HK Stock Market Move | JIA YAO HLDGS (01626) has dropped nearly 35% again. The company has invested heavily in acquiring an AI gaming company and signed a profit guarantee agreement.

JIA YAO HLDGS (01626) has fallen nearly 35%, and as of the time of writing, it is down 30.16%, trading at HKD 16.58, with a turnover of HKD 12.95 million. In terms of news, JIA YAO HLDGS announced that it plans to acquire an 80% stake in AI gaming company Jiuwangli Technology for a maximum of HKD 430 million. This transaction will be fully paid for by JIA YAO HLDGS issuing shares, at a price of HKD 21 per share, which is approximately a 17.9% discount compared to the closing price prior to the announcement, involving the issuance of around 20.5 million shares, accounting for about 3.42% of the total share capital. It is worth noting that the parties to the transaction have signed a profit guarantee agreement. Jiuwangli Technology guarantees that for the entire year ending December 31, 2026, its after-tax net profit will not be less than HKD 50 million. However, the company's net profit for the fiscal year 2025 was only RMB 310,000. Based on the HKD 430 million acquisition for an 80% stake, the overall valuation is approximately HKD 540 million, which corresponds to a price-to-earnings ratio of over 1,700 times.