Core Viewpoint - Huamao Technology is solidifying its core business in automotive passive safety while expanding into the optical communication and semiconductor sectors through the acquisition of Fuchuang Youyue, positioning itself for growth in these emerging markets [1][3][4]. Group 1: Automotive Passive Safety Market - The automotive passive safety system market is expected to reach $24.5 billion by 2025, with a compound annual growth rate (CAGR) of approximately 6.6% from 2022 to 2025 [2]. - Huamao Technology holds over 35% of the domestic market share in the automotive passive safety sector, benefiting from increased vehicle production and the rising penetration of new energy vehicles [2]. - The company is expanding its production capacity with a total investment of 1.05 billion yuan in its Vietnam production base and the renovation of its Xiamen facility, which is expected to contribute to revenue growth as the Vietnam plant ramps up production [2]. Group 2: Acquisition of Fuchuang Youyue - Huamao Technology plans to fully acquire Fuchuang Youyue through a combination of share issuance and cash payment, increasing its stake from 42.16% to 100% [3]. - Fuchuang Youyue is a leading manufacturer in the optical communication industry, with a comprehensive product range and a strong global production capacity [3]. - The company anticipates significant revenue growth driven by the increasing demand for AI applications and computing power, with projected revenues of 6.3 million yuan in 2023, 13.2 million yuan in 2024, and 6.5 million yuan in the first four months of 2025 [3]. Group 3: Investment Outlook - Huamao Technology is rated as a "buy" due to its leadership in the automotive passive safety sector and the expected growth from its new optical communication business [4]. - The company is projected to achieve net profits of 543 million yuan, 720 million yuan, and 915 million yuan from 2025 to 2027, indicating a strong growth trajectory [4].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [9][11]. Core Views - Huamao Technology is a leader in the automotive passive safety sector, with high capacity utilization for airbag products and new factories coming online, which are expected to drive continuous growth in the automotive segment. Additionally, the company plans to fully acquire the optical communication leader Fuchuang Youyue, entering the semiconductor and computing manufacturing fields, creating a new growth engine. Benefiting from the explosive demand for computing power, Fuchuang Youyue has a promising outlook, likely contributing to the company's sustained performance growth. The company is projected to achieve attributable net profits of 543 million, 720 million, and 915 million yuan from 2025 to 2027 [3][9]. Company Overview - Huamao Technology, established in 2002, is a leader in the automotive passive safety field, planning to acquire Fuchuang Youyue, a leader in optical communication, to enter the semiconductor and computing manufacturing sectors. The company has a rich management background, with the current chairman having previously held significant roles in major tech companies [6][19]. Automotive Business Growth - The main products in the automotive safety sector include airbag fabric, airbag bags, and seat belts. The market for automotive passive safety systems is steadily increasing, with a projected global market size of 24.5 billion USD by 2025, growing at a compound annual growth rate (CAGR) of approximately 6.6% from 2022 to 2025. Huamao Technology holds over 35% of the domestic market share in 2022, with new production capacity from its Vietnam base expected to contribute to revenue growth [7][44][50]. Acquisition of Fuchuang Youyue - Huamao Technology plans to fully acquire Fuchuang Youyue through a combination of share issuance and cash payment. Fuchuang Youyue has over 18 years of experience in the optical communication industry and is one of the largest manufacturers of optical module PCBA in China. The company is expected to see significant revenue and profit growth due to the accelerating demand for AI applications and computing power [8][19]. Financial Performance - The company achieved a revenue of 2.21 billion yuan in 2024, a year-on-year increase of 7.7%, and a net profit of 280 million yuan, up 14.6%. In the first quarter of 2025, the company reported a revenue of 540 million yuan, a 14.4% increase year-on-year, and a net profit of 90 million yuan, a 60.3% increase year-on-year [29][32]. Market Position and Competitive Landscape - The automotive passive safety system market is characterized by high entry barriers due to stringent certification requirements and established supplier relationships. Huamao Technology has established a significant competitive advantage in technology, customer resources, and product quality, maintaining a leading position in the domestic market [58][63].

Core Viewpoint - Huamao Technology plans to acquire 100% equity of Fuchuang Youyue Technology, indicating a significant asset restructuring without changing the controlling shareholder or actual controller [1][4]. Group 1: Acquisition Details - The acquisition involves purchasing approximately 19.46% equity of Fuchuang Youyue and 100% equity of its shareholders, Yirui Technology and Fuchuang No.1, through a combination of issuing shares and cash payments [3]. - Prior to this transaction, Huamao Technology held 42.16% equity in Fuchuang Youyue through its wholly-owned subsidiary [4]. - The overall valuation of Fuchuang Youyue was approximately 9.5 billion yuan in September and October 2024, and it decreased to about 8.5 billion yuan in January 2025, reflecting a decline of about 10% [4][5]. Group 2: Financial Performance - Fuchuang Youyue, established in 2019, reported revenues of 630 million yuan and 1.17 billion yuan for 2023 and the first eleven months of 2024, respectively, with net profits of 14.52 million yuan and 120 million yuan [7]. - As of November 2024, Fuchuang Youyue's total assets were approximately 880 million yuan, with net assets around 450 million yuan, and a debt-to-asset ratio of about 50% [8][9]. - Huamao Technology's revenue for 2024 was 2.213 billion yuan, a year-on-year increase of 7.67%, and net profit was 277 million yuan, up 14.64% [10]. Group 3: Strategic Implications - By increasing its stake in Fuchuang Youyue to 100%, Huamao Technology aims to enhance its business layout in the semiconductor and computing manufacturing sectors, which are seen as a second growth curve [4][10]. - The acquisition will allow Huamao Technology to consolidate Fuchuang Youyue's financial performance into its consolidated financial statements, potentially improving overall financial metrics [10].

Core Viewpoint - Huamao Technology plans to acquire 100% equity of Shenzhen Fuchuang Youyue Technology Co., Ltd., which is expected to constitute a major asset restructuring, leading to a suspension of its stock trading starting May 21, 2025 [1][4]. Group 1: Acquisition Details - The acquisition involves purchasing 19.4519% equity from Fuchuang Youyue and 100% equity from its shareholders, including Shenzhen Yinrui Technology Co., Ltd. and Shenzhen Fuchuang Youyue No. 1 Enterprise Management Partnership [4]. - Prior to the transaction, Huamao Technology held 42.1602% equity in Fuchuang Youyue through its subsidiary Huamao (Dongyang) New Materials Co., Ltd. After the acquisition, the company will hold 100% equity [4]. - The transaction is still in the planning stage, and the final agreement is subject to board and shareholder approval, as well as regulatory approval [5]. Group 2: Company Background and Strategic Intent - Fuchuang Youyue, established in August 2019 with a registered capital of 76.165 million yuan, specializes in electronic manufacturing services and has a workforce of nearly 1,000 employees [7]. - Huamao Technology has been gradually increasing its stake in Fuchuang Youyue, indicating a strategic intent to integrate and deepen its involvement in the semiconductor and computing power manufacturing sectors [6][8]. - The company aims to enhance its business layout in semiconductor and computing power manufacturing, focusing on next-generation optical communication technologies and further capital cooperation [8]. Group 3: Financial Performance - Huamao Technology has shown steady financial performance, with consecutive revenue and net profit growth from 2022 to 2024. In Q1 of this year, the company reported revenue of 537 million yuan, a year-on-year increase of 14%, and a net profit of 86 million yuan, up 60% year-on-year [8].

Core Viewpoint - Huamao Technology plans to acquire 100% equity of Shenzhen Fuchuang Youyue Technology Co., Ltd, which is expected to constitute a major asset restructuring, leading to the suspension of its stock trading starting May 21, 2025 [2][3]. Group 1: Acquisition Details - The acquisition involves purchasing 19.4519% equity from Fuchuang Youyue and 100% equity from its shareholders, including Shenzhen Yinrui Technology Co., Ltd and Shenzhen Fuchuang Youyue No.1 Enterprise Management Partnership [3]. - Prior to this transaction, Huamao Technology held 42.1602% equity in Fuchuang Youyue through its wholly-owned subsidiary Huamao (Dongyang) New Materials Co., Ltd [3]. - Upon completion of the transaction, Huamao Technology will directly and indirectly hold 100% equity in Fuchuang Youyue [3]. Group 2: Strategic Importance - The acquisition aligns with Huamao Technology's strategic focus on the semiconductor and computing power manufacturing sectors, which are identified as key growth areas for the company [4][6]. - The company has been increasing its stake in Fuchuang Youyue over the past year, indicating a commitment to integrating and expanding its operations in this sector [5][6]. Group 3: Financial Performance - Huamao Technology has shown steady financial performance, with revenue and net profit increasing year-on-year for three consecutive years from 2022 to 2024 [6]. - In the first quarter of this year, the company reported revenue of 537 million yuan, a 14% increase year-on-year, and a net profit of 86 million yuan, reflecting a 60% growth [6]. - As of May 20, 2025, Huamao Technology's stock price was 41.65 yuan, with a market capitalization of 13.7 billion yuan [7].