CICC has released a research report initiating coverage on Tiangong International (00826) with an "Outperform" rating and a target price of HK$5.29.

On September 15, Tiangong International announced that its indirect subsidiary, Tiangong Cemented Carbide, has entered into an equity cooperation memorandum with Henan Zuoneng Precision Industry and its original shareholders. The agreement proposes an acquisition of approximately 48.42% of Zuoneng Precision's equity for RMB 46 million, alongside a RMB 5 million subscription for newly issued shares. Upon completion of the transaction, the company's stake will reach 51%.

The transaction values the target at a pre-investment valuation of RMB 95 million, with the pricing benchmarked against its estimated after-tax net profit of RMB 9.5 million for 2026. At this stage, both parties have only signed the equity cooperation memorandum, and subsequent audits and evaluations are still required. The completion of the transaction remains subject to uncertainty.