Huagong Technology's market value is 100 billion yuan, Wuhan state-owned assets have made a fortune.

Ask AI · Why did Wuhan State-owned Assets’ acquisition decision years ago generate over 15 billion yuan in returns?

AI’s wealth creation is astonishing.

This time it’s Huagong Technology: a company incubated from Huazhong University of Science and Technology, which, in the past six months, has leveraged its optical module-related business, riding the wave of AI, with a market value surpassing 100 billion yuan.

And Wuhan State-owned Assets, through an acquisition made years ago, unexpectedly reaped a substantial unrealized gain of about 15 billion yuan.

Just a few miles apart, Changfei Optical Fiber, also based in Wuhan, is equally excited. Benefiting from the explosion in AI computing power, Changfei’s stock price has soared continuously, making it one of the new ten-bagger stocks, and becoming the first company in Hubei with a market cap of 1.6T yuan.

This is unprecedented. From this perspective, Wuhan’s industry is entering a period of explosive growth.

Starting from Wuhan 985

Creating a trillion-yuan market value

Looking back, Huagong Technology has a long history.

It is a typical university-incubated project. Going back to 1971, laser technology was still a new concept, but Zhu Jiusi, then president of Huazhong Institute of Technology (now Huazhong University of Science and Technology), keenly perceived the huge prospects of this technology, and decided to establish a “Laser Research Group,” setting up China’s first laser class.

Subsequently, the Huazhong University of Science and Technology National Engineering Research Center for Laser Processing was established. In 1997, this research center was restructured into Wuhan Huagong Laser Engineering Co., Ltd., the predecessor of Huagong Technology. Two years later, Huazhong University of Science and Technology restructured and reorganized four university-affiliated companies—Huagong Gaoli, Image, Kaimu, and Laser—each already leading in their respective fields.

Thus, Huagong Technology was officially born.

In June 2000, Huagong Technology was listed on the Shenzhen Stock Exchange, becoming China’s “First Laser Stock,” and the first university-listed company in Central China. At that time, Huagong Technology set new records for the opening price, closing price, and daily increase on the first day of new stock listing in China’s securities market, earning the reputation as “the most impressive high-tech stock of 2000.”

Over more than twenty years, Huagong Technology gradually formed a product portfolio centered on laser intelligent equipment, sensors, optical communications, PTC heaters, laser holographic anti-counterfeiting & surface decoration, and wholly owned subsidiaries including Huagong Laser, Huagong Gaoli, Huagong Zhengyuan, and Huagong Saibai.

It sounds obscure, but when it comes to optical modules, many people are probably not unfamiliar. In recent years, AI development has accelerated beyond expectations, with demand for computing power exploding. Optical modules, which carry optoelectronic conversion and data transmission, have become the high-speed highway for AI-era computing power.

Huagong Technology is an optical module supplier.

Currently, Huagong Technology has achieved coverage of the full series of optical modules from 400G, 800G to 1.6T. In September last year, it released the industry’s first self-developed 3.2T CPO optoelectronic interconnection product. Larger bandwidth means the ability to meet larger-scale data transmission needs, which is of great importance.

As global tech giants scramble to expand AI data centers, companies selling optical modules are the first to profit. Financial reports show that by 2025, Huagong Technology will achieve operating revenue of 14.355 billion yuan, a year-on-year increase of 22.59%; among which, the connection business will generate 14.36B yuan, a 53.39% increase, mainly driven by AI application fields.

Stories like this have been seen many times over the past year, with many listed companies’ stock prices soaring on the wave of AI. On September 26 last year, Huagong Technology’s total market value first surpassed 6.1B yuan. This marked the emergence of the first trillion-yuan enterprise among Hubei A-shares.

“Crazy rise.” The demand for AI computing power is so strong that Huagong Technology’s stock has surged wildly. Not long ago, it even set a record of 12 consecutive days of gains, with a market value once exceeding 130 billion yuan. Compared to the low point in April last year, the stock price has skyrocketed over 300%.

Although the market value has pulled back somewhat, it still exceeds 4.29B yuan. Meanwhile, Huagong Technology’s H-share listing plan has been approved by the temporary shareholders’ meeting, aiming for a Hong Kong listing.

Wuhan State-owned Assets

A 15 billion yuan return from one deal

Who are the winners in this feast?

Because Huagong Technology went public early, at a time when China’s venture capital market was still in its infancy, there were naturally no VC investors. Before listing, Huagong Technology had not conducted primary market financing, and Huazhong University of Science and Technology was its actual controller.

It was only when a key acquisition occurred that the biggest winner was created.

As a university-run enterprise, due to lengthy decision-making processes, Huagong Technology missed some development opportunities. Therefore, in 2020, Huagong Technology decided to carry out a reform of separating university and enterprise operations, using a public solicitation of transferees to transfer some shares through agreement.

Soon, Guoheng Fund was shortlisted. In fact, Guoheng Fund was a merger and acquisition fund established by Wuhan State-owned Assets specifically for this transaction. Behind it, shareholders include Wuhan Chuangxin Investment Co., Ltd., Wuhan Industrial Development Fund Co., Ltd., and other Wuhan capital entities.

According to the transaction details, Guoheng Fund paid about 19B yuan to acquire 19% of Huagong Technology held by Huazhong University of Science and Technology Industry Group, making it the largest shareholder. The actual controller of Huagong Technology was simultaneously changed to Wuhan State-owned Assets Supervision and Administration Commission.

At that time, Huagong Technology had not yet unlocked its hard-tech growth potential, with a market value only in the two- or three-hundred-billion range. With state-owned capital entering, the company gradually established a “state-controlled, market-oriented, autonomous operation” mechanism, quickly entering a fast growth track.

Now, with a market value exceeding 100 billion yuan, Huagong Technology has brought a substantial return to Wuhan State-owned Assets. Based on Guoheng Fund’s 19% stake, this equity is now worth over 1.4T yuan. Roughly estimating, Wuhan State-owned Assets’ acquisition of Huagong Technology has a paper unrealized gain of about 15 billion yuan.

Of course, Huagong Technology has also brought considerable returns to its alma mater. Currently, Wuhan Huazhong University of Science and Technology Asset Management Co., Ltd. still holds 2% of Huagong Technology, wholly owned by Huazhong University of Science and Technology. This part of the shares is valued at about 2 billion yuan.

The company’s core team has also reaped benefits. In 2021, Huagong Technology signed a performance wager agreement with Guoheng Fund: starting from Huagong Technology’s 2020 profit, over the next three years (2021-2023), if the company’s net profit achieves an annualized growth of 15%, with steady growth of no less than 5% each year, a key clause would be triggered. Huagong Technology’s management team, through Runjunda, would be entitled to acquire a total of 980 million yuan worth of shares from Guoheng Fund’s shareholders at original value.

In other words, as long as performance targets are met, Huagong Technology’s management can buy back part of the shares at original price. The premium is shared by the management team. By June 2025, the above performance wager clause was fulfilled, and the management team successfully acquired 980 million yuan worth of Guoheng Fund shares through Runhua Da and other platforms at original value. Based on the stock price at that time, this portion of the fund’s shares corresponded to a market value of about 2 billion yuan in Huagong Technology shares.

Thus, Huazhong University, the company’s management team, and Wuhan State-owned Assets have all benefited from the passage of time.

Wuhan’s Rare Explosion

Such scenes seem familiar.

Looking around the current secondary market, it seems that as long as a company is involved in AI, it can experience a big rise. Like “Yi Zhongtian” Xin Yisheng, Zhongji Xuchuang, and Tianfu Communication. Since April last year, these three optical module giants have seen their stock prices double repeatedly, with a combined market value approaching 1.4 trillion yuan.

Unbeknownst to many, a force is also rising along the Yangtze River.

Equally astonishing is Changfei Optical Fiber. In 1988, to meet China’s urgent demand for optical fibers in the information age, the original Ministry of Posts and Telecommunications, Wuhan Municipal Government, and Dutch Philips jointly established Changfei Optical Fiber.

Under the wave of AI computing power, the optical communication market has experienced strong demand. As an industry leader, Changfei Optical Fiber performed spectacularly. On April 3, its stock price hit a new intraday high, once hitting the daily limit. By the close, it was 352.50 yuan per share. Compared to the low point in June last year, it has achieved more than a 10-fold increase.

With this, Huagong Technology and Changfei Optical Fiber lead the way, creating two trillion-yuan listed companies in Wuhan.

And both are from Wuhan Optical Valley. The so-called Optical Valley is named after “light,” because of its fame in light technology. In 1988, Optical Valley was officially established; in 2001, it was approved as a national optoelectronic information industry base.

You might not know that the first practical optical fiber, the first optical transmission system, the first international standard for optical communication, the world’s first 128-layer QLC storage chip, the first 400G silicon photonic module in China, and the first 100k-watt optical fiber laser—all these “firsts” were born here.

To date, Optical Valley is the world’s largest optical communication R&D base, gathering over 6,000 optoelectronic companies. Centered on Optical Valley, it has brought a trillion-yuan-level industry cluster to Wuhan.

Riding the wave of AI computing power, the “Optical Valley sector” has become hot. In the capital market, Optical Valley companies like Guangneng Technology and FiberHome Communications have seen their market caps rise to 72 billion and 66 billion yuan respectively. The outside world even calls them the “Optical Valley Four Brothers,” along with Huagong Technology and Changfei Optical Fiber.

The charm of industry cultivation is probably this: in a long and uncertain journey, those who work silently will eventually shine.