Analysis of the Rationality of 45.9% Premium in Debang Lighting's Acquisition of Jiali Co., Ltd.

Based on the detailed information and market data I have collected, I will provide you with a comprehensive analysis report on this acquisition transaction below.

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[1][2]:

• Total Transaction Consideration
  : RMB 1.454 billion (paid in cash)
• Acquisition Method
  : Combination of “transfer of existing shares + capital increase and share expansion”
  • Acquire 60,917,100 shares held by existing shareholders of Jiali Co., Ltd. for RMB 654 million
  • Subscribe to 100 million newly issued shares of Jiali Co., Ltd. for RMB 800 million
• Shareholding Ratio
  : Upon completion of the transaction, Debang Lighting will hold 67.48% of Jiali Co., Ltd.'s equity, achieving control
• Transaction Attribute
  : Constitutes a major asset reorganization, but does not constitute a restructuring listing

[1][2]:

Valuation Method	Premium Rate	Comparison Benchmark
Asset-based Approach Valuation	45.9%	Book net assets of Jiali Co., Ltd.
New Share Subscription Premium	24.8%	Net assets per share after private placement
Relative Market Stock Price	Approximately 6.1%	Jiali Co., Ltd.'s stock price was approximately RMB 8 per share before the acquisition announcement

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[3][4]

Debang Lighting has faced bottlenecks in main business growth in recent years:

• Stagnant Performance
  : From 2020 to 2024, performance remained stagnant overall; in 2024, net profit attributable to parent shareholders was RMB 347 million, a year-on-year decrease of 7.53%[3]
• Sluggish Growth
  : In the first three quarters of 2025, net profit attributable to parent shareholders was RMB 197 million, a year-on-year decrease of 23.65%[3]
• Declining Revenue
  : In 2024, revenue from lighting business decreased by 5.7% year-on-year

The company has clearly identified

, and this acquisition is a key initiative for strategic transformation.

[5]

Year	Target	Business Type	Amount/Details
2021	Shanghai Liangqin, Wuhan Liangxinpeng	Automotive Lamp Structural Components	70% shareholding
2021	BMS Controller Designation	Automotive Controller	RMB 1.27 billion (designated project)
This Time	Jiali Co., Ltd.	Automotive Lamp Assemblies	RMB 1.454 billion

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[6][7]

• Establishment Date
  : December 2006
• Main Business
  : R&D, design, manufacturing and sales of automotive (passenger vehicle, commercial vehicle) lamps
• Customer Structure
  : Direct cooperation with OEMs such as GAC Passenger Vehicle, Chery, BYD, Xpeng, FAW Toyota, GAC Honda
• Listing Status
  : Listed on the NEEQ Innovation Layer in November 2024 (ticker: 874616)

[3][4]

Indicator	2022	2023	2024	Jan-Aug 2025
Operating Revenue (RMB 100 million)	27.0	27.88	25.8	18.14
Net Profit Attributable to Parent Shareholders (RMB 100 million)	1.16	1.12	0.88	-0.13
Net Profit Margin	4.3%	4.0%	3.28%	-0.73%
Comprehensive Gross Margin	-	14.63%	15.59%	10.13%

:

• Declining Performance
  : In 2024, operating revenue decreased by 7.46% year-on-year, and net profit decreased by 21.49% year-on-year
• Recent Losses
  : Incurred a loss of RMB 13.2374 million in the first 8 months of 2025
• High Customer Concentration
  : Sales to top 5 customers account for over 60%
• Asset Quality Pressure
  : Accounts receivable of RMB 1.061 billion and inventory of RMB 412 million, accounting for over 40% of total assets combined

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Case	Premium Rate	Characteristics
Foshan Lighting’s Acquisition of Nanning Liaowang	Not Disclosed	M&A in 2021 to expand automotive lamp business
Xingyu Co., Ltd.'s Acquisitions	Industry average 20-50%	Mainly horizontal integration
This Transaction	45.9%	Valued using asset-based approach

From the perspective of comparable industry cases, the 45.9% premium rate is at the

, but it still falls within a reasonable range considering the following factors[1].

[1]

This acquisition uses the

instead of the income approach for valuation, avoiding the requirement for performance commitments:

• The “Reorganization Management Measures” stipulate that transactions using income approach valuation that result in a change of control should set performance commitments
• Jiali Co., Ltd.'s net profit attributable to parent shareholders exceeded RMB 87.9 million from 2022 to 2024, meeting the conditions for using the income approach for valuation
• Choosing the asset-based approach objectively reduces the counterparty’s risk exposure

[2][5]

Original Customers of Debang Lighting	Customers of Jiali Co., Ltd.	Synergy Value
Panasonic, Huayu Vision, Wanxiang (automotive lamp assembly manufacturers)	GAC, Chery, BYD, Xpeng, Toyota, Honda (OEMs)	Establish a complete link from components to OEMs

[5]

Debang Lighting’s Business	Jiali Co., Ltd.'s Business	Integrity After Integration
Automotive Controllers, Automotive Lamp Structural Components	Automotive Lamp Assemblies (headlamps, rear combination lamps, etc.)	Form a complete industrial chain layout of “controller + structural components + lamp assemblies”

Jiali Co., Ltd. has independently innovated free-form surface light shape design software and headlamp light distribution glass design software with international advanced levels[7], which can make up for Debang Lighting’s technical shortcomings in independent R&D of automotive lamps.

The new energy vehicle market is developing rapidly, and as an important carrier of intelligence, the value of automotive lamps per vehicle continues to increase:

• The trend of LED lamps replacing halogen lamps and xenon lamps is clear
• Intelligent functions such as ADB and DLP increase the added value of automotive lamps
• Opportunity in the window period of domestic substitution

Peers such as Foshan Lighting and Xingyu Co., Ltd. have accelerated their automotive lamp business layout through M&A, so Debang Lighting needs to speed up its strategic pace[5].

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Risk Category	Specific Risk	Risk Level
Performance Risk	Jiali Co., Ltd. incurred losses in 2025 and its gross margin declined (10.13%)	High
Integration Risk	Challenges of cross-regional and cross-cultural integration	Medium-High
Customer Risk	High customer concentration, and some customers have operational issues	Medium-High
Capital Pressure	RMB 1.454 billion accounts for 40.8% of Debang Lighting’s net assets at the end of 2024	Medium
Valuation Dispute	Choosing asset-based approach to avoid performance commitments, insufficient protection for minority shareholders	Medium

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:

1. Strategic Synergy Value
   : Establish a complete industrial chain from automotive lamp controllers to lamp assemblies, with significant customer resource complementarity
2. Industry M&A Practices
   : The 45.9% premium rate is within the normal range for M&A in the automotive lamp industry
3. Time Window Value
   : Under the trend of new energy vehicle intelligence, the integration of domestic automotive lamp enterprises is accelerating
4. Technology Acquisition Value
   : Directly obtain Jiali Co., Ltd.'s technical accumulation and customer resources, saving time for independent development

:

1. Declining Performance of the Target
   : Jiali Co., Ltd. has recently incurred losses, and its gross margin continues to decline
2. Asset Quality Pressure
   : Large amounts of accounts receivable and inventory, with impairment risks
3. Valuation Method Dispute
   : Choosing the asset-based approach to avoid performance commitments, with insufficient protection for listed company shareholders
4. Integration Uncertainty
   : The actual effect of cross-business integration remains to be verified

:

• Full-year performance of Jiali Co., Ltd. in 2025
• Progress of business integration after the acquisition
• Actual realization of synergies in automotive business
• Stability of subsequent cooperation with original customers such as GAC Group

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[1] Sina Finance - “Debang Lighting’s RMB 1.45 Billion Cash Acquisition: Choosing Valuation Method to Avoid Performance Commitments? Target’s Bet Failure Puts Huge Repurchase Pressure on Actual Controller” (https://finance.sina.com.cn/stock/observe/2026-01-14/doc-inhhhnwm4969390.shtml)

[2] Sina Finance - “Debang Lighting Acquires Jiali Co., Ltd., GAC Group is the Happiest” (https://cj.sina.cn/articles/view/7895291927/1d6989817001019vcg)

[3] Changjiang Business Daily - “Debang Lighting Plans to Acquire Jiali Co., Ltd. for RMB 1.454 Billion to Break Through; Target Incurs RMB 13.23 Million Loss in 8 Months with Accounts Receivable Reaching RMB 1.06 Billion” (https://finance.sina.com.cn/roll/2026-01-14/doc-inhhfmkx5313105.shtml)

[4] Leju Finance - “Ni Qiang Calls for ‘Accelerating Automotive Business Construction’, Debang Lighting Acquires Jiali Co., Ltd. for RMB 1.454 Billion” (https://m.10jqka.com.cn/20260116/c674070371.shtml)

[5] Guosen Securities/Minsheng Securities - Industry Research Report

[6] National Equities Exchange and Quotations - Public Transfer Instructions of Jiali Co., Ltd.

[7] Zhejiang Regulatory Bureau of China Securities Regulatory Commission - Introduction to Jiali Co., Ltd. (http://www.csrc.gov.cn/zhejiang/c105671/cef51545b208d43a0a36b5b5ba3b7f9ac/files/1638192365612_38044.pdf)

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: The chart above shows the core analysis dimensions of this acquisition transaction, including transaction structure, Jiali Co., Ltd.'s performance trend, acquisition premium comparison, and expected synergies.