Subsidiary suffers a fire, Fengfan Co., Ltd.'s photovoltaic "withdrawal route" faces another obstacle

Ask AI · How does the fire accident affect the photovoltaic asset sale plan of Fengfan Co., Ltd.?

This article is sourced from Times Weekly, authored by Yu Chen.

Image source: TuChong

On the evening of March 29, Fengfan Co., Ltd. (601700.SH) released an announcement stating that at around 4:00 p.m. on March 27, a fire broke out in the cleaning area of the slicing workshop involving Suzhou Jingying Photovoltaic Electrical Technology Co., Ltd. (hereinafter “Jingying Photovoltaic”), a wholly-owned subsidiary of its controlling subsidiary. The fire accident has been extinguished under the rescue and firefighting efforts of the local emergency response department.

Fengfan Co., Ltd.’s announcement shows that the fire accident did not result in any casualties, but the on-site plant facilities and equipment were damaged to some extent. The company preliminarily expects that the accident will have a certain impact on full-year 2026 performance.

On the morning of March 30, relevant personnel from Fengfan Co., Ltd. told reporters from Times Weekly that the specific cause of the fire is still under investigation, and the subsequent conclusion will be based on the official notice from the local emergency management authority. As of now, the company is still unable to complete a comprehensive assessment of the direct and indirect economic losses caused by the accident. “The damaged assets involved in this incident have been insured under an all-risks property insurance policy, and the company has filed a claim with the insurer. The company will closely monitor the progress of this incident and timely fulfill its information disclosure obligations in accordance with regulations.” The above-mentioned relevant personnel from Fengfan Co., Ltd. said.

In the secondary market, as of the close on March 30, Fengfan Co., Ltd.’s share price fell 3.04% to 5.42 yuan per share, and the company’s total market capitalization was about 6.2 billion yuan.

It is worth noting that just 5 days before this fire occurred, on the evening of March 24, Fengfan Co., Ltd. announced that it planned to sell 60% of the equity interest it held in Jingying Photovoltaic. The related equity transfer project has been launched for preliminary listing on the Jiangsu Province Equity Exchange.

As a long-established manufacturer of power transmission towers and steel structures, Fengfan Co., Ltd. entered the photovoltaic sector in 2022 by acquiring 60% of the equity interest in Jingying Photovoltaic. From a high-profile entry to planning an exit, the company’s strategic stance toward its photovoltaic business has undergone a clear shift. And this sudden fire has also added uncertainty to this asset sale.

In its announcement, Fengfan Co., Ltd. frankly stated that, at present, the audit and appraisal work related to the equity transfer of Jingying Photovoltaic is still being advanced, and the impact of this incident on the appraisal work and the transaction progress remains uncertain.

Behind Fengfan Co., Ltd.’s divestment of photovoltaic assets is the sustained underperformance of this segment against expectations. Fengfan Co., Ltd.’s 2025 performance forecast shows that the company expects to incur a loss of between 320 million yuan and 380 million yuan in net profit attributable to shareholders for the full year; year-on-year it will swing from profit to loss. Among this, the goodwill impairment provision made only for the photovoltaic business alone is about 339 million yuan. Company insiders previously told reporters from Times Weekly that the main drivers of the expected loss in 2025 were dual pressures from goodwill impairment of photovoltaic assets and a downturn in industry cycles.

Although Fengfan Co., Ltd. fully received performance compensation of 393 million yuan in July 2025, the ongoing weakness of the photovoltaic business has not improved. Jingying Photovoltaic’s net profit in the first three quarters of 2025 was still -96.3176 million yuan, remaining in a continuous loss state. Against this backdrop, Fengfan Co., Ltd. implemented a capital reduction in January 2026 for another photovoltaic platform under its portfolio, Yueyang Jingying Photovoltaic Electrical Technology Co., Ltd.

While the photovoltaic business was taking a hit, Fengfan Co., Ltd. again attempted to open up new growth opportunities through cross-industry acquisitions, but so far it has not been successful.

On January 26, 2026, Fengfan Co., Ltd. announced that it planned to acquire 51% of the equity interests in Beijing Yanling Jiaye Intelligent Technology Co., Ltd. (hereinafter “Yanling Jiaye”) for 383 million yuan, entering the field of high-end intelligent equipment. At that time, the company said the acquisition would help fill its shortcomings in intelligent equipment and enable an upgrade from traditional equipment to intelligent equipment. Relevant insiders at Fengfan Co., Ltd. also stated that controlling shareholder Tangshan Industry Control implemented differentiated positioning for listed companies under its control, and Fengfan Co., Ltd. will focus on promoting a transformation toward intelligent equipment in the future.

However, the transaction drew market skepticism from the moment it was disclosed. Yanling Jiaye adopted the income approach and the market approach for valuation, and ultimately the income approach was used as the valuation result. As of the valuation date, September 30, 2025, the income approach valued the total shareholders’ equity of Yanling Jiaye at 751 million yuan, representing an appreciation rate of 249.77%. Yanling Jiaye achieved net profit attributable to shareholders of 3.2771 million yuan and 9.6389 million yuan for 2024 and January–September 2025, respectively, yet it committed that its cumulative net profit for 2026–2028 would not be less than 180 million yuan. The gap between the performance commitment and its historical profitability scale was substantial.

That evening, the Shanghai Stock Exchange issued a letter of inquiry requiring the company to provide supplementary explanations on four major aspects: the purpose of the transaction, the target company’s performance commitment and financial condition, the valuation of the target, the payment arrangements, and the transaction counterparty, among others.

Finally, this cross-industry acquisition—from disclosure to the planned termination—only took 5 days. On January 30, Fengfan Co., Ltd. announced it would terminate the acquisition of 51% of Yanling Jiaye’s equity interests. On March 21, Fengfan Co., Ltd.’s board of directors formally approved the resolution to terminate the acquisition. The plan for transformation through external expansion via M&A has temporarily failed.

As of now, the specific amount of losses caused by the fire at Yueyang Jingying, as well as the progress of insurance claims and the production resumption timeline, have not been clarified. The actual impact of this incident on Fengfan Co., Ltd.’s full-year 2026 performance still awaits further disclosure by the company.