Wandes' Annual Losses Expand After Being Incorporated into "Chery System"; Takes Over Latter's High Debt, Zero Revenue Assets Again

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Produced by: Sina Finance Listed Company Research Institute

Author: Hao

Recently, Wandes announced that it plans to purchase a 68% stake in Anhui Jiaqing Energy Technology Co., Ltd. (hereafter “Anhui Jiaqing”) from Wuhu Chery Resources Technology Co., Ltd., and also buy a 68% stake in Wuhu Minghao New Materials Co., Ltd. (hereafter “Wuhu Minghao”) from Anhui Jaxin Recycled Resources Co., Ltd., totaling 31.95 million yuan, involving battery recycling and auto dismantling businesses.

Both counterparties in this transaction are companies indirectly controlled by Wandes’ shareholder Ruiyuan International Resources Investment Co., Ltd. (hereafter “Ruiyuan International”), which is also under Chery Group. Therefore, this is an internal related-party transaction and capital operation within the “Chery system.”

By May 2025, Wandes’ control was transferred, officially joining Chery Group. However, after Chery’s involvement, Wandes’ revenue continued to decline, and losses widened. Meanwhile, accounts receivable turnover days kept rising, while related bad debt impairments decreased year by year—an abnormal divergence worth noting.

Currently, Wandes’ acquisition targets Anhui Jiaqing has a debt ratio of 88%, while Wuhu Minghao has zero revenue. At the same time, the company’s debt ratio has risen above 50%. Considering intangible assets increased sevenfold over four years, the actual debt burden is even heavier.

After Chery Group took control of Wandes and incorporated these problematic targets, it will undoubtedly further increase the company’s financial risks.

Losses Widen After Joining “Chery System” — Accounts Receivable Turnover Days and Bad Debt Impairments Diverge Long-term

Wandes’ main business includes environmental pollution control, zero-discharge industrial wastewater, waste salt resource utilization, and new energy material extraction. It went public on the STAR Market in 2020. However, that year also marked Wandes’ highest net profit; since then, profits have steadily declined, turning into losses in 2023.

In May 2025, Ruiyuan International, under Chery Holdings, acquired 100% of Wandes’ investment from its original controllers Liu Jun and Gong Jianrui for 413 million yuan, indirectly holding 28.88% of Wandes, becoming its largest shareholder, and officially joining Chery Group.

However, after Chery’s involvement, Wandes’ operations did not improve; performance continued to deteriorate. The company’s performance report shows that in 2025, Wandes achieved revenue of 506 million yuan, down 18.64% year-on-year, with a net loss attributable to shareholders of 114 million yuan, a 54% increase in losses.

It is noteworthy that in recent years, Wandes’ accounts receivable turnover days have kept rising, while bad debt losses have decreased annually. Despite expanding losses, the company’s performance “fudging” appears to have increased.

Wandes’ core business is environmental engineering and operations, mainly using BOT/Concession models. These projects typically have long construction cycles, with payments relying on government, urban investment, or large enterprise funding, often with acceptance, audit, and payment chains exceeding one year. For environmental engineering companies, accounts receivable are a critical lifeline.

Generally, as receivables age, expected credit losses should increase accordingly. The long-term divergence between Wandes’ receivable turnover days and bad debt impairments is abnormal and warrants caution.

One Acquisition Target with High Debt, One with Zero Revenue; Intangible Assets Increase Sevenfold in 4 Years, Debt Ratio Continues to Rise

Wandes plans to acquire 68% stakes in Anhui Jiaqing and Wuhu Minghao, both controlled by Ruiyuan International, for a total of 31.95 million yuan. The company states this aims to “expand new profit growth points and improve operational levels.” However, whether this will effectively improve the company’s performance remains uncertain.

According to the announcement, Anhui Jiaqing mainly engages in power battery recycling. As of December 31, 2025, its total assets were 48.58 million yuan, with liabilities of 42.98 million yuan, resulting in a high debt ratio of 88.48%. In the context of an industry where technical routes are undecided and channels are king, a company with net assets under 6 million and nearly 90% debt ratio has limited risk resistance.

Compared to Anhui Jiaqing, Wuhu Minghao’s financial situation is more concerning. Audited reports show that this company, involved in dismantling scrapped vehicles, had zero revenue in 2025 and a net loss of 2.27 million yuan; in 2024, revenue was also zero, with a net loss of 86,800 yuan. For Wandes, acquiring such an asset that has yet to generate cash flow involves significant risk.

Meanwhile, Wandes’ intangible assets increased from 100 million yuan at the end of 2021 to 710 million yuan by Q3 2025—an almost sevenfold increase in less than four years. Despite this, the company’s debt ratio has risen to a new high of over 51%, indicating a heavier debt burden.

After Chery Group took control and incorporated these problematic targets, it will likely further intensify the company’s financial risks. Whether these moves are normal industrial synergies or a major shareholder using the listed platform to offload high-risk assets for their own benefit is a matter of high market attention. Further similar operations may follow.