Guanghetong plans to acquire Hangsheng Electronics' control rights; the target company has previously sought independent listing on the A-share market.

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        Reporter｜Cai Ding    Editor｜Huang Sheng              

On the evening of March 24, Guanghetong (SZ300638) announced that the company is planning to purchase the controlling rights of Shenzhen Hangsheng Electronics Co., Ltd. (hereinafter referred to as Hangsheng Electronics) by means of a cash transaction. The transaction price and the acquisition ratio are subject to further demonstration and negotiation. Upon completion of this transaction, Hangsheng Electronics will become a controlling subsidiary of the company.

According to the announcement, based on preliminary estimates, this transaction is expected to constitute a major asset restructuring and a “major transaction” under the relevant rules of the Hong Kong Stock Exchange. However, this transaction is planned to be carried out by cash and does not involve the company issuing shares, does not constitute a related-party transaction, and will not result in any change in control of the listed company. It is worth noting that the company’s shares will not be suspended for this planned matter. Guanghetong will fulfill its information disclosure obligations in a timely manner in stages based on the progress of the relevant matters.

The target company has been established for over 32 years

Guanghetong said that this transaction is still in the planning stage, and the transaction parties have not yet signed any related agreements. The specific transaction proposal still needs to be further demonstrated and negotiated, and it is also necessary to complete the necessary internal and external decision-making and approval procedures required by the company, the target company, and the transaction counterparties. At the same time, this transaction still has significant uncertainty.

The announcement shows that Hangsheng Electronics was established on December 6, 1993, with a registered capital of about RMB 320 million. The legal representative is Yang Hong. Its registered address is in Fuhai Subdistrict, Bao’an District, Shenzhen. The company type is “joint-stock company.” The target company’s business scope includes research and development, manufacturing, and sales of a series of automotive electronic products, variable frequency speed regulation device series products, instruments and meters, and more.

The reporter from The Daily Economic News noted that Hangsheng Electronics is one of the leading enterprises in China’s automotive electronics industry. Its product portfolio covers intelligent cockpits, intelligent connected vehicles, assisted driving (ADAS), new energy, and control electronics. As a Tier 1 (first-tier supplier), Hangsheng Electronics has already entered the global supply systems of international automakers such as Nissan, Toyota, Honda, Volkswagen, and Ford, as well as almost all major domestic automakers (such as Dongfeng, Geely, etc.), with very high market coverage.

It is also worth noting that Hangsheng Electronics has been seeking an independent listing. In December 2023, CITIC Securities signed a tutoring agreement with Hangsheng Electronics and submitted an IPO (initial public offering) stock tutoring filing application to the Shenzhen Securities Regulatory Bureau. Throughout the first half of 2024, institutions including CITIC Securities and Zhonghue Certified Public Accountants have been conducting intensive IPO tutoring and financial verification.

With Guanghetong planning to acquire the controlling rights of Hangsheng Electronics this time, it likely means that Hangsheng Electronics will give up the independent IPO route and instead achieve asset securitization through a merger and acquisition by a listed company.

The transaction is still in the planning stage

Regarding the impact of this transaction on the listed company, Guanghetong said that the listed company has been deeply involved in vehicle wireless communication module business for many years. By integrating downstream enterprises, it is expected to achieve a transformation from a vehicle communication module supplier to a full-stack automotive electronics solution provider.

“After this transaction is completed, Hangsheng Electronics will become a controlling subsidiary of the company. The listed company and the target company will carry out deep integration and synergy. The business scale of the listed company will be improved, and the company’s sustainable operating capability and sustainable development capability will be effectively enhanced. This will be in line with the interests of the listed company and all shareholders.” Guanghetong added.

However, Guanghetong also disclosed that this transaction is still in the planning stage. At present, the transaction parties have not signed any related agreements. The specific transaction proposal still needs to be further demonstrated, communicated, and negotiated. There is significant uncertainty as to whether the transaction parties can ultimately reach agreement on this transaction and sign the related agreements.

As a provider of wireless communication modules, Guanghetong has made very drastic strategic adjustments in its vehicle business in recent years. This acquisition is an important step toward closing its strategic loop. For example, in July 2024, in order to respond to complex international market conditions, Guanghetong sold its overseas vehicle pre-install wireless communication module business (Ruiling Wireless, that is, assets such as Rolling Wireless, etc.) to a European enterprise for a price of US$150 million.

Guanghetong originally provided the underlying “communication modules.” If the acquisition of Hangsheng Electronics proceeds smoothly, Guanghetong may directly leap to become a full-vehicle Tier 1 supplier with the capability to deliver complete “intelligent cockpit + intelligent driving + connected systems.”

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