Goodwill Impairment Risk Analysis Report for Debang Lighting (603303): RMB 780 Million in Goodwill

Debang Lighting (Hengdian Group Debang Lighting Co., Ltd., Stock Code: 603303.SH) is an integrated lighting enterprise specializing in the R&D, production and sales of lighting products[0]. The company’s main business covers three segments: general lighting, automotive lighting and controller business, with products including LED lamps, lighting control systems, automotive electronics and other categories.

• Listing Venue: Shanghai Stock Exchange
• Industry: Electrical Equipment - Lighting Equipment
• Total Market Capitalization: Approximately RMB 6.94 billion (as of January 16, 2026)
• Latest Share Price: RMB 13.78

According to public information, Debang Lighting has book goodwill of approximately RMB 780 million[1]. The goodwill mainly comes from multiple historical external acquisitions, including but not limited to:

• Acquisition of TeYouShi Lighting:
  The company previously acquired assets related to TeYouShi Lighting, forming a certain scale of goodwill
• Acquisition of Jiantong Company:
  By acquiring enterprises in niche sectors such as Jiantong Company, the company expanded its business footprint
• Shanghai Liangqin/Hangzhou Дом and other subsidiaries:
  Through a series of mergers and acquisitions, the company formed its automotive lighting business segment

It should be specially noted that since the original 2024 annual report of the company is not available, for detailed information such as the specific composition of the RMB 780 million goodwill, impairment testing methods, and provision for impairment, it is recommended to refer to the official announcements disclosed by the company on the Shanghai Stock Exchange[2].

Financial Indicator	Value	Proportion
Total Assets	Approximately RMB 6.565 billion	-
Goodwill	Approximately RMB 780 million	Approximately 11.9%
Net Assets Attributable to Listed Company Shareholders	Approximately RMB 4.936 billion	-
Goodwill as a Percentage of Net Assets	-	Approximately 15.8%

From the above data, the proportion of goodwill in the company’s total assets and net assets is at a moderate level. However, considering the overall cyclical fluctuations in the lighting industry, the risk of goodwill impairment still requires continuous attention.

• Slowdown in global economic growth, putting pressure on the lighting industry’s exports
• Fluctuations in the RMB exchange rate affect overseas business revenue
• Changes in international trade environment lead to increased tariff costs

• Fierce competition in the lighting industry, with ongoing price wars
• Serious homogenization of LED lighting products, putting pressure on profit margins
• Accelerated industry integration, with small and medium-sized enterprises facing elimination pressure

• Uncertainty in the fulfillment of subsidiary performance commitments
• Business integration synergies may fall short of expectations
• Management challenges such as personnel integration and cultural integration

• Energy conservation and environmental protection policies drive the growth of LED lighting demand
• New energy vehicle policies benefit the automotive lighting business

• The company’s asset-liability ratio is at a reasonable level
• Operating cash flow performs well
• Interest-bearing debt ratio is only 0.37%, with small debt repayment pressure

Indicator	2024	2023	Year-on-Year Change
Operating Revenue	RMB 4.431 billion	RMB 4.697 billion	-5.7%
Net Profit Attributable to Shareholders	Approximately RMB 290 million	RMB 360 million	-19.4%
Goodwill	RMB 780 million	-	-

From the performance trend, the company’s operating revenue and net profit have declined for three consecutive years. In the first three quarters of 2025, the company achieved a net profit of RMB 197 million, a year-on-year decrease of 23.65%[3]. The performance decline increases the risk of goodwill impairment caused by subsidiaries failing to meet performance expectations.

The company is advancing a major asset restructuring, planning to acquire 67.48% of the controlling stake in Jiali Co. (873871.NQ), a company listed on the NEEQ, for RMB 1.454 billion in cash[4].

• Transaction Consideration: RMB 1.454 billion
• Target: 67.48% equity of Jiali Co.
• Evaluation Benchmark Date: August 31, 2025
• Evaluation Value of 100% Equity of Target: RMB 1.401 billion
• Loss of Jiali Co. from January to August 2025: RMB 28.83 million

After the completion of this acquisition, in accordance with accounting standards, the difference between the transaction consideration and the fair value of identifiable net assets will form new goodwill. If Jiali Co.'s future performance fails to meet expectations, it may face further goodwill impairment pressure.

According to the financial diagnosis model of Tonghua Shun, Debang Lighting’s overall financial condition in the past five years is good[3]:

Financial Dimension	Score	Industry Ranking	Evaluation
Profitability	4.41	14/110	Excellent
Operating Capability	4.23	18/110	Outstanding
Solvency	4.00	23/110	Strong
Cash Flow	4.86	4/110	Abundant
Growth Capability	2.18	63/110	Fair
Total Score	3.83	10/110	Good

• Average return on net assets (ROE) of 10.26%, with outstanding profitability
• Average net profit cash content of 174.03%, with excellent cash flow
• Average inventory turnover of 7.87 times per year, with strong inventory liquidity
• Interest-bearing debt ratio of only 0.37%, with small debt repayment pressure

• Latest Closing Price: RMB 13.78
• 52-Week Price Range: RMB 10.71 - RMB 16.94
• 52-Week Price Position: 49.3% (in the middle of the range)
• Year-to-Date Increase: 18.69%
• 20-Day Moving Average: RMB 13.21
• 60-Day Moving Average: RMB 13.34

From a technical perspective, the stock price is currently in a medium-term consolidation pattern, with the 20-day moving average and 60-day moving average converging, indicating a short-term directional choice.

Risk Type	Risk Level	Description
Goodwill Impairment Risk	Medium	The RMB 780 million goodwill accounts for a relatively high proportion; attention should be paid to subsidiary performance
Performance Decline Risk	Medium	Operating revenue and net profit have declined for three consecutive years
Industry Competition Risk	Higher	The lighting industry is highly competitive
Asset Restructuring Risk	Medium	Acquisition of Jiali Co. will result in new goodwill
Exchange Rate Fluctuation Risk	Low	High proportion of export business

• Pay attention to the details of goodwill impairment testing disclosed in the company’s 2024 annual report
• Pay attention to the progress of the Jiali Co. acquisition
• Pay attention to changes in macroeconomic conditions and industry policies

• If the goodwill impairment risk is fully released, consider accumulating on dips
• Pay attention to the growth potential of the automotive lighting business
• Pay attention to the dividend value brought by the high dividend policy

• Stable leading position in the lighting industry
• The automotive lighting business is expected to become a new growth driver
• The high dividend tradition provides a safety margin

• Goodwill impairment testing report in the company’s annual report
• Fulfillment of subsidiary performance commitments
• Integration effect after the acquisition of Jiali Co.
• Changes in the prosperity of the LED lighting industry
• Revenue growth rate of the automotive lighting business

Debang Lighting’s RMB 780 million book goodwill mainly comes from historical acquisitions. Given the company’s continuous performance decline in the past three years and the ongoing large-scale acquisition, the risk of goodwill impairment deserves investors’ attention. However, the company’s overall financial condition is robust, with excellent cash flow and small debt pressure, which provides a certain safety margin to cope with potential risks.

1. Detailed disclosure of goodwill impairment testing in the company’s 2024 annual report
2. Approval progress and performance commitments of the Jiali Co. acquisition
3. Actual growth of the company’s automotive lighting business
4. Changes in the prosperity of the lighting industry and the company’s market share

This report is for reference only and does not constitute investment advice. Investors should combine their own risk tolerance and make prudent decisions.

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[0] Jinling AI - Debang Lighting Company Profile and Real-time Market Data
[1] Public Information - Disclosure of Goodwill-related Information of Debang Lighting
[2] Shanghai Stock Exchange - Debang Lighting Announcement Disclosure Page (http://www.sse.com.cn)
[3] Tonghua Shun Finance - Debang Lighting 2025 First Three Quarters Performance Report
[4] Sina Finance - Debang Lighting Major Asset Restructuring Announcement
[5] Guosen Securities - Debang Lighting (603303.SH) 2025 Mid-year Report Review