Minbao Optoelectronics, the teachers' calculators are smoking.

China Securities Journal China Securities Network News (Reporter Qi Jinzhao) Recently, Minbao Optoelectronics announced that the company plans to acquire a 51% stake in Xiazhi Precision through a cash purchase, and also intends to purchase a 49% stake in Xiazhi Precision from Xiamen Maida by issuing shares, while raising supporting funds. [Taoguba]
Prior to this transaction, Minbao Optoelectronics mainly engaged in the research and development, design, manufacturing, sales, and service of LED green lighting fixtures, including three major sectors: commercial lighting, industrial lighting, and special lighting. Xiazhi Precision focuses on the research and development, production, and sales of micro-drill needles, deeply involved in the core consumables of PCB manufacturing, providing professional micro-hole processing technical solutions for leading global PCB customers; its core products include PCB, FPC, IC substrates, and tungsten steel micro-drills for AI PCB processing, with sizes covering 0.09mm-0.35mm, especially skilled in the research, development, and manufacturing of micro-drills with diameters below 0.20mm. The target company’s products, backed by thirty years of technological accumulation and continuous process improvements, achieve ultra-high precision and stable quality, widely serving high-end fields such as communications, consumer electronics, automotive electronics, and rapidly growing areas like AI servers and low-orbit satellites. Additionally, the target company has many years of independent development capabilities for core PCB drill needle production equipment such as multi-station composite segment machines and multi-station grinding equipment. Relying on a mature production and quality control system, it not only ensures high-precision and stable batch quality but also builds a strong continuous supply capacity, effectively solving the industry’s problems of long cycle and high costs for customized imported equipment, laying a foundation for subsequent smooth expansion.

Minbao Optoelectronics stated that after the completion of this transaction, the company’s business will expand into the high-end specialized PCB drill needle field, actively conducting technological research and forward-looking layout in the PCB drill needle industry, continuously developing and applying new technologies and products, which will help accelerate the strategic transformation of the listed company, share the growth dividends brought by the development of the AI industry and PCB drill needle industry, and align with the interests of all shareholders of the listed company.

According to the announcement, the core value of the target company acquired by Minbao Optoelectronics lies in its technological accumulation and customer resources formed over thirty years of deep cultivation in the PCB drill needle field, which are key supports for its strong performance growth.

It is reported that Xiazhi Precision is strategically positioned in the high-end PCB drill needle market. With continuous process innovation and stable product quality, it has gained recognition from well-known PCB manufacturers worldwide. Its clients include Shen Nan Circuit, AT S, Shenghong Technology, Huadong Computer, Jianding Technology, Huidian Co., Ltd., Jingwang Electronics, Japan’s Meikou Electronics, and other leading domestic and international companies, with strong customer stickiness. As one of the few manufacturers capable of mass-stable supply of high-end drill needles for AI server boards and ultra-small diameter drill needles for high-end substrates, it has established stable cooperation with top clients such as Shenghong Technology, Shen Nan Circuit, and Jingwang Electronics, with a clear first-mover advantage. Its technological and customer barriers are difficult for competitors to break through.

As the core consumables in printed circuit board manufacturing, PCB drill needles’ market demand is deeply linked to the technological iteration of the electronics industry. With the explosion of high-end applications such as AI servers, 5G communications, and automotive electronics, PCB products are upgrading toward multi-layer, high-density, and high-precision. According to Frost & Sullivan, from 2020 to 2024, the global PCB drill needle market size will grow from 3.5 billion yuan to 4.5 billion yuan, with a compound annual growth rate (CAGR) of 6.5%; benefiting from the continued penetration of the AI industry, the industry’s CAGR is expected to rise to 15.0% from 2024 to 2029, with the market size projected to exceed 9.1 billion yuan by 2029. Among them, the market share of high-end coated drill needles will increase from 31.3% in 2024 to 50.5% in 2029, becoming the core engine driving industry growth.

Industry insiders believe that Minbao Optoelectronics’ layout not only accurately captures industry trends but also aligns with policy and its own development needs, demonstrating significant strategic rationality. For Minbao Optoelectronics, crossing industries is a highly necessary choice. The traditional lighting industry has entered a mature stage, with leading companies transforming into high-growth sectors through mergers and acquisitions. The PCB drill needle sector not only has strong growth potential but also highly aligns with the company’s core capabilities in precision manufacturing and material processes, providing a natural foundation for cross-industry integration.

Regarding the purpose and expected effects of this transaction, a relevant person from Minbao Optoelectronics stated that this acquisition is a key implementation of the company’s “internal growth + external M&A” strategy. On one hand, by entering the high-growth PCB drill needle sector, the company will gain a stable high-growth engine, significantly enhancing overall profitability and cyclicality resistance, creating long-term value for shareholders; on the other hand, leveraging the listed company’s capital, channels, and management advantages, the target company’s technological potential and production capacity will be fully unleashed, rapidly expanding into high-end domestic and international markets. Meanwhile, the technological and channel synergies between both parties will achieve a “1+1>2” effect, accelerating the growth of the target company and opening space for the listed company to expand its lighting electronics supporting business, ultimately achieving a win-win situation for both the listed company and the target company.

Note: The analysis of Minbao Optoelectronics is provided for reference only.