Ka Shui International Holdings Limited to Acquire Remaining 40% Stake in Magnesium Alloy Subsidiary

Key Points of the Transaction

• Acquisition Announcement: On 17 March 2026, Ka Shui International Holdings Limited (“Ka Shui” or the “Company”, stock code: 822) announced that its wholly-owned subsidiary, Ka Shui Metal Company Limited, has entered into a sale and purchase agreement to acquire the remaining 40% equity interest in its indirect subsidiary, Kamay New Material Technology (Yulin) Company Limited (“Target”), from Jiaxian Zhongtuo Huixin Technology Co., Ltd. (“Vendor”).
• Total Consideration: The deal is valued at RMB14.3 million, to be settled in cash within 30 days after the completion of the equity transfer registration with the PRC’s Administration for Industry and Commerce.
• Transaction Structure: The consideration was determined based on the Target’s unaudited net assets of RMB31.4 million as of 31 December 2025, the 40% stake being acquired, as well as the Vendor’s share of unpaid government subsidies and certain costs owed to the Vendor.
• Listing Rules Implications: The size of the acquisition falls within the “discloseable transaction” category under Chapter 14 of the Hong Kong Listing Rules, as the highest applicable percentage ratio exceeds 5% but is below 25%. This requires public disclosure and reporting.

Strategic Rationale and Potential Impact

• Full Control Achieved: Upon completion, the Target will become an indirect wholly-owned subsidiary of Ka Shui. This gives the Company full management autonomy and control over the subsidiary’s operations, facilitating faster decision-making and operational flexibility.
• Product & Market Expansion: Full ownership enables Ka Shui to accelerate the development, trial, and commercialization of advanced magnesium alloys, including flame-retardant, corrosion-resistant, and high thermal conductivity products. These alloys are increasingly sought after as alternatives to aluminum and plastics, especially given regulatory and cost trends.
• Competitive Advantages: The Target benefits from lower energy and raw material costs in Northwest China, and has established die casting capacity. Ka Shui plans to leverage these advantages to offer integrated magnesium alloy and die casting solutions, and expand its business across the entire Northwest region of China.

Financial and Other Details

• Target Company’s Performance: The Target recorded unaudited losses of RMB2.439 million for the year ended 31 December 2024 (2023: loss of RMB2.318 million). Net assets stood at approximately RMB31.4 million as at 31 December 2025.
• Funding: The consideration will be financed entirely from Ka Shui’s internal resources. Both parties will equally share the transaction costs related to the equity transfer.
• Conditions Precedent: The acquisition is contingent on obtaining all necessary consents and approvals, entering into key supply agreements for crude magnesium and raw coal gas, and ensuring all warranties and obligations are met and true at completion.
• Relationship with Vendor: The Vendor and its ultimate beneficial owners are confirmed as Independent Third Parties under the Listing Rules, ensuring no connected person transaction concerns.

Details About Ka Shui and the Vendor

• Ka Shui Group: The Company is engaged in the manufacture and sale of zinc, magnesium, aluminium alloy and plastic products, trading of lighting products, provision of vehicle repair services, sales of special purpose vehicles, new energy vehicle power systems, and production of smart home and other products.
• The Vendor: Jiaxian Zhongtuo Huixin Technology is an investment company whose ultimate beneficial owners are Zhang Zhenping and Yang Wendi.
• Target Company: Kamay New Material Technology (Yulin) focuses on the manufacture and sale of metallic materials in the PRC, and was previously a 60%-owned indirect subsidiary of Ka Shui.

Shareholder Implications and Potential Price Sensitivity

• Shareholder Value: The transaction is designed to strengthen Ka Shui’s competitive position in the growing magnesium alloy market, potentially enhancing long-term shareholder value through improved operational synergies, market reach, and product innovation.
• Potential Price Sensitivity: Achieving 100% ownership over a strategically important subsidiary in a growth sector, and the prospect of business expansion and cost advantages, are likely to be viewed positively by the market and could impact the share price.
• Risks: Investors should note the Target’s recent operating losses, but the acquisition aims to address these through full integration and management control.

Board Composition

As at the date of the announcement, the Board comprises four executive directors (Mr. Lee Yuen Fat, Mr. Wong Wing Chuen, Ms. Chan So Wah, and Ir. Chan Sin Wing) and four independent non-executive directors (Professor Sun Kai Lit, Cliff BBS, JP, Ir. Dr. Lo Wai Kwok GBS, MH, JP, Mr. Kong Kai Chuen, Frankie, and Mr. Tang Koon Yiu, Thomas).

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The information is based on company disclosures as of 17 March 2026 and may be subject to change.

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