New M&A Case in New Energy Materials Sector: Cangzhou Mingzhu Acquired by Guangzhou Light Industry, High Pledge Risk Faces a Turning Point?

A notice of equity transfer set the wheels of fate in motion for Cangzhou Mingzhu, a plastic film manufacturer.

On the evening of October 16, Cangzhou Mingzhu announced that its controlling shareholder, Hebei Cangzhou Dongsu Group Co., Ltd., and its affiliates have signed an "Agreement of Intent on Share Transfer and Voting Rights Entrustment" with Guangzhou Light Industry & Trade Group Co., Ltd. According to the agreement, Guangzhou Light Industry will acquire a total of 19.58% of the voting rights of Cangzhou Mingzhu through "agreement transfer + voting rights entrustment," thus becoming the company's new controlling shareholder.

Image source: Cangzhou Pearl

If the transaction is completed, the actual controller of Cangzhou Mingzhu will change from private entrepreneur Yu Guiting to the Guangzhou Municipal People's Government State-owned Assets Supervision and Administration Commission. This news triggered a strong market reaction, and on the morning of October 17, Cangzhou Mingzhu's stock price hit the daily limit right after the market opened, maintaining at 4.26 yuan.

Image source: Daily Economic News

01 Transaction Structure Analysis: Two-Step Control Transfer

The transfer of control transaction is intricately designed, adopting a "two-step" strategy. The first step involves Guangzhou Light Industry acquiring 167 million unrestricted circulating shares of Cangzhou Mingzhu held by Dongsu Group through an agreement transfer, accounting for 10.00% of the company's total share capital. The initial transfer price is set at 4.263 yuan per share, which is a 5% premium over the average stock trading price of the 30 trading days prior to signing the letter of intent. The second step involves Dongsu Group and its concerted parties delegating the voting rights of the remaining 160 million shares they hold (accounting for 9.58% of the company's total share capital) to Guangzhou Light Industry. Upon completion of the transaction, Guangzhou Light Industry will directly hold 10% of the company's shares and control the voting rights of an additional 9.58% of shares through voting rights delegation, thereby controlling a total of 19.58% of the voting rights. The original controlling shareholder, Dongsu Group, will see its shareholding ratio decrease from 18.85% to 8.85%, losing control over the company. It is noteworthy that the shareholding ratios of Dongsu Group's concerted parties, Yu Lihui and Zhao Ming, will remain unchanged, but their voting rights will also be fully delegated to Guangzhou Light Industry.

High Proportion of Pledging: A Potential Trigger for Transfer of Control

The high proportion of equity pledge by the original controlling shareholder Dongsu Group behind this transfer of control has drawn attention.

Just a few days before the signing of the letter of intent (October 13), Dongsu Group had just pledged 38 million shares of the company it held. After this pledge, the total number of shares pledged reached 242 million, accounting for 77.09% of the company's shares it held, and 14.53% of the company's total share capital.

A high proportion of equity pledges often indicates that shareholders are under significant financial pressure. The announcement shows that the purpose of this pledge is to "supplement working capital," reflecting that Dongsu Group may be facing certain cash flow difficulties.

A high proportion of pledged shares may not only be one of the direct reasons driving the transfer of control but also a major risk point of the transaction. The announcement specifically emphasizes that the transfer of shares involves pledged shares, and it can only be completed after obtaining the consent of the pledgee and completing the procedures to release the pledge. This process may involve uncertainties.

03 Cangzhou Mingzhu's Main Business Analysis: Dual-Engine Driven by Plastic Products and New Energy Materials

Cangzhou Mingzhu was established in 1995 and listed on the Shenzhen Stock Exchange in 2007. It is mainly engaged in the research, production, and sales of various plastic products.

Image source: Cangzhou Mingzhu

The company's products are mainly divided into three categories: PE pipeline plastic products (37.27% share): mainly used in gas and water supply pipeline systems, this is the business segment with the highest revenue share; BOPA film plastic products (32.23% share): BOPA film is a high-performance packaging material widely used in soft packaging for food, pharmaceuticals, cosmetics, and other fields; lithium-ion battery separator new energy materials (26.12% share): this is a strategically important business that the company has focused on in recent years, and the lithium-ion battery separator is one of the core materials for new energy vehicle power batteries.

From the perspective of business structure, Cangzhou Mingzhu's traditional plastic products business is dominant, but it has also actively expanded into the new energy materials sector, presenting a pattern where traditional and emerging businesses are equally emphasized.

It is worth noting that the company's fundraising investment project, the "Annual Production of 38,000 Tons of High-Barrier Nylon Film Project (Cangzhou)," has been delayed several times. In response, Cangzhou Mingzhu stated on the investor interaction platform on October 17 that if the subsequent project of the "Annual Production of 38,000 Tons of High-Barrier Nylon Film Project (Cangzhou)" is put into production, the company will promptly release progress announcements on the project's production. Please pay attention to the relevant announcements issued by the company at that time.

04 2025 Performance, Control Transition amid Lackluster Growth

Based on public data, in the first half of 2025, Cangzhou Mingzhu achieved a revenue of 1.319 billion yuan, representing a year-on-year growth of 6.88%; the net profit was 82.81 million yuan, reflecting a year-on-year decrease of 6.15%.

The phenomenon of "increased revenue without increased profit" reflects that the company may be facing operational pressures such as rising costs or intensified competition. In the context of the fiercely competitive plastic products industry and fluctuating raw material prices, the company's profitability is challenged. It is particularly noteworthy that the lithium-ion battery separator business, as a key direction for the company's transformation, is facing dual pressures of industry capacity expansion and price competition. The performance of this business segment directly impacts the company's overall valuation and market expectations.

In this context, the introduction of Guangzhou Light Industry, which has a state-owned background, could bring multiple benefits to Cangzhou Mingzhu, such as financial support, resource integration, and optimization of governance structure, helping the company to address current operational challenges.

05 The strategic intent of Guangzhou Light Industry and the considerations of state-owned capital layout in new energy materials.

Guangzhou Light Industry, as the receiving party, is a primary state-owned enterprise directly under the Guangzhou State-owned Assets Supervision and Administration Commission, focusing on three main industries: daily consumer goods, fashion and cultural sports, and modern services. It is the first large enterprise group company in Guangzhou that integrates industry and trade, with the main shareholders being the Guangzhou Municipal Government (holding 90.03% of shares) and the Guangdong Provincial Department of Finance (holding 9.97% of shares).

Guangzhou Light Industry's acquisition of control over Cangzhou Mingzhu reflects several strategic considerations:

Firstly, by controlling a listed company, we can quickly enter the new energy materials sector, aligning with the local state-owned capital's strategy to focus on emerging strategic industries.

Secondly, the Letter of Intent reveals that after the completion of the transaction, Guangzhou Light Industry intends to subscribe to the private placement shares of the listed company, further consolidating its control and providing financial support to the company, indicating its intention for long-term shareholding and operation.

Thirdly, upon completion of the transaction, Guangzhou Light Industry will reorganize the board of directors of Cangzhou Mingzhu. The new board will consist of 9 directors, among whom Guangzhou Light Industry will nominate 4 non-independent directors and 2 independent directors, as well as nominate the chairman and the chief financial officer, to ensure actual control over the company.

Industry Impact and Insights: Observations on the Trend of State-Owned Enterprises Taking Control of Private Listed Companies

The change of ownership event of Cangzhou Mingzhu is a microcosm of the current trend in the capital market of state capital taking over private listed companies.

For the plastic film and new energy materials industry, this transaction may bring several impacts:

Industry consolidation accelerates, and the involvement of state capital may drive industry resources to concentrate on leading enterprises, altering the current competitive landscape.

The acceleration of technological upgrades and the support from state-owned capital may help enterprises increase R&D investment, promoting product technology iteration and innovation.

Industrial chain collaboration: the industrial resources of Guangzhou Light Industry may form a synergistic effect with Cangzhou Mingzhu's existing business, enhancing the company's market competitiveness.

With further disclosure of transaction details, the capital market will closely monitor the subsequent developments of this transfer of control.

Edited by: Lily

Sources: "National Business Daily," Caijing Society, Wind, Cangzhou Mingzhu Plastic Co., Ltd. (official announcement)