(Yicai) May 21 -- Golden Dragon Development plans to extend a CNY1 billion (USD138 million) loan, which would give the Chinese investment firm some breathing space after terminating the sale of its stake in Zhongshan Securities.

Because of great debt pressure, Golden Dragon aims to extend a loan with a total principal of CNY1 billion, the Qingyuan-based company announced on May 19.

Golden Dragon had a debt-to-asset ratio of over 80 percent at the end of the first quarter. As of Dec. 31, its overdue and unpaid debts had exceeded CNY700 million (USD97.1 million).

Last year, Golden Dragon announced in two separate statements that it would sell its whole stakes in Zhongshan Securities and Dongguan Securities for various reasons, including recovering funds, optimizing its financial structure, hiking its cash flow, improving its business performance, and accelerating its business transition to data centers.

Half of Golden Dragon's stake in Dongguan Securities has already been transferred, with the change in shareholders awaiting regulatory approval.

On May 19, Golden Dragon also announced that it had terminated the sale of its stake in Zhongshan Securities to avoid remaining without a specific business operation after the transfer, which would be against existing stock exchange regulations.

According to Golden Dragon's original plan, after transferring the stakes in the two securities firms, the company would shift its main business focus to the computing power leasing and value-added services industry, with external collaborations and investments of up to CNY1 billion.

However, its 2024 financial statements showed that progress in the computing power business remained at the initial stage, having only signed cooperation intention agreements.

Zhongshan Securities achieved an operating income of CNY800 million last year, up 76 percent from the year before. It turned a net loss into a net profit of CNY150 million (USD20.8 million) in the period.

Dongguan Securities reported a revenue of CNY2.8 billion in 2024, up 28 percent from the previous year. Net profit widened 45 percent to over CNY900 million.

Due to significant financial burdens, Golden Dragon was unable to emerge from the red last year. The company's revenue soared 245 percent to CNY660 million, but it still incurred a net loss of CNY90 million (USD12.5 million).

Shares of Golden Dragon [SHE: 000712] were trading down 1.3 percent at CNY12.59 (USD1.75) as of lunch break in Shenzhen today, giving it a market capitalization of CNY11.3 billion (USD1.6 billion).

Editor: Futura Costaglione