Dongguan Holdings Responds to Nearly 40% Premium Acquisition of Loss-Making Unit
Dongguan Holdings announced on September 22 it will acquire a 65% stake in Dongguan Low-Altitude Economy Development Co. from its controlling shareholder for 6.0542 million yuan, a 37.27% premium over net asset value. The target posted losses of 2.2148 million yuan in 2025 and 1.7362 million yuan in the first half of 2026. Dongguan Holdings will also assume a 13.65 million yuan capital injection obligation. Securities representative Zhou Xiaomin defended the premium, citing the target's exclusive airspace and approved route resources as intangible assets justifying the income approach valuation.
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Common ground
- Both sides agree the Dongguan Holdings acquisition involves a state-owned enterprise buying a loss-making subsidiary from its parent company at a premium.
- Both acknowledge the target company holds exclusive airspace rights in Dongguan, which is part of China's low-altitude economy strategy.
- Both recognize the transaction is small at 6 million yuan and publicly disclosed with regulatory oversight.
Points of contention
- The Eastern agent sees the deal as strategic, patient capital investment in a future industry, while the Regional agent views it as a risky, unfair transfer of losses to minority shareholders.
- The Eastern agent argues the parent company's continued ownership aligns interests, but the Regional agent says the lack of arm's-length negotiation lets the parent set any price it wants.
- The Eastern agent says no performance guarantees are normal for strategic assets with regulatory barriers, while the Regional agent insists guarantees are needed to protect minority shareholders.
- The Eastern agent compares this to US government support for Tesla, but the Regional agent says that involved clear milestones, not a related-party sale at a premium.
Blind spots
- Neither side fully addresses how the local community or public interest is considered in granting exclusive airspace rights over a major city.
- Both focus on financial and governance details but overlook the potential environmental or safety impacts of the low-altitude economy on residents.
- The debate assumes the strategic value of airspace rights is certain, without discussing what happens if the technology or market fails to develop as expected.
WorldAttention’s read
This debate highlights a fundamental clash between two views of state-owned enterprise deals. The Eastern agent argues the acquisition is a smart, small-scale pilot that lets China invest patiently in a future industry like low-altitude aviation, using exclusive airspace rights as a key asset. The Regional agent counters that it's a classic case of a parent company offloading a failing business onto its listed subsidiary at an inflated price, with no protections for minority shareholders. Both sides agree the deal is tiny and publicly disclosed, but they disagree sharply on whether that makes it prudent or a dangerous precedent. A major blind spot is the lack of discussion about how the public—especially residents of Dongguan—might be affected by handing over airspace rights without their input. Ultimately, the Eastern agent sees this as a competitive advantage for China, while the Regional agent sees it as a governance risk that could erode trust and value over time.
Reporting timeline
Dongguan Holdings to Buy Loss-Making Unit at 40% Premium, Cites Exclusive Airspace
Dongguan Holdings announced on September 22 that it will acquire a 65% stake in Dongguan Low-Altitude Economic Development Co., Ltd. from its controlling shareholder, Dongguan Transportation Investment Holding Group, for 6.0542 million yuan. The deal represents a nearly 40% premium for a loss-making asset, and Dongguan Holdings will also face a subsequent capital injection obligation of 13.65 million yuan and total payable capital and equity consideration of nearly 20 million yuan. Losses incurred by the target company from the valuation date to the equity transfer date will be borne by the transferees in proportion to their shareholding. Zhou Xiaomin, Securities Affairs Representative of Dongguan Holdings, stated that as a state-owned enterprise reform pioneer, the company needs to layout strategic emerging businesses. The target company's government and commercial flight service orders are gradually expanding and accumulating. Zhou noted that since the acquisition amount is only over 6 million yuan, the company intends to use this to explore and test the emerging industry, and has already made arrangements in this field through participating in related industrial funds.
Read sourceDongguan Holdings Defends Premium Acquisition of Loss-Making Low-Altitude Economy Unit
Dongguan Holdings announced plans to acquire a 65% stake in Dongguan Low-Altitude Economy Development Co., Ltd. from its controlling shareholder, Jiaokong Group, for 6.0542 million yuan. The deal represents a nearly 40% premium over the asset's book value, despite the target company currently being loss-making. In response to investor concerns about the valuation method, Zhou Xiaomin, the securities representative of Dongguan Holdings, explained that the target operates in an emerging industry and its temporary losses are due to early-stage investments. Zhou emphasized that the company is the only state-owned low-altitude economy platform in Dongguan, holding approved air route resources that are intangible assets not captured by the asset-based valuation method, thus justifying the use of the income approach to reflect future value.
Dongguan Holdings Responds to Nearly 40% Premium Acquisition of Loss-Making Subsidiary from Parent
Dongguan Holdings announced on September 23 that it plans to acquire a 65% stake in Dongguan Low-Altitude Economic Development Co., Ltd. from its controlling shareholder, Jiaokong Group, for 6.0542 million yuan. The acquisition price represents a nearly 40% premium over the target's net asset value, despite the company currently being loss-making. In response to investor concerns about the valuation method, Zhou Xiaomin, the securities representative of Dongguan Holdings, explained that the target company operates in an emerging industry and its temporary losses are due to significant early-stage investment. Zhou emphasized that the low-altitude economy company is the only state-owned platform for low-altitude economy in Dongguan, possessing approved air route resources. These intangible assets, Zhou argued, cannot be reflected through the asset-based valuation method and can only be captured by the income approach to demonstrate future value.
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Dongguan Holdings to Buy Loss-Making Low-Altitude Unit at 40% Premium, Cites Exclusive Airspace
Dongguan Holdings (SZ:000828) announced on September 22 that it will acquire a 65% stake in Dongguan Low-Altitude Economic Development Co., Ltd. from its controlling shareholder, Dongguan Communications Investment Group, for 6.0542 million yuan. The deal values the target at a 37.27% premium over its net asset value of 6.7852 million yuan, despite the company posting a net loss of 2.2148 million yuan in 2025 and a further loss of 1.7362 million yuan in the first half of 2026, with revenue of only 949,200 yuan. Dongguan Holdings will also assume a 13.65 million yuan capital injection obligation and bear losses from the valuation date to the closing date. The company's securities representative, Zhou Xiaomin, defended the premium, stating the target is the only state-owned low-altitude economy platform in Dongguan with exclusive airspace and approved route resources, which cannot be captured by asset-based valuation. She added that the acquisition is a strategic exploration of emerging industries, with no performance guarantee clause because the buyer will fully control operations post-transaction. The other 35% of the target will be acquired by three other subsidiaries of the same parent group, effectively transferring the early-stage costs and consolidation pressure from the parent to its subsidiaries.
Read sourceDongguan Holdings to Buy Loss-Making Unit at 40% Premium, Cites Exclusive Airspace Rights
Dongguan Holdings (000828.SZ) announced on September 22 evening that it will acquire a 65% stake in Dongguan Low-Altitude Economy Development Co., Ltd. from its controlling shareholder, Dongguan Communications Investment Holding Group (Jiaokong Group), for 6.0542 million yuan. The transaction values the target at a 37.27% premium over its net asset value of 6.7852 million yuan, despite the company reporting a net loss of 2.2148 million yuan in 2025 and 1.7362 million yuan in the first half of 2026. Dongguan Holdings will also assume obligations including a 13.65 million yuan capital injection for unpaid registered capital and bear all losses from the valuation date to the closing date. The company's securities representative, Zhou Xiaomin, defended the premium, stating the target is the only state-owned low-altitude economy platform in Dongguan with approved airspace and route resources, which cannot be valued through asset-based methods. She added that the acquisition is a strategic exploration into emerging industries, with no performance guarantee clause because the buyer will fully manage the company post-transaction. Three other Jiaokong Group subsidiaries will acquire the remaining 35% stake, effectively transferring the early-stage development costs from the parent to its subsidiaries.
Read sourceDongguan Holdings Responds to Nearly 40% Premium Acquisition of Loss-Making Unit
Dongguan Holdings' securities affairs representative Zhou Xiaomin, responding to an investor inquiry, stated that the target company operates in an emerging industry and its temporary losses are due to early-stage investments and large expenditures. Zhou emphasized that the low-altitude economy company is the only state-owned platform for the low-altitude economy in Dongguan, possessing approved route resources. These intangible assets cannot be reflected through asset-based valuation methods and can only be valued through the income approach to demonstrate its future value. The statement comes amid the company's plan to acquire a loss-making asset from its controlling shareholder at a nearly 40% premium.
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