On December 30, 2025, Hong Kong-listed company DAIDO GROUP (Stock Code: 00544.HK) announced that it has signed a letter of intent to acquire two data centers with a total capacity of 30 megawatts for $11.4 million (approximately HK$88.8 million) through a joint venture entity established in Delaware, USA. This move signifies a formal cross-industry foray into the computing power sector by a traditional enterprise primarily engaged in cold storage and food trading, a strategic shift driven by its ongoing operational woes of declining revenue and widening losses.
The determination to transform stems from a harsh financial reality. The company's interim report for 2025 revealed a stark picture: first-half revenue plummeted 38.6% year-on-year to just HK$76.6 million, while net loss attributable to owners expanded significantly to HK$36.9 million, an 86.4% increase in the loss margin. More critically, its asset-liability ratio has soared to 111.68%, the current ratio is a precarious 0.27, and net asset value per share stands at negative HK$0.21, indicating the company is technically insolvent.
A singular business structure has exacerbated operational risks. Cold storage and related services contributed a hefty 88.21% of revenue, but this core business is facing multiple headwinds, including shifting consumption patterns in Hong Kong and rising costs. As cross-border shopping trends intensify, local warehousing demand continues to shrink, leading to customer attrition and worsening price competition. Despite attempts to counter this through measures like warehouse relocation and staff reductions to cut costs, the company has been unable to reverse the downward trajectory.
DAIDO GROUP's announcement emphasized a logical synergy: data centers and cold storage facilities share common requirements, such as handling high electrical loads, precise temperature control, and specialized storage infrastructure. The board views this acquisition as a "strategic extension of the Group's core expertise in managing high-energy-consumption industrial infrastructure." By leveraging existing technical capabilities in the computing power domain, the company plans to transform into a high-end storage infrastructure operator, aiming to generate recurring revenue through an "Infrastructure-as-a-Service" model.
The value of the target assets extends beyond their current use. The announcement revealed that these data centers could potentially be repurposed for high-demand fields like AI computing in the future, providing the group with versatile industrial real estate. Furthermore, securing access to US land and power resources could lay the groundwork for subsequent expansion into the AI data center business.
However, the US data center market is already an arena for industry giants. Companies like EDGNEX have announced massive expansion plans, with investments reaching $20 billion targeting 2,000 megawatts of capacity; traditional markets like Virginia and Texas are also grappling with power supply crises—Virginia could face a 41.4% electricity shortfall by 2050, and Texas's grid planning reserve margin is projected to turn negative by 2027. Against this backdrop, the ability of DAIDO GROUP's acquired 30-megawatt facility to compete effectively remains highly uncertain.
A more profound risk lies in the controversy surrounding the industry's profitability model. While US AI data centers are currently contributing to GDP growth, this is primarily driven by capital investment rather than consumer demand, with Harvard University research pointing to thin commercial returns. Tech behemoths like Microsoft and Google have poured hundreds of billions of dollars into the sector yet struggle to show profits. The assets chosen by DAIDO GROUP are currently only servicing Bitcoin mining, which offers limited technological sophistication and added value.
The transaction's structure raises strategic questions. Designed as a joint venture (with DAIDO holding a 60% stake), the total consideration of $11.4 million, while less than 15% of the group's market capitalization, still poses a strain on its tight cash flow. Notably, the deal lacks any performance-based guarantees, and the target assets have a history of sustained losses.
This acquisition appears even more adventurous when contrasted with industry trends closer to home. Coinciding with DAIDO GROUP's US announcement, its headquarters city, Datong, is aggressively promoting an industrial transformation, attracting investments exceeding 70 billion yuan from companies like Chindata Group and Zhonglian Data, resulting in the construction of 326,000 standard racks. Given the maturity of the local industrial ecosystem, the decision to venture far afield has sparked market skepticism regarding the clarity of the group's strategy.
For DAIDO GROUP, this cross-industry leap represents both an opportunity and a last-ditch effort. Successful integration could allow the company to escape the decline of its traditional business via the computing power track; failure, however, could accelerate financial deterioration due to resource dispersion. Capital markets are already signaling caution: since December 31, 2025, the company's stock price has stagnated at HK$1.9 for six consecutive trading days, with average daily turnover of only tens of thousands of Hong Kong dollars, and it has had no investment bank coverage for 90 days.
The group emphasized in its announcement that it aims to create stable returns through a "space leasing + power management fee" model. Yet the industry reality is that demand for Bitcoin mining services is highly volatile, and the AI computing track requires sustained, massive capital investment. For DAIDO GROUP, with annual revenue under HK$150 million, whether its financial strength and technical积累 can support long-term competition remains to be seen.