Huashengchang, one of China’s leading makers of measurement instruments, has moved decisively into the optical-communications ecosystem. On February 27 the Shenzhen-listed company announced a cash deal to acquire 100% of Shenzhen Galant Technology for Rmb460 million, a bid to add optical chip and module testing to its product mix and to arrest a recent slowdown in growth.
The purchase agreement includes a linked share-transfer arrangement in which Huashengchang’s controlling shareholder, Yuan Jianmin, will transfer 5% of Huashengchang (9.47 million shares) to Galant founder Yu Xinwen by agreement if the equity acquisition completes. The deal valuation is explicitly tied to Galant’s projected profitability: the parties have set a cumulative net-profit target of at least Rmb115 million for 2026–28 (an annual average of about Rmb38.3 million). That target will be used to unlock staged transfers of the shares, creating a performance safeguard for the buyer.
The timing is telling. Huashengchang, founded in 1991 and listed in 2020, is well known for infrared thermal imagers, laser rangefinders and environmental detectors across industrial, medical and transport markets. After three years of growth through 2024, the company reported weaker results in 2025. Its January–September revenue fell to Rmb530 million (down 5.5% year-on-year) and third-quarter revenue plunged 20.7% year-on-year. Net profit attributable to shareholders declined roughly 41% for the nine months, with the third-quarter profit down over 53%, a hit management blames on higher R&D spending and rising trade frictions that dented exports.
Management frames the acquisition as a horizontal extension: test equipment for optical chips and modules fits the company’s measurement expertise while opening opportunities in a higher-growth vertical. Demand for optical components is being driven by hyperscale data centres, telecom upgrades and a global push to onshore critical parts of the semiconductor and photonics supply chains. For a company facing a near-term earnings inflection, the sector offers potential new revenue streams and closer ties to fast-growing customers.
But the transaction is not without risk. Rmb460 million is a material cash outlay for a company whose 2025 revenue is modest by electronics-industry standards, and successful integration of a specialist test-equipment firm requires sustained engineering and sales effort. The profit-guarantee mechanism mitigates some valuation risk but places execution pressure on Galant to ramp margins and sales quickly. The contingent intra-group transfer of 5% of Huashengchang’s shares to Galant’s founder also raises questions about related-party incentives and governance that investors will watch closely.
Investors reacted enthusiastically in the short term: Huashengchang shares hit the daily limit-up on the announcement and extended the rally into the following session. Whether that optimism proves durable will depend on whether Galant can deliver on its profit targets, how quickly Huashengchang can commercialise combined offerings, and whether broader external pressures—trade policy and export headwinds—ease. The deal exemplifies a growing trend of traditional industrial-equipment firms pivoting into semiconductor- and telecom-adjacent niches as China seeks to deepen domestic supply chains for high-tech components.