SGX Tech Stock Update: Galaxy Microelectronics Jumps 20% on Resumption as It Restructures to Acquire Hengtai Ke
After being suspended for more than half a month, Galaxy Microelectronics (688689.SH) resumed trading after disclosing a restructuring plan. The company plans to acquire 100% of Hengtai Ke Semiconductor by issuing shares to the three shareholders of Shanghai Zhinneng Hengxin Industrial Electronics Co., Qingcheng Mingnuo Investment Partnership (LP), and Tianmuyu Lin (Shanghai) Technology Co., while also raising supporting funds.
On the first day back, the stock hit the 20% limit-up and closed at RMB 55.88 per share, lifting its market value to about RMB 7.2 billion. Turnover was only 1.21%, while the limit-up buy order queue reached 291 million shares, 185 times the day's trading volume, representing more than RMB 1.5 billion.
Against the backdrop of a strong cycle in the power semiconductor industry, the market has given a positive outlook to Galaxy Microelectronics' move into the higher-end segment of medium- and high-voltage power semiconductors through this acquisition. But the deal still faces multiple controversies: suspicion of insider trading triggered by the unusual run-up before the suspension, the target valuation that has yet to be finalized, and the risk of a large amount of goodwill in the future.
The core challenge of M&A synergy: product lines, customer management and binding the technical team
Jiang Han, a senior researcher at Pangoal Institution, said the biggest integration challenge lies in refined management of product lines and customers. After Hengtai Ke is folded in, the total number of products will exceed 1,000, sharply increasing the complexity of customer management and capacity allocation. Second, core technology is highly tied to the R&D team. Without appropriate equity incentives and non-compete clauses, the company may face risks of technology loss and goodwill impairment.
Using M&A to fill gaps and enter medium- and high-voltage power semiconductors: real-world barriers still need to be tested
Galaxy Microelectronics' acquisition of Hengtai Ke is an industry M&A aimed at filling gaps and strengthening synergy. Once completed, the company is expected to make up for its technical shortcomings in medium- and high-voltage power semiconductors, fill gaps in high-end products and improve its product matrix.
Galaxy Microelectronics has long relied on small-signal devices and low-voltage power devices as its earnings base, but has been slow to develop in high-end areas such as high-voltage MOSFETs, IGBTs and silicon carbide (SiC). Hengtai Ke is seen as the key to breaking through technological bottlenecks: according to the restructuring plan, Hengtai Ke is a national-level 'little giant' specialized and innovative enterprise mainly engaged in the research, development and sales of power semiconductor products, with applications in power supplies, lithium battery protection, brushless motors, new energy and E-car (OBC, ECU) fields. Hengtai Ke has medium-voltage SGTMOSFET technology and high-voltage SuperJunction technology; its medium- and high-voltage SGTMOSFETs in the 150V-200V range have reached top domestic standards and can be pin-to-pin matched to and replace Infineon's medium-voltage series.
The transaction model is an industry-chain integration of 'Fabless design + IDM manufacturing': Galaxy Microelectronics has mature chip manufacturing capacity but lacks high-end design capability; Hengtai Ke has top-tier design technology but no in-house production line, and has long been constrained by foundry capacity and cost fluctuations. Whether the synergy can be realized depends on subsequent integration.
Zhang Jiaming, general manager of the investment department, believes that for small and medium-sized companies, M&A can shorten the development timeline and help them strengthen overall competitiveness in a complex market environment. But integration risk remains the biggest challenge. Only by minimizing differences in organization, culture, team integration and R&D path through refined management can the company create a unified force to drive strategy execution.
Valuation fog and financing pressure: final price not disclosed, goodwill impairment and consolidation timing are key
The risk disclosure in the plan said Hengtai Ke will face competitive pressure from both global giants and domestic upstarts. If the global macro environment weakens, downstream demand growth slows, or the semiconductor industry enters a deep and prolonged downturn, Hengtai Ke's operating performance could be affected.
The bigger uncertainty is that the final valuation and consideration have not yet been settled. As of the signing date of the plan, audit and valuation work for Hengtai Ke is still ongoing, and the transaction price has not been disclosed. The share issuance price has been set at RMB 28.48 per share, and the counterpart shares will be locked up for 36 months. The supporting funds raised will be used to pay transaction taxes and fees, intermediary costs and project construction for the target company, as well as to replenish working capital and repay debt.
Unaudited figures show Hengtai Ke recorded revenue of RMB 206 million in 2024 and RMB 193 million in 2025; net profit attributable to shareholders was RMB 32.2325 million and RMB 35.718 million, respectively, showing stable growth. At the end of 2025, equity attributable to the parent company's shareholders was only RMB 416 million, reflecting a clearly asset-light profile.
Jiang Han said the valuation of an asset-light semiconductor design company hinges on intangible assets such as IP cores and the R&D team. Traditional PE/PB models often fail because of volatile profits and high upfront investment. A more reasonable approach would be to base it on a multi-stage discounted cash flow (DCF) model, supplemented by relative valuation for cross-checking, while also quantifying qualitative factors such as technology iteration risk and downstream application cycles.
Looking at the listed company's fundamentals, Galaxy Microelectronics' net profit attributable to shareholders fell year-on-year in both 2022 and 2023. In 2024, the company posted revenue of RMB 909 million, up 30.75% year-on-year; net profit attributable to shareholders was RMB 71.8742 million, up only 12.21%. Full-year 2025 revenue reached RMB 1.05 billion, up 15.46%; net profit attributable to shareholders was RMB 79.9047 million, with growth slowing to 11.17%, indicating weak overall momentum.
On the funding side, Galaxy Microelectronics had only RMB 137 million in cash and cash equivalents at the end of 2025, down 44.65% year-on-year, while operating cash flow has weakened year after year. Last year's net operating cash inflow was RMB 43.7501 million, down 34.73%, partly due to longer payment cycles from downstream customers and increased inventory building.
A private fund source said whether this acquisition can deliver the benefits of the boom depends on the timing of consolidation and synergy realization. Hengtai Ke has stable revenue and profit, so once the deal closes and consolidation begins, it can directly lift the listed company's earnings. But both companies are relatively small, and it remains uncertain whether the deal can achieve more than the sum of its parts. The biggest risk is that a high-premium acquisition could create large goodwill, and if performance later misses expectations, goodwill impairment would directly erode the listed company's profits.
In addition, the stock's unusual move before suspension has also sparked market suspicion of insider information leakage. From June 10 to 11, Galaxy Microelectronics surged sharply, rising nearly 19% over two trading days on much higher volume, while the semiconductor sector index rose only 2.70% over the same period, significantly diverging from the sector index. The company said in its explanation that no parties involved in the transaction engaged in insider-information leaks or insider trading.
Regarding market concerns, Blue Whale News called Galaxy Microelectronics' secretary office on June 29, but had received no reply as of press time.
