhongying Technology focuses on the communications sector, with products centered on high-frequency communication materials, mainly high-frequency copper-clad laminates and VC heat sinks. Its downstream applications are concentrated in communication base stations and mobile phone cooling fields. Its subsidiary, Saiken Xuzhou, mainly produces lead frames used in semiconductor packaging and testing.

In 2021, Zhongying Technology was listed on the Growth Enterprise Market. After listing, its net profit attributable to the parent declined, and its performance experienced significant fluctuations.

Financial reports show that in 2021 and 2022, Zhongying Technology faced a situation of increasing revenue but decreasing profits. Although revenue grew by 3.41% and 13.94% respectively, net profit attributable to the parent decreased by 10.47% and 33.43% during the same period.

In 2023, Zhongying Technology’s performance rebounded. The company achieved a total revenue of 278 million yuan, a year-on-year increase of 12.14%, and net profit attributable to the parent of 146 million yuan, a year-on-year increase of over 324%. However, the Shenzhen Stock Exchange immediately inquired about six issues in the annual report.

In 2024, Zhongying Technology’s revenue was 275 million yuan, a decrease of 1.0%, and net profit was 31.64 million yuan, down 78.3% year-on-year.

In 2025, the company’s performance declined again. According to its earnings forecast, Zhongying Technology expects net profit attributable to the parent to be between 1.8 million and 2.7 million yuan, a decline of 91.47% to 94.31% year-on-year; and non-recurring profit and loss to be a loss of 5 million to 9 million yuan.

The company explained the decline in performance from two aspects. First, revenue decreased compared to the previous period, and net profit after deducting non-recurring gains and losses declined significantly, mainly due to macroeconomic impacts, weak domestic consumption, and intensified industry competition, leading to overall operational performance decline. Second, provisions for bad debts also impacted the results.

Financial reports show that Zhongying Technology’s debt ratio remains relatively low, and cash flow is relatively ample. At the end of 2023, 2024, and the first three quarters of 2025, the company’s asset-liability ratios were 6.06%, 8.42%, and 13.32%, respectively. Cash balances at year-end 2023, 2024, and the end of Q3 2025 were 239 million yuan, 452 million yuan, and 232 million yuan.