SGX Market Watch: Galaxy Microelectronics Resumes Trading with 20% Limit-Up on Hengtaike M&A

Galaxy Microelectronics (688689.SH), suspended for more than half a month, disclosed a restructuring plan yesterday and resumed trading today. The company plans to acquire 100% equity of Hengtaike Semiconductor from three shareholders via share issuance, and simultaneously raise supporting funds.

On the first day of resumption, the stock hit the 20% daily limit-up, closing at 55.88 yuan per share, with a market cap of about 7.2 billion yuan. Turnover rate was only 1.21%, and buy orders at the limit price reached 291 million shares, 185 times the day's trading volume, corresponding to over 1.5 billion yuan in funds, showing strong market demand.

Against the backdrop of a high cycle in the power semiconductor industry, the market gave a positive outlook to the veteran discrete device maker's move to enter the medium- to high-voltage power semiconductor field through M&A. However, the deal still faces multiple controversies: insider trading allegations from abnormal pre-suspension price moves, undetermined valuation, and potential large goodwill pressure, bringing uncertainty.

M&A to Fill Gaps: Technology Leap Still Faces Real Barriers

Compared to cross-border M&A cases with no synergy, Galaxy Microelectronics' acquisition of Hengtaike is a typical industry merger for complementing weaknesses and synergy. Upon completion, the company expects to quickly fill gaps in medium- to high-voltage power semiconductor technology, fill high-end product blanks, and improve the overall product matrix.

Galaxy Microelectronics has long relied on small-signal devices and low-voltage power devices as its core business, but has lagged in high-voltage MOSFET, IGBT, SiC and other high-end areas. Disclosed technical breakthroughs have not yet translated into actual performance, restricting the company's penetration into high-end markets such as automotive electronics.

As industry leaders continue to release capacity, the window for latecomers to catch up is narrowing. In this context, Hengtaike became a key lever for Galaxy Microelectronics to break through technical bottlenecks. According to the restructuring plan, Hengtaike is a national-level specialized "little giant" enterprise mainly engaged in R&D and sales of power semiconductor products, applied in power supplies, lithium battery protection, brushless motors, new energy, E-car (OBC, electric control) and other fields.

Hengtaike has medium-voltage SGT MOSFET technology and high-voltage Super Junction technology. The plan discloses that compared with domestic competitors, Hengtaike's medium- to high-voltage SGT MOSFETs in the 150V-200V range have reached domestic top level, directly Pin-to-Pin comparable to Infineon's medium-voltage series.

This transaction is an integration of "Fabless design + IDM manufacturing". Galaxy has mature chip manufacturing capacity but lacks high-end design capability; Hengtaike has cutting-edge design technology but no own production line, long constrained by foundry capacity and cost fluctuations. Whether the synergy can be realized depends on actual integration.

Integration Challenges and Technology Binding: Product Lines, Customers and R&D Team

The biggest integration challenge lies in fine management of product lines and customers. After adding Hengtaike's more than 700 products, the total exceeds 1,000, significantly increasing complexity in customer management and capacity allocation.

Second, core technology is highly tied to the R&D team. Without reasonable equity incentives and non-compete clauses, there is a risk of technology loss and goodwill impairment.

For small and medium companies, M&A can shorten development windows and help form initial full-industry-chain synergy. But integration risk is the biggest challenge. Differences in organizational structure, corporate culture, team integration and R&D paths may cause friction and uncertainty. Only through fine management can internal friction be reduced to form synergy.

Valuation Fog and Capital Pressure: Deal Price Undetermined, Goodwill Risk in Focus

The final valuation and consideration for this transaction have not been determined. As of the signing date of the plan, Hengtaike's audit and valuation work is still in progress. The transaction price has not been disclosed yet. The share issue price is set at 28.48 yuan per share, with a lock-up period of 36 months for the counterparties. The supporting funds will be used to pay transaction costs, intermediary fees, project construction, and supplement working capital or repay debt.

Unaudited data shows Hengtaike's revenue for 2024 and 2025 was 206 million yuan and 193 million yuan respectively, with net profit of 32.23 million yuan and 35.72 million yuan, showing steady growth. As of end-2025, parent company equity was only 416 million yuan, highlighting light-asset nature.

Valuation of light-asset semiconductor design companies is centered on intangible assets like IP cores and R&D teams. Traditional PE/PB models often fail due to high earnings volatility and upfront investment. Reasonable valuation should be based on multi-stage DCF models, supplemented by relative valuation cross-validation, while incorporating qualitative factors like technology iteration risk and downstream cyclicality.

Fundamentally, Galaxy Microelectronics' net profit declined year-on-year from 2022 to 2023. In 2024, revenue was 909 million yuan, up 30.75%; net profit was 71.87 million yuan, up only 12.21%. In 2025, full-year revenue was 1.05 billion yuan, up 15.46%; net profit was 79.90 million yuan, growth slowing to 11.17%.

On cash, Galaxy had only 137 million yuan in cash at end-2025, down 44.65% year-on-year; operating cash flow weakened, with net operating cash inflow of 43.75 million yuan, down 34.73%.

Whether the M&A can realize cyclical dividends depends on consolidation pace and synergy realization. If high premium leads to large goodwill, subsequent underperformance will erode profits through impairment.

Pre-Suspension Price Anomaly Controversy: Market Focus on Insider Information

Additionally, the abnormal stock price move before suspension has raised widespread market suspicion of insider information leakage. On June 10-11 before the suspension announcement, Galaxy Microelectronics' stock surged, accumulating nearly 19% gains in two days with heavy volume, while the semiconductor index rose only 2.70%, significantly deviating from the industry index. The precise pre-move sparked heated discussion.

In response, the company issued a statement that there was no insider information leakage or insider trading involved. On June 29, Blue Whale News called the company's board office but received no reply by press time.