Huafeng Technology aprobado para aumentar capital en 972 millones de yuanes para expansión de producción; ingresos se disparan 128% en 2025 con explosión de ganancias

Long River Business Daily, ● Reporter Xu Yang

Huafeng Technology (688629.SH) has made new progress on its private placement.

On the evening of March 11, Huafeng Technology announced that the company’s application for issuing shares to specific targets has received approval and registration from the China Securities Regulatory Commission. The company plans to raise no more than 972 million yuan this time, and the funds will be used to expand production capacity and improve the company’s manufacturing and R&D capabilities, enhancing its competitiveness.

Fundamentally, Huafeng Technology’s performance is set to explode in 2025. According to the 2025 performance forecast, during the reporting period, the company achieved a total revenue of 2.495 billion yuan, a year-on-year increase of 128.47%; net profit attributable to the parent company (hereinafter referred to as “net profit attributable to the parent”) and net profit attributable to the parent after deducting non-recurring gains and losses (hereinafter referred to as “deducted non-recurring profit”) both turned from loss to profit, with significant jumps, reaching record highs.

Increasing funds to expand capacity and R&D

Huafeng Technology is one of China’s leading core backbone enterprises and high-tech enterprises engaged in the research, development, and production of electrical connectors. It has long been involved in the R&D, production, and sales of optical and electrical connectors and cable assemblies, providing system solutions for clients. The company’s products are divided into three application fields: defense connectors, communication connectors, and industrial connectors.

In June 2023, Huafeng Technology listed on the STAR Market of the Shanghai Stock Exchange. It raised a total of 640 million yuan through an initial public offering, used for the expansion of industrialization bases and upgrades of R&D centers. As of June 2025, the IPO fundraising projects “Mianyang Industrialization Base Expansion Project” and “High-Speed Line Module Production Line Project” have reached usable status and been completed; the “R&D Innovation Center Upgrade Project” has been delayed until April 30, 2026.

In July 2025, Huafeng Technology launched a private placement. According to the latest announcement, the company received approval from the China Securities Regulatory Commission on March 6, 2026, for its registration application to issue shares to specific targets. This approval is valid for 12 months from the date of approval.

According to Huafeng Technology’s private placement plan (revised draft), the total amount of funds raised from issuing shares to specific targets will not exceed 972 million yuan (including this amount). After deducting related issuance costs, the net funds will be used for the high-speed line module expansion project, defense connector base construction and capacity expansion, communication connector R&D capability upgrade, and to supplement working capital.

The high-speed line module expansion project will take 6 months to build, with a total investment of 450 million yuan, and is planned to use 388 million yuan of the raised funds. The main investment content includes equipment purchase and installation.

The defense connector base construction and capacity expansion project will last 2.5 years, with a total investment of 470 million yuan, and plans to use 387 million yuan of the raised funds. The project involves building an independent factory, consolidating defense connector operations at this site, and optimizing and upgrading capacity. The investment includes land purchase, factory construction, equipment purchase and installation, and necessary working capital.

The communication connector R&D capability upgrade project will last 2 years, with a total investment of 80 million yuan, and plans to use 60 million yuan of the raised funds. This project will utilize existing R&D facilities, introduce advanced R&D equipment, and strengthen R&D management.

Huafeng Technology states that the funds raised will focus on its existing main business. The capacity expansion projects—“High-Speed Line Module Expansion” and “Defense Connector Base Construction and Capacity Expansion”—are important layouts to meet industry development trends and the increasing product demands of downstream customers, helping to expand business scale and consolidate market position. The R&D project “Communication Connector R&D Capability Upgrade” will enhance the company’s technological level in high-speed communication interconnection, which will improve its core competitiveness in the long term.

Additionally, the company’s normal production and operation require significant working capital. Without considering other factors, as business scale and revenue continue to grow, the demand for operating funds will also increase, and there is a large gap in working capital. The company plans to use 137 million yuan of the raised funds to supplement its working capital to meet future operational needs.

Performance hits new high in 2025

As one of China’s first enterprises engaged in the R&D and production of electrical connectors, Huafeng Technology has long been dedicated to the connector industry, continuously innovating and strengthening product competitiveness.

From 2023 to the first three quarters of 2025, Huafeng Technology’s R&D expenses were 94.29 million yuan, 114 million yuan, and 106 million yuan, respectively, with year-on-year increases of 13.77%, 20.99%, and 27.56%; the R&D expense ratios were 10.43%, 10.45%, and 6.36%, respectively.

In terms of patents and product development, as of June 30, 2025, Huafeng Technology had obtained a total of 703 patents, including 166 invention patents, 505 utility model patents, and 32 design patents.

Leveraging its technological advantages and service capabilities, Huafeng Technology has established a good reputation among communication and military enterprises such as Huawei, ZTE, Super Fusion, China Aerospace Science and Industry Corporation, China Aerospace Science and Technology Corporation, and China State Shipbuilding Corporation, maintaining long-term stable cooperation with major clients.

In terms of performance, from 2022 to 2024, Huafeng Technology’s revenue showed a “growth—decline—rebound” fluctuation, with figures of 984 million yuan, 904 million yuan, and 1.092 billion yuan; net profit attributable to the parent decreased from 98.78 million yuan in 2022 to a loss of 17.75 million yuan in 2024.

Huafeng Technology explained that the 2024 loss was due to increased R&D investment in the server field, higher promotion costs for CPU Socket products, and pressure on gross profit margins of defense products.

Entering 2025, Huafeng Technology’s performance significantly improved. According to the 2025 performance forecast, during the reporting period, the company achieved a total revenue of 2.495 billion yuan, a year-on-year increase of 128.47%; net profit attributable to the parent was 360 million yuan, and net profit after deducting non-recurring gains and losses was 323 million yuan, both turning from loss to profit compared to the same period last year.

Notably, Huafeng Technology’s 2025 performance reached a new annual high. The net profit attributable to the parent of 360 million yuan and the deducted non-recurring profit of 323 million yuan increased approximately fourfold and elevenfold, respectively, compared to its IPO year in 2023 (net profit attributable to the parent of 72.37 million yuan and deducted non-recurring profit of 26.39 million yuan).

Regarding the substantial growth in 2025, Huafeng Technology stated that it was mainly driven by the development of artificial intelligence, cloud computing, and big data technologies, accelerating data center construction, and increasing demand for switches, accelerated computing servers, and core routers, which boosted revenue from communication connectors. The company’s sales scale growth, industrial layout optimization, and product structure adjustment also contributed to overall profit growth.

In the secondary market, Huafeng Technology’s stock price has generally been rising. On March 12, the closing price was 109.68 yuan per share, representing an increase of over 200% since the beginning of 2025. The company’s latest total market value is 50.56 billion yuan.

Editor: ZB