Hengfeng Paper Completes Jinfeng Paper Acquisition as Target Returns to Profit

Mudanjiang Hengfeng Paper has completed the final substantive stage of its acquisition of 100% equity in Sichuan Jinfeng Paper, following the disclosure of transition-period profit and loss results related to the transaction.

In an announcement issued on May 11, Hengfeng Paper said Jinfeng Paper recorded a net profit of 4.49 million yuan during the transition period from June 1, 2025 to February 28, 2026. Under the terms of the agreement, profits generated during the period belong to Hengfeng Paper, while any losses would have been borne by the original shareholders.

The result marks Jinfeng Paper’s first return to profitability after several years of losses. The company reported losses of 17.78 million yuan in 2022, 22.47 million yuan in 2023, and 2.27 million yuan in 2024, indicating a gradual operational recovery ahead of the acquisition’s completion.

The transaction’s core asset is Jinfeng Paper’s Tobacco Monopoly Production Enterprise License, a qualification held by only a limited number of companies in China, with approvals for new licenses largely suspended. The final transaction price was 254 million yuan, paid through the issuance of 30.81 million shares at 8.25 yuan per share, representing 9.35% of Hengfeng Paper’s total share capital.

Hengfeng Paper said the acquisition supports several strategic objectives, including easing production capacity constraints, expanding its presence in Southwest China, and strengthening product and technology integration between the two companies. Jinfeng Paper’s Chengdu production base is located near major tobacco industry customers including Yunnan Tobacco and Sichuan Tobacco, while also providing logistics advantages through access to the China-Europe Railway Express network.

The acquisition is also expected to support Hengfeng Paper’s planned expansion into the heated-not-burn (HNB) tobacco market by leveraging Jinfeng Paper’s production qualifications and operational experience in the tobacco paper sector.

With the transition-period profit and loss arrangements finalized, the companies will move forward as parent and subsidiary entities, focusing on operational integration, capacity utilization, and the commercialization of Jinfeng Paper’s tobacco-related production assets.