Jingwei Hui's Trading Combination Punch: "Phasing Out the Old, Bringing In the New" to Switch Tracks and Survive

What is the deeper meaning behind AI·Fujie Technology’s asset takeover just 7 days after its establishment?

China Economic Journalists Gu Mengxuan and Li Zhenghao report from Guangzhou and Beijing

Recently, Weijing Huikai (300120.SZ) issued a “Notice on Planning Major Asset Restructuring” (hereinafter referred to as the “Restructuring Announcement”), proposing to transfer its electronic information sector assets to Shenzhen Fujei Technology Co., Ltd. (hereinafter “Fujei Technology”). The transaction is planned to be cash-only, with no share issuance involved, and is expected to constitute a major asset restructuring.

While divesting the electronic information sector, Weijing Huikai has proactively laid out high-quality assets for transformation, preparing for future business development. By October 2025, Weijing Huikai acquired 100% equity of ZTE System Technology Co., Ltd. (hereinafter “ZTE System”) for 850 million yuan. On March 10, Weijing Huikai announced that ZTE System had completed industrial and commercial change registration, officially becoming a wholly owned subsidiary.

Regarding the transfer of electronic information assets and the reasons for Weijing Huikai’s acquisition of ZTE Electronics, China Business Journal sent interview emails to Weijing Huikai. As of press time, the company has not responded.

Nanning College finance expert and PhD Shi Lei told reporters: “By ‘divesting loss-making electronic information sectors’ and ‘acquiring ZTE System,’ Weijing Huikai is resolutely implementing a ‘retreat from old and advance into new’ strategy, aiming to shift from traditional red ocean manufacturing to high-end information technology services.”

Shi Lei explained that on one hand, Weijing Huikai is decisively ‘stopping the bleeding’ by shedding continuous loss assets like LCD displays to optimize asset quality; on the other hand, it is precisely ‘changing lanes’ by shifting focus to high-barrier fields such as private network communications and digital solutions to build new growth poles. “This is not only an active ‘self-revolution’ during industry downturns but also a key move to achieve long-term sustainable development through thorough asset replacement,” he said.

The newly established company only 7 days ago

According to the restructuring announcement, the assets involved in the transfer include Xinhuikai Technology (Shenzhen) Co., Ltd. (hereinafter “Shenzhen Xinhuikai”) and its subsidiaries within the scope of consolidation, as well as Hunan Weijing Huikai Technology Co., Ltd., Zhuzhou Xinhuikai Technology Co., Ltd., and Weijing Huikai Technology (Shenzhen) Co., Ltd., covering all electronic information assets such as liquid crystal displays and touch modules previously laid out by the company, to achieve a complete divestment of this sector.

It is understood that these assets are among Weijing Huikai’s main businesses, mainly acquired through mergers and acquisitions, but fell into operational losses by 2025.

Weijing Huikai stated in the restructuring announcement that this transaction will divest the electronic information sector, allowing the company to focus on the development of the power equipment and information technology solutions sectors. The divestment is expected to accelerate the company’s transformation toward new productive forces.

“After this transaction, the company expects to recover a large amount of funds, which will help to continuously increase investment in new productive forces, focus on advantageous resources, expand into cutting-edge technology fields, and accelerate industrial transformation and upgrading,” the company said.

Shi Lei pointed out that Weijing Huikai plans to divest all assets in the electronic information sector mainly because this business was acquired at a high premium in 2017 and, affected by intensified industry competition and environmental changes, it suffered continuous losses in 2025, leading to significant goodwill impairment and becoming a major ‘bleeding point’ dragging down the company’s performance from profit to loss.

He further explained that this “amputation for survival” restructuring aims to recover funds through cash transactions, clear historical burdens, and stop investments in red ocean markets like LCD displays, focusing resources on traditional advantages in power equipment and new information technology solutions, thus speeding up the shift toward “new productive forces” and reshaping the business structure.

The reporter noted that this transfer will be conducted in cash and does not involve share issuance. Tian Lihui, director of the Financial Development Research Institute at Nankai University, told reporters that choosing cash transactions over share issuance is mainly due to three considerations:

First, after the transaction, the company expects to recover substantial funds. Cash transactions can directly strengthen financial capacity and reduce debt ratios, providing “ammunition” for subsequent transformation.
Second, avoiding share issuance prevents dilution of existing shareholders’ equity and maintains a stable ownership structure.
Third, Tian Lihui pointed out that the counterparty, Fujei Technology, is a newly established company only 7 days old. Using cash to assume debt facilitates rapid transaction progress and reduces negotiation complexity. More deeply, cash transactions convey management’s confidence in the transformation prospects. “By ‘shedding burdens’ to obtain cash flow, replacing uncertain equity consideration with certain cash payment, the company can concentrate resources on new productive forces,” he said.

According to enterprise warning data, the company was established on March 6, 2026. Just one week before Weijing Huikai announced the restructuring on March 13, 2026. The registered capital is 10 million yuan, with OLNIEC JEFFREY WILLIAM holding 80% and Yu Qiaohua holding 20%.

Why would a company established only 7 days ago become the acquirer in this transfer?

Tian Lihui explained that Fujei Technology is a strategic buyer well-prepared for this move.
First, it was established just 7 days before the announcement, serving as a typical special-purpose vehicle for asset stripping and risk isolation.
Second, although the assets have short-term losses, they are part of a mature manufacturing sector accounting for 70% of revenue, with existing capacity and customer base, offering low-cost integration value.
Third, Tian noted that Fujei Technology’s shareholders include foreign nationals, possibly indicating intentions of overseas industrial capital to leverage this transaction to expand China’s manufacturing capacity and achieve cross-border integration. For Fujei Technology, this is a reverse strategy of acquiring low-cost physical assets through debt assumption, betting on a cyclical recovery.

Internal and external difficulties

Weijing Huikai’s recent earnings forecast shows an expected net loss attributable to shareholders of 350 million to 450 million yuan in 2025, a significant turn from profit. The company explained that this is mainly due to goodwill impairment of the acquired Shenzhen Xinhuikai and the decline in performance of its touch display sector caused by international environment and intensified industry competition.

Shenzhen Xinhuikai is one of the assets being transferred. Weijing Huikai acquired Shenzhen Xinhuikai in 2017. After the acquisition, Shenzhen Xinhuikai’s performance initially improved but then declined.

From 2016 to 2019, Shenzhen Xinhuikai was under performance commitments. According to Weijing Huikai’s 2020 report on the performance commitment period, Shenzhen Xinhuikai achieved a cumulative net profit of 503 million yuan, with a performance completion rate of 105.38%, which helped Weijing Huikai’s net profit reach 137 million yuan in 2018.

Subsequently, Shenzhen Xinhuikai’s performance declined. According to annual reports from 2020 to 2023, its net profits were 94.46 million, 50.01 million, and 32.44 million yuan respectively.

In 2023, Shenzhen Xinhuikai first recognized goodwill impairment. Weijing Huikai’s 2023 annual report shows that the promotion of new touch display products and project execution did not meet expectations, leading to a goodwill impairment of 194 million yuan.

Regarding the poor performance of Shenzhen Xinhuikai and Weijing Huikai’s electronic information sector, Tian Lihui identified three reasons:

First, demand-side factors: global consumer electronics are weak, with declining shipments of smartphones and tablets, shrinking LCD module orders; supply-side factors: excessive domestic panel capacity, high industry inventory, and intensifying price wars have caused product gross margins to fall below break-even levels.
Second, cost pressures: fluctuations in raw materials and rising labor costs, coupled with the transition to OLED and Mini LED technologies, have rendered traditional LCD production lines obsolete with sunk costs.
Third, Tian emphasized that the most critical issue is the company’s insufficient R&D investment, which has hindered effective transformation into niche markets like automotive displays and industrial control screens. As a result, the company has gradually lost its differentiation advantage in red ocean competition, leading to cash flow exhaustion and the need for cutbacks.

Renowned financial writer and head of the Qiaoyuan Impact Research Institute, Gao Chengyuan, pointed out that the goodwill from Weijing Huikai’s high-premium acquisition of Shenzhen Xinhuikai failed to deliver expected returns. The profitability of traditional LCD display business has continued to deteriorate in the cycle downturn, forcing Weijing Huikai to cut losses decisively to preserve capital.

Gao further explained that overcapacity and fierce price competition in LCD and touch module fields, combined with weak downstream demand, have severely compressed profit margins. Accelerated technological iteration has increased asset impairment pressures, and the company’s failure to upgrade product structures in time has led to its performance predicament.

From manufacturing to services

The reporter noted that while divesting underperforming sectors, Weijing Huikai has also been actively acquiring high-quality assets. In October 2025, it acquired 100% of ZTE System Technology Co., Ltd. for 850 million yuan.

On March 10, Weijing Huikai announced that ZTE System had completed industrial and commercial change registration, officially becoming a wholly owned subsidiary.

ZTE System is a national-level “Little Giant” specializing in private network communications, industrial internet, smart energy, and government-enterprise digital solutions. It has high-quality customer resources and stable profit expectations. The shareholders of ZTE System have committed that its net profit for 2025, 2026, and 2027 will not be less than 215 million yuan in total.

Regarding the reason for acquiring ZTE System, Shi Lei believes it aims to break through the growth bottleneck of traditional manufacturing, strategically enter high-growth fields like private network communications and digitalization, and leverage its “specialized, refined, distinctive, innovative” technology and the commitment to over 215 million yuan in net profit over three years to significantly boost performance.

Shi Lei said this acquisition will generate multiple synergistic effects. Market-wise, leveraging ZTE System’s leading customer resources in rail transit and smart cities to complement existing products, rapidly expanding into new transportation and industrial scenarios.
Technologically, integrating communication and semiconductor layout to accelerate domestic substitution and enhance overall high-end information technology solutions.
In empowerment, using the listed company platform to strengthen project acquisition, with high-growth businesses feeding back to the parent company, ultimately driving the shift from “traditional electronic manufacturing” to “high-end information technology services.”

What does the divestment of the electronic information sector and the acquisition of ZTE System reveal about Weijing Huikai’s strategy? Tian Lihui pointed out that these moves collectively show a clear strategic shift of “retreating from manufacturing and advancing into services,” which is a survival reorganization in response to industry changes.

Vertically, it upgrades from LCD module OEM to information technology solutions, climbing the value chain toward higher added value links.
Horizontally, it shifts from the red ocean of consumer electronics to the blue ocean of government and enterprise digitalization, reducing dependence on a single industry cycle.

Tian emphasized that this transformation reflects the common anxiety and breakthrough attempts of Chinese manufacturing listed companies. When traditional capacity advantages turn into competitive burdens, business restructuring through mergers and acquisitions becomes necessary to sustain value in the capital market.
However, risks such as integration capabilities of new assets, goodwill impairment, and cross-sector operation uncertainties are critical tests for success. Investors should carefully evaluate whether “blood-selling” reorganizations can lead to substantive improvements, he concluded.