Long Young Electronic Kunshan Co Ltd and the Surge in A-Share Company Mergers and Acquisitions
In a notable development within China’s financial markets, Long Young Electronic Kunshan Co Ltd, a company listed on the Shenzhen Stock Exchange, has been part of a broader trend where A-share companies are increasingly engaging in mergers and acquisitions (M&A) of companies planning initial public offerings (IPOs). This trend has been highlighted by recent reports from stock.eastmoney.com, which indicate a significant acceleration in such activities.
As of July 6, 2025, there have been 23 cases of A-share companies announcing the acquisition of companies that have applied for IPOs on the ChiNext board, a trend that has been gaining momentum since the release of the “Six Articles on M&A” in September 2024. This policy framework has led to 40 A-share companies disclosing related M&A activities, with 31 focusing on consolidations within their main business lines or related industries, and 9 engaging in cross-industry acquisitions, signaling a strategic interest in emerging sectors.
The surge in M&A activities is attributed to several key factors:
- Valuation Opportunities: Many of these transactions are valued at market prices significantly lower than comparable IPO levels, highlighting a market value gap effect.
- Streamlined Processes: Post-policy reforms have simplified the approval process, significantly reducing the review cycle compared to IPOs.
- Flexible Payment Methods: The introduction of diverse payment options has facilitated the success and proliferation of these transactions.
- Focus on Technology and Innovation: The majority of these M&A activities are concentrated in the technology sector and the “innovation and entrepreneurship” board, with potential expansion into other industries like consumer goods.
A case in point is the recent announcement by Jinding Micro, which plans to acquire a majority stake in Hanxing Energy, a company that had previously applied for an IPO on the ChiNext board. This move is not isolated, as it reflects a broader trend where companies are leveraging M&A as a strategic tool for growth and expansion, particularly in high-growth sectors.
The policy environment has been conducive to this trend, with the China Securities Regulatory Commission (CSRC) releasing revised regulations on significant asset restructuring by listed companies. These reforms have simplified the approval process, diversified payment tools, and enhanced regulatory flexibility, further deepening the market for M&A activities among listed companies.
This strategic shift towards M&A, especially in acquiring companies poised for IPOs, underscores a systemic improvement in resource allocation efficiency within China’s capital markets. It reflects a move towards a “M&A-driven” development model, characterized by rational pricing, streamlined approval processes, and innovative industry integration.
As the landscape of China’s financial markets continues to evolve, companies like Long Young Electronic Kunshan Co Ltd are at the forefront of leveraging these trends to enhance their market position and drive growth. The focus on technology and innovation, coupled with strategic M&A activities, positions these companies well for future success in an increasingly competitive and dynamic market environment.