Huafeng Technology's 972 Million RMB Increased Financing for Production Expansion Approved, 2025 Performance Poised to Explode with Revenue Surging 128%

Changjiang Business Daily News ● Changjiang Business Reporter Xu Yang

Huafeng Technology (688629.SH) has made new progress on its private placement.

On the evening of March 11, Huafeng Technology announced that the company’s application for issuing shares to specific targets has received approval and registration from the China Securities Regulatory Commission. The company plans to raise no more than 972 million yuan through this private placement. The funds will be used to expand production capacity and improve the company’s manufacturing and R&D capabilities, enhancing its competitiveness.

Fundamentally, Huafeng Technology’s performance is set to explode in 2025. According to the 2025 performance forecast, during the reporting period, the company achieved a total revenue of 2.495 billion yuan, a year-on-year increase of 128.47%. Net profit attributable to the parent company (hereinafter referred to as “net profit attributable to the parent”) and net profit excluding non-recurring gains and losses (hereinafter referred to as “non-recurring profit”) both turned profitable after losses, with significant jumps, reaching record highs.

Increasing funds to expand capacity and R&D

Huafeng Technology is one of China’s leading core enterprises and high-tech companies engaged in the research, development, and production of electrical connectors. It has long been involved in the development, manufacturing, and sales of optical and electrical connectors and cable assemblies, providing system solutions for clients. The company’s products are divided into three application areas: defense connectors, communication connectors, and industrial connectors.

In June 2023, Huafeng Technology listed on the STAR Market of the Shanghai Stock Exchange. It raised a total of 640 million yuan through an initial public offering (IPO) to fund the expansion of its industrialization base and upgrade its R&D center. As of June 2025, the IPO projects “Mianyang Industrialization Base Expansion” and “High-Speed Line Module Production Line” have been completed and are operational; the “R&D Innovation Center Upgrade” project’s completion date has been extended to April 30, 2026.

In July 2025, Huafeng Technology launched a private placement. According to the latest announcement, the company received approval from the China Securities Regulatory Commission on March 6, 2026, for its registration application to issue shares to specific targets. This approval is valid for 12 months from the date of approval.

According to Huafeng Technology’s revised private placement plan, the total amount of funds raised will not exceed 972 million yuan (including this amount). After deducting related issuance costs, the net proceeds will be used for the high-speed line module expansion project, defense connector base construction and capacity expansion, communication connector R&D capability upgrade, and working capital.

The high-speed line module expansion project will take 6 months, with a total investment of 450 million yuan, of which about 388 million yuan will be raised. The main investment will be in equipment purchase and installation.

The defense connector base construction and capacity expansion project will last 2.5 years, with a total investment of 470 million yuan, of which about 387 million yuan will be raised. The project plans to build an independent factory building, consolidating defense connector operations at this site, and optimizing and upgrading capacity. Investment includes land purchase, factory construction, equipment purchase and installation, and necessary working capital.

The communication connector R&D capability upgrade project will take 2 years, with a total investment of 80 million yuan, of which about 60 million yuan will be raised. This project will utilize existing R&D facilities, introduce advanced R&D equipment, and strengthen R&D management.

Huafeng Technology states that the funds raised will focus on its existing main business. The capacity expansion projects—“High-Speed Line Module Expansion” and “Defense Connector Base Construction and Capacity Expansion”—are important strategic moves to meet industry development trends and the increasing product demands of downstream clients, helping to expand business scale and strengthen market position. The R&D project “Communication Connector R&D Capability Upgrade” will enhance the company’s technological level in high-speed communication interconnects, which will improve its core competitiveness in the long term.

Additionally, the company’s normal operations require significant working capital. Without considering other factors, as business scale and revenue grow continuously, the demand for operating funds will also increase, leading to a substantial working capital gap. About 137 million yuan of the raised funds will be used to supplement working capital to meet future operational needs.

Performance hits new high in 2025

As one of China’s first companies engaged in the R&D and manufacturing of electrical connectors, Huafeng Technology has long been dedicated to the connector industry, continuously innovating and strengthening product competitiveness.

From 2023 to the first three quarters of 2025, Huafeng Technology’s R&D expenses were 94.29 million yuan, 114 million yuan, and 106 million yuan, respectively, with year-on-year increases of 13.77%, 20.99%, and 27.56%. During the same period, R&D expense ratios were 10.43%, 10.45%, and 6.36%.

In terms of patents and product development, as of June 30, 2025, Huafeng Technology had obtained a total of 703 patents, including 166 invention patents, 505 utility model patents, and 32 design patents.

Leveraging its technological advantages and service capabilities, Huafeng Technology has established a good reputation among telecom and military clients such as Huawei, ZTE, Super Fusion, China Aerospace Science and Industry Corporation, China Aerospace Science and Technology Corporation, and China State Shipbuilding Corporation, maintaining long-term stable partnerships.

In terms of performance, from 2022 to 2024, Huafeng Technology’s revenue showed a “growth—decline—rebound” pattern, with figures of 984 million yuan, 904 million yuan, and 1.092 billion yuan. Net profit attributable to the parent declined from 98.78 million yuan in 2022 to a loss of 17.75 million yuan in 2024.

The 2024 loss was attributed to increased R&D investment in server-related fields, higher promotion costs for CPU Socket products, and pressure on defense product gross margins.

In 2025, Huafeng Technology’s performance significantly improved. According to the 2025 performance forecast, during the reporting period, the company achieved a total revenue of 2.495 billion yuan, a 128.47% increase year-on-year; net profit attributable to the parent was 360 million yuan, and non-recurring net profit was 323 million yuan, both turning profitable compared to the previous year.

Notably, Huafeng Technology’s 2025 performance reached a new annual high. The net profit attributable to the parent of 360 million yuan and non-recurring net profit of 323 million yuan represent approximately 4 times and 11 times the results in its first year listed in 2023 (72.37 million yuan and 26.39 million yuan, respectively).

Regarding the substantial growth in 2025, Huafeng Technology stated that it was mainly driven by the rapid development of AI, cloud computing, and big data technologies, accelerating data center construction, and increasing demand for switches, accelerated computing servers, and core routers, which boosted revenue from communication connectors. The company’s sales scale, industry layout, and product structure adjustments also contributed to overall profit growth.

In the secondary market, Huafeng Technology’s stock price has generally been rising. On March 12, the closing price was 109.68 yuan per share, more than doubling since the beginning of 2025. The company’s latest market capitalization is approximately 50.56 billion yuan.

Editor: ZB