Zhan Ding System's Two-Year Capital Dream Shattered: Second Shareholder Departures, Related Company Defaults, and Restructuring Failures | Titanium Media In-Depth

When Ba Yi Shi Kong (688181.SH) announced on March 9th that it was divesting its 11.5892% stake in Nantong Zhanding, a capital narrative around AI liquid cooling and new semiconductor materials was officially torn open. This deal, with a 123% premium and net profit exceeding 86 million yuan, seemed like a perfect financial arbitrage, but it concealed a darker undercurrent—the collapse of the “Zhanding system” capital map. Once pursued by well-known institutions like Sequoia Capital and with a valuation soaring 700% in 27 months, this star target is now falling from the peak, while the mastermind behind it, Chen Chaoqi, and his “Electronic Fluorinated Liquid + Electronic Special Gas” empire, have faced successive capital setbacks over two years.

From the cross-border acquisition failure of Shimao Energy, to the penalty for Sunflower’s restructuring, to Nantong Zhanding’s massive losses and the hurried exit of secondary shareholders, the rise and fall of the “Zhanding system” is not only a failure case for a capital player but also a reflection of the profound shift in the capital market’s attitude toward “hard technology” and “domestic substitution” concepts—from frenzy to rationality.

At the Peak of the Bubble: The Myth of Valuation and Capital Hunting of Star Targets

Looking back to 2022, the acceleration of AI computing infrastructure construction made submerged liquid cooling the core cooling route for AI servers, ushering in a golden window for electronic fluorinated liquids. Nantong Zhanding, founded just four months earlier, quickly gained favor with capital due to its main product advantages—leading domestic liquid crystal display materials company Ba Yi Shi Kong was among the first to enter, investing 20 million yuan in the first round of capital increase at a pre-money valuation of 150 million yuan, acquiring 11.11% equity, and positioning it as a strategic layout in new materials.

At that time, Chen Chaoqi, leveraging his experience at Semiconductor International and Applied Materials, positioned himself as a “technology expert” to endorse the “Zhanding system,” rapidly building a blueprint across electronic fluorinated liquids and electronic special gases.

As the AI industry continued to heat up, capital’s pursuit of hard tech targets intensified, causing Nantong Zhanding’s valuation to soar. By March 2025, Ba Yi Shi Kong invested an additional 50 million yuan, pushing Nantong Zhanding’s pre-investment valuation to 1 billion yuan—nearly six times the initial valuation—with a total investment of 70 million yuan, making it the second-largest shareholder. During this round, well-known institutions like Sequoia Capital, Changjiang Innovation Investment, and Dingfeng Investment entered, elevating Nantong Zhanding to industry star status—taking less than three years from founding to surpassing 1 billion yuan in valuation, with a maximum increase of 700% in just 27 months, creating a capital frenzy.

At that time, Ba Yi Shi Kong was very confident about Nantong Zhanding. In November 2025, at a meeting with nearly 50 institutions, the company’s secretary publicly stated that “Nantong Zhanding is developing well” and promised to support its growth through various means. The capital market also held high expectations for this cross-border investment, viewing it as a key move for Ba Yi Shi Kong to break through core business bottlenecks and seize the AI liquid cooling track.

However, few noticed that behind this valuation frenzy lurked hidden risks. As early as November 2024, the “Zhanding system” attempted to connect with the A-share market—Shimao Energy (605028.SH), under pressure from its main business, planned to issue shares to acquire at least 58.07% of Nantong Zhanding, aiming to cross into the semiconductor materials field. At that time, Nantong Zhanding’s valuation was capped at “no more than 1.2 billion yuan,” but just four months later, Ba Yi Shi Kong’s pre-investment valuation during capital increase dropped to 1 billion yuan, indicating that before institutions like Sequoia entered, Nantong Zhanding’s valuation had already quietly shrunk.

More notably, Shimao Energy’s restructuring was abruptly terminated after three days of suspension, with the official reason being “failure to reach consensus among parties,” but it was more likely due to potential risks uncovered during due diligence. The day after the restructuring announcement, the Shanghai Stock Exchange issued a regulatory work letter swiftly, and the abnormal stock price fluctuations before suspension, along with four QFII investors rushing in and then quickly exiting, cast further doubt on this cross-border M&A.

Image source: Tianyancha APP

Fading Glory: The Truth Behind the Downturn in Hot Sectors

Ba Yi Shi Kong’s liquidation announcement was the first to disclose Nantong Zhanding’s core operational data, shattering external expectations. Despite being in the explosive liquid cooling sector, Nantong Zhanding’s trajectory was the opposite—its revenue and net profit declined sharply, turning from profit to loss.

In 2024, China’s AI computing infrastructure entered a peak period, with major internet companies and cloud service providers expanding data centers, leading to a surge in demand for liquid-cooled servers. The fluorinated liquid market exploded. IDC forecasted that from 2024 to 2029, China’s liquid-cooled server market would grow at a CAGR of 46.8%, reaching $16.2 billion by 2029; QY Research predicted that by 2030, the global immersed cooling liquid market in data centers would reach $970 million, with a CAGR of 21.2%.

In this context, fluorochemical companies like Guyue股份, Yonghe股份, and Sanmei股份 benefited, with their 2025 performance soaring.

Image source: IDC report

Meanwhile, Nantong Zhanding delivered an awkward report: in 2024, its total revenue was only 108.75 million yuan, with a net profit of just 85,100 yuan—almost negligible. In the first three quarters of 2025, revenue further declined to 21.19 million yuan, and net profit turned into a loss of 41.54 million yuan. While the industry experienced explosive growth, Nantong Zhanding suffered massive losses, a stark contrast that cannot be simply explained by “industry cycles” or “market pain points.”

Source: Announcement

What’s more puzzling is that, despite poor performance, Nantong Zhanding continued to expand capacity—building factories in Jiangxi, Gansu, and other regions. According to media reports, Chen Chaoqi’s controlled Jiangxi Zhanding signed an investment promotion agreement with Jinxian County government, but project progress was far below expectations, and the company was sued by local state-owned shareholders for breach of promise, with a claim of 16.8 million yuan. Jiangxi Zhanding’s plant was left idle for a long time, and its temporary offices were shut down for unpaid electricity bills. Meanwhile, Chen Chaoqi transferred employees and assets from Jiangxi Zhanding to Gansu Zhanding free of charge, further worsening Nantong Zhanding’s operational difficulties. The Gansu project, although seemingly progressing quickly—environmental assessments announced in March 2025, groundbreaking ceremonies in May—appeared more like a capital operation stunt than genuine industry development. Nantong Zhanding’s website, aside from a brief company introduction, lacks detailed information on products, technologies, or clients, revealing a stark disconnect between its actual operations and the “star target” image crafted by capital.

Related Collapse: The Final Straw Crushing Investor Confidence

If Nantong Zhanding’s poor performance caused doubts, then the collapse of its related company Xipu Materials’ restructuring shattered the confidence of Ba Yi Shi Kong and other investors. As another core asset in Chen Chaoqi’s “Zhanding system,” Xipu Materials was deeply intertwined with Nantong Zhanding, forming a mutually beneficial community—“one glory, one loss.” Its failed backdoor listing became the trigger for the collapse of the “Zhanding system” capital map.

In September 2025, just six months after Ba Yi Shi Kong completed its second round of investment in Nantong Zhanding, Sunflower (300111.SZ) announced a major asset restructuring plan to acquire 100% of Xipu Materials, branding it as a “rising star in semiconductor materials.” It claimed to adopt a “customized OEM + self-production” profit model, with mature technology and customer channels. After the announcement, Sunflower’s stock hit three consecutive limit-ups, with trading volume surging, but the seemingly promising restructuring was soon exposed by media and regulators.

Investigations revealed that Xipu Materials’ own factories were still under construction and lacked autonomous production capacity. Its main products were standardized, and the so-called “customized OEM + self-production” model was misleading. The company claimed to supply from two factories, but one only had a lease intention without a formal contract, and the other was still under construction, making capacity realization impossible. Moreover, Xipu Materials was suspected to be a trading company, relying on external procurement for its core product, electronic fluorinated liquids, rather than self-production.

Under regulatory inquiries and market skepticism, Sunflower terminated the restructuring in January 2026, and in March received a “Pre-Notification of Administrative Penalty” from Zhejiang Securities Regulatory Bureau, being fined 5.1 million yuan for misleading disclosures. The then-chairman and secretary were also penalized. This failed restructuring not only cost Sunflower heavily but also exposed the “Zhanding system” capital operation model—Chen Chaoqi’s attempt to promote assets via “shell change” ended in a fall due to false statements.

It’s worth noting that Xipu Materials and Nantong Zhanding had deep related-party transactions: Xipu Materials was both a purchaser of Nantong Zhanding’s electronic fluorinated liquids and a provider of customer referrals. The head of Xipu Materials once said, “Xipu Materials was established early and has strong customer relationships, which can help Zhanding materials attract customers.” But after Xipu Materials collapsed, its customer resources could no longer support Nantong Zhanding, turning the original business synergy into risk transmission, further intensifying Nantong Zhanding’s operational pressure. Even more concerning, multiple companies controlled by Chen Chaoqi operated similar businesses, yet only pushed Xipu Materials into restructuring, revealing obvious competitive conflicts and raising serious questions about the compliance of his capital operations.

Capital Withdrawal: The Final Wake-up Call for the Zhanding System

From the failure of Shimao Energy’s restructuring in 2024 to Sunflower’s penalty and Ba Yi Shi Kong’s exit in 2026, in just two years, Chen Chaoqi’s “Zhanding system” saw its two core assets suffer heavy setbacks in the capital market. Its “electronic fluorinated liquids + electronic special gases” industrial map is now teetering.

Reviewing the “Zhanding system” capital operation path, its core logic is clear: leveraging Chen Chaoqi’s semiconductor background, packaging hot-track targets, inflating valuations through capital speculation, and then attempting to list via mergers and acquisitions for capital realization. This “storytelling and concept hype” model thrived during the period of frenzy over hard tech concepts but lacked genuine performance support and compliance awareness, ultimately leading to a bubble burst.

Ba Yi Shi Kong’s exit was a warning sign. Its 2025 performance brief subtly indicated, “Previous investments involved performance commitments and compensation clauses, which are under negotiation.” Given the massive losses of the targets, related-party collapses, and doubts about the actual control capabilities, holding onto these stakes posed enormous risks.

The rise and fall of the “Zhanding system” also serve as a stark warning to the capital market. Recently, “hard tech” and “domestic substitution” have become hot pursuits, attracting large capital inflows into AI, liquid cooling, semiconductor new materials, and other sectors. However, some investors blindly follow trends, neglecting the real operational capabilities and technological strength of companies, leading to inflated valuations. Meanwhile, regulatory tightening—such as inquiries into Shimao Energy’s restructuring and penalties after Sunflower’s restructuring—demonstrates the authorities’ resolve to regulate the market and protect investors’ interests.

Today, Chen Chaoqi’s capital dreams have been severely dashed, and the future of the “Zhanding system” is uncertain. With Nantong Zhanding sued, Gansu Zhanding’s capacity questioned, Nantong Zhanding’s huge losses, and Xipu Materials’ IPO dreams shattered, this entrepreneur—who combines technical expertise and capital acumen—still faces the challenge of reconstructing the “Zhanding system” narrative. The market’s judgment remains to be seen.