Termination of the spin-off listing triggers a surge in Lishi International's stock price

On the evening of April 1, Leoch International (00842.HK) announced that it would terminate the plan to split off LeochEnergy Inc. for a U.S. listing. On April 2, the share price surged immediately, with a one-day gain of 76.79%, closing at HK$0.99. Its market capitalization rebounded to HK$1.428 billion, making it a widely discussed market event.

Leoch International launched the spin-off plan in February 2025. It plans to spin off its wholly owned subsidiary LeochEnergy Inc. (LEI Group) and list it independently in the United States.

The LEI Group’s main business covers backup batteries, starting batteries, and traction battery operations across Europe, the Middle East, Africa, the Americas, and Asia-Pacific (excluding Mainland China, Hong Kong, and Macau). This is the company’s core overseas asset.

Leoch International plans to distribute all LEI shares to shareholders in-kind. For every 50 shares of Leoch International, shareholders will receive 1 share of LEI. Any fractional portion will be handled by the nominee selling the shares and returning the cash; there is no cash fundraising involved.

By the end of 2025, Leoch International classified the LEI-related assets and liabilities as “held for sale.” The profit for that year attributable to the segment was RMB 79.293 million. After the spin-off is completed, Leoch International will no longer hold its equity interest in LEI, achieving a full divestment.

Leoch International’s goal is to retain the Group’s focus on the China market. The spin-off entity will deepen its operations overseas, achieving business focus and optimized resource allocation, and thereby improving both parties’ valuations and financing efficiency.

On December 30, 2025, Leoch International submitted a 20-F filing to the U.S. SEC. On January 7, 2026, the plan was approved by the shareholders’ meeting. On April 1, citing changes in the market and regulatory environment, the company announced that it would terminate the spin-off at its current stage, and LEI would adjust its financing strategy.

Last December, after the spin-off proposal was disclosed, the market expected a valuation re-rating driven by the independent listing of overseas assets, leading to a phase of share price increases and a contest of funds around spin-off arbitrage opportunities. In January last year, once it entered the ex-rights phase, market expectations that the overseas assets would be divested led to a sharp 62.65% plunge in the share price that day, with the market capitalization shrinking significantly, followed by low-level trading in a range.

On April 1, announcing the termination of the spin-off means that all high-quality overseas assets return to the company. The company keeps a complete global business portfolio, and combined with demand for a rebound from the low end, the share price surged 76.79% on April 2, with an intraday peak gain of over 100%. Turnover reached HK$142 million, and trading activity increased significantly.

On March 31, 2026, Leoch International released its annual report for the previous year. During the reporting period, the company’s total revenue was RMB 17.212 billion, up 6.7% year over year. Driven by factors including tariff changes and rising costs, it recorded a loss of RMB 174 million, turning from profit to loss. The main reasons for the loss include changes in overseas tariff policies, new production line ramp-up pushing up production costs, and fluctuations in the RMB exchange rate, along with increased overseas market expansion and higher R&D spending, which put short-term earnings under pressure.

In terms of business, revenue from power supply solutions was RMB 15.453 billion, up 6.5% year over year; revenue from lead recycling was RMB 1.758 billion, up 8.4%. By product, revenue for data center and energy network batteries and starting batteries increased by 4.5% and 8.8%, respectively. Traction battery revenue declined slightly by 2.6%. Regional performance showed clear differentiation: Mainland China, EMEA, and Asia-Pacific (excluding Mainland China) rose by 6.4%, 7.7%, and 21.9%, respectively, while the Americas region fell slightly by 0.9%. The company’s R&D investment for the full year was RMB 374 million, up 9.3% year over year. It accumulated over 1,000 core patents and its products received multiple internationally authoritative certifications.

As of the end of 2025, the company’s total assets were RMB 15.523 billion and net asset value was RMB 4.842 billion. Bank borrowings were RMB 5.141 billion, and the capital-to-liability ratio was 36.3%.

Leoch International holds a leading position in the lead-acid battery sector, especially in the communications backup power supply segment where its market share is ahead. However, market concerns about the company’s traditional manufacturing attributes have pressured its valuation.

(Editor: Zhang Yang HN080)

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