I noticed a quite interesting market trend. In early January, Yanjing Co. announced its intention to acquire Ningbo Yongqiang Technology. Once the news broke, the stock hit the daily limit up, closing on the 31st up 11.68% at 14.82 yuan, with a market capitalization reaching 4.9 billion. This actually reflects the market’s optimistic outlook on this cross-industry merger and acquisition.

Speaking of which, Yanjing’s moves have shown signs early on. In last year’s annual report, they mentioned the goal to "carefully select and develop other industries to grow stronger." This acquisition of Yongqiang is a concrete step in that direction. So, what does Yongqiang do? Mainly manufacturing IC substrates and high-end display substrates—hard tech products. Their clients include Intel, Huawei, Inspur, among major companies, with a valuation exceeding 1 billion. Yanjing itself is a leader in surface materials for disposable hygiene products, so this is indeed a cross-industry acquisition. The idea is very clear—diversify development.

From a financial perspective, Yanjing’s core business has been quite steady. In the first three quarters of last year, revenue reached 12.95 billion, a year-over-year increase of 23%, with net profit of 425 million, up nearly 28%. Especially in the third quarter, net profit surged 209% quarter-over-quarter, indicating that the profitability of the main business continues to improve. The company’s clients include industry giants like Procter & Gamble, Kimberly-Clark, and Hengan, so product strength needs no further explanation.

In the past two years, Yanjing has also been expanding globally, establishing local factories in Egypt, the US, and India. The Egypt plant’s annual capacity has reached about 10,000 tons, and the US plant is expected to start production this year. Considering that major clients are upgrading their products from mid- to high-end, the additional capacity released from these facilities still holds significant growth potential.

The current uncertainty lies in the specific plan for this acquisition. Yanjing suspended trading on January 5, planning to disclose detailed plans within 10 trading days. Market reactions show that investors are supportive of this direction. After all, building on a solid traditional core business to enter high-end manufacturing is indeed a promising growth story. Stocks related to this and the industry chain are worth paying attention to.