Strategic Impact Analysis of Hualing Cable's Termination of Acquisition of Xingxin Aerospace New Materials

Based on the information searched, I will provide you with a detailed strategic analysis report.

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Hualing Cable (001208) issued an announcement on the evening of January 19, 2026, announcing the termination of the acquisition of control rights of Hunan Xingxin Aerospace New Materials Co., Ltd. [1][2]. The acquisition intention originated on March 14, 2025, when the company’s board of directors reviewed and approved the “Proposal on the Proposed Cash Acquisition of Control Rights of Hunan Xingxin Aerospace New Materials Co., Ltd. and the Signing of a Transaction Intent Agreement” [1]. After approximately 10 months of negotiations, the two parties failed to reach an agreement on some specific terms of the agreement, and finally negotiated to terminate the acquisition [1][2]. The company clearly stated that the termination of the acquisition will not have an adverse impact on its production, operation and financial status [1][2].

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Hualing Cable is an A-share listed company under the State-owned Assets Supervision and Administration Commission of Hunan Provincial Government, which has established the business philosophy of “Establishing the Enterprise with High-quality Products, Winning with High-end Offerings”, and is committed to building a world-class leading enterprise in high-end cable integration and intelligent composite transmission [3]. The company’s core business focuses on the specialty cable niche market, mainly providing professional, high-quality specialty cable products for sectors such as aerospace and integrated equipment, rail transit and high-speed locomotives, mining, new energy, engineering equipment, and data communication [3].

The company has a prominent market position in the aerospace sector, with its products covering the four major domestic satellite launch bases, participating in more than 300 rocket launch missions, and holding a market share of 70%-80% in the rocket supporting cable sector [4][5]. The company’s major customers include China Aerospace Science and Technology Corporation, China Aerospace Science and Industry Corporation, China North Industries Group Corporation, Aero Engine Corporation of China, China Shipbuilding Industry Corporation, etc. [3].

Founded in 2003, Xingxin Aerospace is a national high-tech enterprise, whose predecessor was a key enterprise in the insulating material industry under a former Ministry of Machinery Industry of the country [6]. The company’s main businesses include high-temperature resistant and heat-insulating materials, silicon nitride ceramic products, phenolic resin materials, etc., providing supporting products for the Shenzhou series spacecraft, Chang’e series probes, Tiangong Space Station, and various carrier rockets, and participated in the supporting work for the first manned spaceflight project [6].

Hualing Cable’s strategic intentions for acquiring Xingxin Aerospace have multiple considerations:

: The high-temperature resistant series products produced by Xingxin Aerospace can be used as high-temperature heat-insulating protective layers for wires and cables in aerospace vehicles, and the glass fiber braided sleeves in the braided sleeve series can be used in the installation and thermal protection of tertiary cables [6]. Through this acquisition, Hualing Cable could gain control of the core protective materials for high-end cables, reduce costs, and improve gross profit margin.

: Materials such as silicon nitride ceramics developed by Xingxin Aerospace can be used in scenarios such as robot dexterous hands, which could extend Hualing Cable’s business reach directly to the trillion-yuan robot track [4]. Hualing Cable’s revenue from robot cables reached nearly RMB 100 million in 2024, and this acquisition was intended to convert its first-mover advantage into a market advantage.

: Xingxin Aerospace has years of experience in the aerospace and integrated equipment sectors, with obvious synergies in customer resources, marketing channels, etc. By collaborating to expand market share, it is expected to realize the expansion of the company’s industrial chain in the aerospace and integrated equipment sectors [6].

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The termination of the acquisition has had a certain impact on the strategic implementation of Hualing Cable. According to the company’s announcement, after the termination of the acquisition, the company will continue to focus on its established strategic goals, and optimize its industrial layout through the dual-drive path of endogenous development and external mergers and acquisitions [1]. This indicates that the company may shift its focus to internal development in the short term, specifically including:

: In July 2025, the company received the “Approval for Agreeing to the Registration of Stock Issuance to Specific Objects by Hunan Hualing Cable Co., Ltd.” from the China Securities Regulatory Commission, and the RMB 1.215 billion private placement funds will be invested in high-gross-profit products such as photoelectric composite cables and marine umbilical cables [4]. After the termination of the acquisition, these projects will become the main focus of the company’s strategic promotion.

: The company’s orders for aerospace specialty cables in the first half of 2025 surged 232% year-on-year [4], showing strong endogenous growth momentum. After the termination of the acquisition, the company may invest more resources in the expansion of existing businesses and technological research and development.

: Xingxin Aerospace has profound technological accumulation and customer resources in sectors such as high-temperature resistant and heat-insulating materials, silicon nitride ceramics, etc. The termination of the acquisition means that Hualing Cable cannot quickly obtain these technologies and market resources through mergers and acquisitions in the short term.

: Xingxin Aerospace is an enterprise that develops heat-insulating materials for on-board cable networks of various types of national strategic and tactical missiles [6]. The termination of the acquisition may affect Hualing Cable’s independent and controllable process in the field of core materials for high-end cables.

: Xingxin Aerospace’s silicon nitride ceramic materials can be used in scenarios such as robot dexterous hands, and the termination of the acquisition may delay Hualing Cable’s layout in the robot field [4].

According to the company’s announcement, the termination of the acquisition will not have an adverse impact on the company’s production, operation and financial status [1][2]. The main reasons include:

: As of the date of disclosure of the termination announcement, the above-mentioned intentional acquisition had not yet signed a formal transaction agreement, and the company had not made any substantive capital investment [1].

: According to the terms of the Letter of Intent, the agreement can be terminated upon mutual consultation and signing of a written agreement by both parties, and neither party to the transaction shall bear compensation or legal liability for the termination of this acquisition [1].

: Hualing Cable also completed the acquisition of 35% equity of Anhui Sanzhu (increasing its control to 70%) in 2025, and this merger and acquisition is expected to directly increase the company’s net profit by 13.65% [4].

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After the termination of the acquisition, Hualing Cable may accelerate its endogenous development path:

: The company’s RMB 1.215 billion private placement funds have been in place, which will be used for the capacity construction of high-end products such as photoelectric composite cables and marine umbilical cables [4]. These products target incremental markets such as offshore wind power, new energy vehicles, and commercial aerospace.

: The company has made breakthroughs in fields such as flexible umbilical cables for deep-sea robots and aluminum alloy conductors for aviation, and has completed the R&D of aluminum alloy lightning protection wires and the development and delivery of torsion-resistant cables for 35kV wind power generation [3]. The company will continue to overcome technological bottlenecks such as the localization of fluorine materials and polyimide materials.

: The company’s overseas market business saw significant growth in 2024, achieving revenue of approximately RMB 200 million, with a year-on-year growth rate of 250% [3]. The company has signed a strategic agreement with Hunan International Trade Group to jointly develop emerging markets such as Southeast Asia and the Middle East.

Although the acquisition of Xingxin Aerospace has been terminated, Hualing Cable may still seek other merger and acquisition opportunities:

: The company clearly stated that it will focus on its core business and main responsibilities, focus on improving the core competitiveness of its main business and upstream and downstream industrial chains, and focus on three niche markets: aerospace and integrated equipment, special rubber sleeves, and special control cables [3].

: Anhui Sanzhu is a company engaged in industrial connectors, with customers in the automotive, CNC machine tool, and industrial robot sectors [4]. Hualing Cable can learn from this model and continue to seek targets with synergies with its existing business.

: If it cannot obtain the required technologies and resources through mergers and acquisitions, the company may obtain them through strategic cooperation, technology licensing, and other methods.

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In 2025, commercial aerospace was included in the national strategy, and the industry entered a period of rapid development. LandSpace completed its IPO counseling and is sprinting to become the “first stock of commercial aerospace”; companies such as Galactic Energy and CAS Space are also queuing up to enter the listing process [4]. The products provided by Hualing Cable for commercial aerospace mainly include aerospace-grade space wire harnesses, umbilical cables, ultra-high temperature cables, etc., which have been applied to the “Long March” series of carrier rockets, “Shenzhou” series of spacecraft, and the “Mengzhou” national major project [5].

The 15th Five-Year Plan proposal lists aerospace as one of the strategic emerging industrial clusters [5]. With the acceleration of China’s satellite internet networking and the accelerated networking of low-Earth orbit satellite constellations (such as the Qianfan Constellation), the demand for high-reliability specialty cables will show exponential growth [5].

In the value volume of the commercial aerospace industrial chain, the unit value of the cable connection system in the rocket sector is RMB 1.5-3 million, and the listed company involved is Hualing Cable [5]. The company has a market share of 70%-80% in this sector, with obvious competitive advantages.

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Hualing Cable is facing the problem of “two extremes in business structure”: on the one hand, mid-to-low-end products such as power cables and cables for electrical equipment are in a fiercely competitive red ocean market; on the other hand, although specialty cables for aerospace and integrated equipment have high gross profit margins, they are completely dependent on the project progress of downstream customers, resulting in large revenue fluctuations [4]. The revenue of this business was RMB 168 million in 2021, and fell to RMB 57 million in 2024 [4].

The company achieved a net profit of RMB 135 million in 2021, the year it went public, but it declined for the following two consecutive years, and has not returned to the 2021 level by 2024 [4]. This reflects the profit pressure of the company’s traditional business and the instability of its high-end business.

The company’s aggressive expansion strategy has brought financial leverage and cash flow pressure [4]. Although the RMB 1.215 billion private placement funds have been in place, the scale of projects under construction has expanded by 50%, which puts forward higher requirements for the company’s capital management.

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The termination of Hualing Cable’s acquisition of Xingxin Aerospace New Materials has had the following impacts on the company’s strategic development and aerospace business layout:

: The pace of industrial chain integration has slowed down, the independent and controllable process of high-end materials has been set back, and the expansion into the robot field has been delayed. However, the company has clearly stated that the termination of the acquisition will not have an adverse impact on production, operation and financial status.

: The company may accelerate the progress of its private placement project and endogenous growth, and consolidate its competitive advantages through technological innovation and capacity expansion. At the same time, the company will continue to seek other merger and acquisition or strategic cooperation opportunities.

: The rapid development of the commercial aerospace industry provides broad market space for the company. Although this acquisition has been terminated, the company’s strategic direction of “dual-drive of endogenous development and external mergers and acquisitions” has not changed.

Overall, the termination of the acquisition is a commercial decision reached by mutual consultation between the two parties, and will not have a significant impact on the company’s core competitive advantages. Against the background of the rapid development of the commercial aerospace industry, Hualing Cable, as a leading enterprise in the rocket supporting cable sector, is still expected to achieve sustainable development through endogenous growth and strategic adjustments.

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[1] Announcement of Hunan Hualing Cable Co., Ltd. on Termination of Acquisition of Control Rights of Hunan Xingxin Aerospace New Materials Co., Ltd. (http://static.cninfo.com.cn/finalpage/2026-01-20/1224939488.PDF)

[2] Hualing Cable Terminates Acquisition of Xingxin Aerospace’s Control Rights - Sina Finance (https://finance.sina.com.cn/jjxw/2026-01-19/doc-inhhvsft7976203.shtml)

[3] 2025 Semi-Annual Report of Hunan Hualing Cable Co., Ltd. (http://static.cninfo.com.cn/finalpage/2025-08-22/1224533246.PDF)

[4] When Hualing Cable is in the IPO Craze of Commercial Aerospace, What is This “Shovel Seller” Borrowing Money to Bet On? - Sina Finance (https://cj.sina.cn/articles/view/6858683040/198cf32a000101gkus)

[5] Leading Commercial Aerospace Enterprise Sees Stock Price Surge Over 130% in a Month; Sorting Out A-Share Stocks with Top Value in the Industrial Chain - 21st Century Business Herald (https://www.21jingji.com/article/20251221/herald/4e4611be57fc0b6fcb66b0141d211b0f.html)

[6] Hualing Cable Plans to Acquire Control Rights of Xingxin Aerospace to Expand in Aerospace and Integrated Equipment Sectors - Securities Times (https://www.stcn.com/article/detail/1585836.html)