Guocheng Mining borrows to acquire assets under the actual controller, with Tsinghua Wudaokou Finance PhD participating in the restructuring, resulting in a unrealized profit of 24 billion yuan.

Log in to the Sina Finance app and search for [Disclosure Requirements] to view more assessment tiers

By | Entrepreneurship Frontline

On March 7, Guocheng Mining released an announcement stating that the company and its consolidated financial statement subsidiaries will provide loan guarantee(s) of no more than RMB 5.56 billion to the company and its subsidiaries within the scope of the consolidated financial statements. This also means that, in the future, Guocheng Mining will further intensify its outward expansion.

As a mining enterprise, Guocheng Mining’s mine products include iron concentrate, zinc concentrate, copper concentrate, and more. Previously, after acquiring 60% of the equity in Guocheng Industrial, Guocheng Mining also expanded its business footprint to molybdenum concentrate.

With the acquisition and consolidation of Guocheng Industrial, Guocheng Mining achieved attributable net profit of RMB 1.076 billion in 2025. If the gains brought by the reorganization are excluded, Guocheng Mining’s net loss after deducting non-recurring items (扣非) reached RMB 257 million.

Against the backdrop of sustained increases in non-ferrous metal prices, why did companies that held iron concentrate, zinc concentrate, and copper concentrate before the reorganization continue to post losses? After the reorganization, can Guocheng Mining’s profitability climb to a new level again?

1 Interest expenses and a decline in titanium dioxide powder prices erode profits; losses after excluding non-recurring items continue for two consecutive years

According to publicly available information, Guocheng Mining was founded in 1978. The company’s predecessor was Fuling Building Ceramics Co., Ltd., and its main business was building ceramics.

In 1997, under the circumstances of being listed on A-shares only for a few years, Guocheng Mining completed its listing on the SZSE and became the first listed company in the Three Gorges reservoir area.

From 1997 to 2013, Guocheng Mining began diversified operations, with its business covering areas such as technology and trade. However, due to unstable operations, it often recorded losses, its stock was designated as ST multiple times, and the company underwent several name changes in the meantime.

In 2013, Guocheng Mining began a thorough transition to the mining sector. Through major asset restructuring, it divested low-efficiency assets and injected mining assets such as lead-zinc mines including Inner Mongolia Dongshengmiao Mining.

In 2018, the company’s then-controlling shareholder, Jianxin Group, was ruled by the court to undergo bankruptcy reorganization due to debt issues. The company’s current controlling shareholder, Guocheng Group, became the controlling shareholder of Guocheng Mining by participating in the reorganization of Jianxin Group.

With support from Guocheng Group, Guocheng Mining continued to invest and conduct acquisitions, with its operating scale expanding year by year. Its product types include iron, zinc, copper, lead, and more. After that, Guocheng Mining also gradually laid out production of titanium dioxide powder and lithium minerals.

With continuous outward expansion, Guocheng Mining’s revenue scale has also been growing. In 2024, the company’s operating revenue before adjustments was RMB 1.918 billion, reaching a historical high.

Although operating revenue continued to rise, the company’s net profit after excluding non-recurring items posted a loss of RMB 90.18 million. In 2025, the company’s net profit after excluding non-recurring items further widened to a loss of RMB 257 million.

Guocheng Mining’s continued losses after excluding non-recurring items are closely related to its later expansion into the titanium dioxide powder business and relatively high interest expenses.

Due to continuous external investments, Guocheng Mining’s interest-bearing liabilities continued to grow. By the end of 2023, the balance of its various interest-bearing liabilities was nearly RMB 1.399 billion, a clear increase from RMB 904 million at the end of 2022.

Under this impact, Guocheng Mining’s interest expense rose significantly. In 2024, the company’s interest expense was RMB 129 million, up more than RMB 88 million from RMB 40.85 million in 2023. In 2025, the company’s interest expense increased to RMB 160 million.

In addition, the titanium dioxide powder business that the company expanded aggressively faced a downturn in the industry, resulting in continuous losses. In 2024, the annual average price of titanium dioxide powder was about RMB 15,716 per ton, down 9.61% year over year. Under this impact, in 2024 the company recorded inventory impairment mainly for titanium dioxide powder of RMB 62.533 million, whereas in the same period of 2023 it was RMB 8.729 million.

In 2025, the average price of titanium dioxide powder was RMB 13,677 per ton, down again by about 12% year over year. Therefore, even though spot prices of copper, aluminum, lead, and zinc continued to rise, due to falling titanium dioxide powder prices and massive interest expense, Guocheng Mining still recorded losses for two consecutive years.

2 Taking on debt to acquire assets held by the company’s actual controller; the target company’s valuation grows by over 80% in two years

Against the backdrop of sustained losses in performance, in 2025 Guocheng Mining still completed a “David-and-Goliath” style reorganization.

In November 2025, Guocheng Mining announced that it plans to acquire 60% of the equity in Inner Mongolia Guocheng Industrial Co., Ltd. held by its controlling shareholder, Guocheng Holding Group Co., Ltd., for RMB 3.168 billion.

On December 30, 2025, Guocheng Mining announced that, currently, the payment for the transaction consideration had been completed and all asset transfer procedures had been fully completed, marking the official completion of the acquisition. With this acquisition, Guocheng Mining successfully brought Guocheng Industrial into its consolidated financial statements, and the resulting impact is that in 2025 Guocheng Mining turned losses into profits.

On March 24, Guocheng Mining disclosed its annual report. In 2025, Guocheng Industrial achieved operating revenue of RMB 4.806 billion and attributable net profit of RMB 1.076 billion. In 2024, the company’s operating revenue before adjustments was only RMB 1.918 billion, and its attributable net profit was a loss of RMB 113 million.

It is understood that the core asset of Guocheng Industrial is a large molybdenum mine. It holds 124 million tons of ore and 144,800 tons of molybdenum metal, and it is advancing its mining scale from 5 million tons per year to 8 million tons per year. The average ore grade is 0.117%, ranking among the top in the industry.

Although the overall grade is high, unlike copper and other bulk commodity metals used in power grids, molybdenum is a main raw material for various kinds of steel. More than 80% of molybdenum is used to manufacture alloy steel, stainless steel, tool steel, and high-speed steel.

Therefore, although Guocheng Industrial has strong profitability, this acquisition still caused considerable controversy in the market. As early as April 2022, Guocheng Mining planned to acquire 100% of Guocheng Industrial’s equity. But because Guocheng Industrial had provided a guarantee for Guocheng Group’s RMB 2.9 billion loan, this acquisition ended in failure.

The controversy lies in the fairness of the valuation used in the acquisition. In June 2023, Guocheng Group purchased an 8% stake in Guocheng Industrial from Wumili Trust at a price of RMB 231 million. Based on this, Guocheng Industrial’s valuation at that time was only RMB 2.888 billion.

It is worth noting that in 2023, Guocheng Industrial’s revenue and attributable net profit were RMB 2.612 billion and RMB 1.449 billion, respectively. In 2025, Guocheng Industrial’s operating revenue and attributable net profit both declined to RMB 2.442 billion and RMB 1.146 billion, respectively.

In the past two years, with the Federal Reserve cutting interest rates, metal bulk commodity prices surged, but this did not include molybdenum. Molybdenum’s main use is manufacturing various kinds of steel; and due to the continued slump in property sales, demand for steel is also shrinking.

Therefore, Guocheng Industrial’s sales price for molybdenum products continued to decline. In 2023, Guocheng Industrial’s sales unit price for molybdenum concentrate was RMB 316,800 per metal ton, which fell to RMB 311,800 per metal ton in the first half of 2025.

Against the backdrop of performance decline and lower product sales prices, Guocheng Industrial’s valuation did not fall but rose. In this acquisition, Guocheng Mining spent RMB 3.168 billion to obtain 60% equity. Based on that, the total transaction valuation of Guocheng Industrial was RMB 5.28 billion, which is an increase of more than 80% compared with RMB 2.888 billion in June 2023.

It is worth noting that this acquisition was mainly carried out with a cash purchase. For this reason, Guocheng Mining significantly increased its external borrowing. As of December 31, 2025, the total balance of Guocheng Mining’s long-term borrowings, short-term borrowings, and non-current liabilities due within one year exceeded RMB 3.9 billion, while as of September 30, 2025, the total balance of the above items in the company was only RMB 1.5 billion.

Under this impact, the company’s asset-liability ratio also rose from 58.82% as of September 30, 2025 to 69.55%. Meanwhile, as the former controlling shareholder of Guocheng Industrial, Guocheng Group successfully obtained RMB 3.168 billion in cash.

3 A PhD in finance from Tsinghua PBC School of Finance runs the reorganization; the personal investment has an unrealized gain of about RMB 24 billion

Based on information disclosed about Guocheng Mining’s asset reorganization, its controlling shareholder, Guocheng Group, also faces significant debt pressure. By obtaining this funding, Guocheng Group’s own debt pressure was alleviated to some extent.

By the end of 2024, Guocheng Group’s total liabilities were as high as RMB 2.189 billion. Because the disclosed financial data is not complete, the amount of short-term liabilities that Guocheng Group needs to repay in the short term is not known to the outside world. At present, the equity transfer payment of RMB 3.168 billion it received can fully cover the liabilities as of the end of 2024.

However, judging by the fact that its 100% pledged equity is being used and that the loan requires the listed company to provide a guarantee, its debt situation is not optimistic. Wind data shows that Guocheng Group and its wholly controlled subsidiary, Gansu Jianxin Industrial Co., Ltd. (hereinafter referred to as “Jianxin Industrial”), together hold 784 million shares of Guocheng Mining, accounting for 66.18% of the company’s shares.

At present, the combined number of pledged shares by Jianxin Industrial and Guocheng Group totals as many as 699 million shares, representing as much as 89.13% of their shareholding. In particular, the 318 million shares directly held by Guocheng Group are almost pledged at 100%.

From May 19, 2020 to December 30, 2020, Guocheng Group also cumulatively illegally occupied RMB 30.4132 million of listed company Guocheng Mining. In addition, Guocheng Group borrowed RMB 200 million from Anhui Rongheng Commercial Management Co., Ltd., with the guarantee provided by Guocheng Mining.

Because this guarantee failed to fulfill disclosure obligations, the listed company Guocheng Mining, Guocheng Group’s actual controller Wu Cheng, and then-chairman Wu Jiangen, then-general manager Ying Chun Guang, then-finance director Wu Bin Hong, general manager Li Wubbo, and finance director Guo Wei were subject to regulatory penalties including a notice of criticism.

It is worth noting that in January 2018, Guocheng Group had successively contributed RMB 5 billion to participate in the bankruptcy reorganization of Jianxin Industrial. Meanwhile, the founding time of Guocheng Group is September 2017. From the timing, it seems to have been set up specifically for the bankruptcy reorganization of Jianxin Industrial.

From the equity structure perspective, Wu Cheng is the actual controller of Guocheng Group. He directly and indirectly controls 77% of Guocheng Group’s equity, making Wu Cheng the actual controller of Guocheng Mining as well.

Image / Equity structure relationship diagram of Guocheng Industrial

Previously, according to a publicly reported report by Caixin Media, in relation to an RMB 1.1 billion loan from a bank in Gansu, certain guarantors believed that the actual purpose of this loan was for Guocheng Group to participate in the bankruptcy reorganization of Jianxin Industrial, and to withdraw the loan from Lanzhou Bank through three-party shell companies. Although this has not been confirmed, it has nevertheless pushed Wu Cheng, the actual controller, onto the spotlight.

Judging from Wu Cheng’s work background, his handling of the reorganization of Jianxin Industrial, and his high-price sale of Guocheng Industrial—whose actual control he held—to Guocheng Mining, Wu Cheng is undoubtedly a master of capital operations.

Public information shows that Wu Cheng is a PhD in GFD Finance from the Tsinghua University PBC School of Finance. According to the PBC School of Finance, its global financial GSFD program (Global Scholars Finance Development Program, referred to as the “global scholars program”) is one of the top teaching programs positioned by Tsinghua PBC School of Finance, with very high requirements for student quality, and it integrates top educational resources from inside and outside Tsinghua University.

Only considering his academic career, Wu Cheng has achieved a high level of knowledge and broad networking accumulation in the finance field.

From the result, Wu Cheng, through participating in the reorganization of Jianxin Industrial and selling Guocheng Industrial to a listed company, has indeed made a fortune.

When Guocheng Group was established, Wu Cheng personally invested RMB 3.5 billion to hold 75% of the company. Subsequently, through equity transfers and other methods, his direct and indirect shareholding ratio rose to 77%.

The most valuable part of Guocheng Group is undoubtedly its equity holdings in Guocheng Mining. As of March 27, Guocheng Mining’s share price was RMB 42.44 per share, up more than 300% from the low point in April 2025. Currently, Guocheng Group directly and indirectly holds 784 million shares of Guocheng Mining. Based on Wu Cheng’s control of 77% of Guocheng Group’s equity, his personal indirectly held equity in Guocheng Mining has an unrealized gain of about RMB 22 billion.

If we also include the cash obtained from Guocheng Group’s prior sale of its equity in Guocheng Industrial and the remaining equity in Guocheng Industrial, participating in the reorganization of Jianxin Industrial has led to Wu Cheng having an unrealized gain of about RMB 24 billion.

From the perspective of outsiders, Wu Cheng, the actual controller of Guocheng Mining, is undoubtedly a veteran in capital operations. Under his control, Guocheng Mining, through a series of capital operations, has generated over RMB 1 billion in attributable net profit, and its market capitalization has surpassed RMB 50 billion. At the same time, he has also earned a windfall through his ownership of Guocheng Mining. Whether he can take Guocheng Mining to yet another level depends on whether the management can seize this current bull market in bulk commodities to further increase metal extraction volume and thereby achieve performance growth.

Huge amounts of information and precise interpretation—right in the Sina Finance app