Lirn Technology confirms $8.4M related-party stake as target posts $1.9M profit
What's the deal? Lirn Technology (001259.SZ) said on November 7 that its board held a supplementary review to confirm a related-party investment first completed in April 2026. The company had paid US$8.25M for a 15% stake in Shanghai Chaoxian Xinchuang Optoelectronics, acquiring US$727.4K of new registered capital.
Why now? At the time of the deal, Lirn did not flag it as a related-party transaction and skipped the required review and disclosure steps. Chaoxian's controller, Feng Hongwei, may indirectly control 5% of Lirn through a Shanghai partnership, which makes him a related party and the investment a related-party deal. The resolution still needs shareholder approval.
By the numbers: Chaoxian, founded on April 20, 2026, reported unaudited revenue of US$7.58M and net profit of US$1.82M for April to September. As of end-September, it held total assets of US$78M and net assets of US$41.7M.
Those figures cover a minority holding, not results Lirn can consolidate or book as equivalent earnings.
What's the endgame? Lirn calls the deal a financial investment made with its own funds, meant to share in growth from the electronic-cloth sector at low cost while keeping an exit open. It can nominate one director and holds a buyback right priced at the investment plus 6% annual interest, minus any dividends received.
What could go wrong? Lirn's stake is already shrinking. After Chaoxian raised fresh capital in September, lifting registered capital to US$6.47M, Lirn waived its subscription rights and its holding is set to fall to 9%. In May, the company said Chaoxian had not yet started operations and stressed that its core business remains small home appliances, with no plan to pivot to electronic cloth.
The signal: The target's profit is eye-catching for a company only months old, but the real story is governance, not a transformation. Lirn's own first-nine-month revenue rose 27.2% and net profit attributable to shareholders climbed 59.3%, though on a small base. The supplementary review underscores the compliance gap and investment risk, not a windfall for Lirn's bottom line.
Read more: sohu.com
Image credit: Generated with Gemini
