Hualing Cable Responds to Shenzhen Stock Exchange Inquiry: Detailed Explanation of the Necessity of Acquiring SanZhu Intelligent and the Synergistic Effects

Hunan Valin Cable Co., Ltd. (hereinafter referred to as “Valin Cable”) has recently issued an announcement in response to the Shenzhen Stock Exchange’s audit inquiry letter regarding its application to purchase assets through the issuance of convertible corporate bonds and to raise supporting funds.

According to the reply announcement, the company has provided a detailed explanation of key issues including the necessity of acquiring Anhui Sanzhu Intelligent Technology Co., Ltd. (hereinafter referred to as “Sanzhu Intelligent”), the synergy effects, the competitive landscape in the industry, and the advantages of the target assets, with the aim of promoting the company’s transformation and upgrading from a single cable supplier to a provider of integrated “cables + connectors” connectivity system solutions.

Based on the reply announcement, Sanzhu Intelligent mainly engages in the R&D, production, and sales of industrial connectors and components. Its products are widely used in fields such as factory automation, servo drive systems, CNC machine tools, industrial robots, and more. During the reporting period, Sanzhu Intelligent achieved operating revenue of RMB 20,452.74 million (FY 2023), RMB 20,862.94 million (FY 2024), and RMB 16,988.48 million (Jan.–Jul. 2025). Its top five customers include Wuxi Xinjet Electric, BYD, ZD Electronics (Jiangsu), Shenzhen Leisai Intelligent Control, and Wuxi Sanzhu Control Technology, among others. The end-application areas of these customers span multiple industries including photovoltaic, lithium batteries, semiconductors, 3C manufacturing, automobiles, electronics, new energy, and rail transit.

Valin Cable states that after completion of this transaction, the listed company and Sanzhu Intelligent will generate significant synergy in customer resources and application domains. On the one hand, Valin Cable can rely on Sanzhu Intelligent’s product system to provide existing customers with one-stop supporting services of “cables + connectors,” thereby strengthening customer stickiness. On the other hand, both parties can share customer resources. Valin Cable’s customer resources in high-end fields such as equipment manufacturing, mining, rail transit, and aerospace can help Sanzhu Intelligent expand its application scenarios, while Sanzhu Intelligent’s customer base in areas such as industrial control and robots can also feed back into market penetration of Valin Cable’s cable products.

Regarding the challenges faced when transforming from a single cable supplier to an integrated solutions provider, Valin Cable has proposed specific measures to address them: in terms of management integration, it will set up a dedicated synergy working group to unify the management system and promote corporate cultural alignment; in terms of technology integration, it plans to integrate both parties’ R&D teams, establish an integrated connectivity system R&D center, and focus on joint R&D in key areas; and in terms of capacity synergy and supply-chain optimization, it will coordinate and plan capacity layout overall, and establish internal supply-chain synergy mechanisms to improve efficiency and reduce costs.

The announcement also discloses the competitive landscape in the connector industry. The global connector market shows a “high concentration at the top, with clearly defined tiers” pattern, with international giants such as TE Connectivity (formerly Tyco Electronics), Amphenol, and Molex holding dominant positions. In 2024, the global connector market size reached USD 86.478 billion, up 5.65% year over year. China’s connector market size grew from USD 20.933 billion in 2018 to USD 28.004 billion in 2024, making it the largest connector consumption market globally. Sanzhu Intelligent has competitive advantages in the domestic servo connector segment; according to estimates, its 2024 market share in the domestic general-purpose servo connector and component market is approximately 20.33%, giving it a leading market position.

Valin Cable emphasizes that this transaction is an inevitable choice to align with the industry’s trends toward integration and customization, enhancing core competitiveness. It will help the company seize the opportunity of rapid growth in the connector industry, build a second growth curve, and enable business development through the sharing of customer resources and channels. The independent financial advisor, Shenwan Hongyuan Securities Co., Ltd. (Securities underwriting and investment banking), conducted verification of the relevant matters and issued clear opinions.

Sales by Sanzhu Intelligent’s top five customers (FY 2023 – Jan.–Jul. 2025)

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