Following its acquisition of liquid cooling supplier Liminda, Lingyi Itech (Guangdong) Company (ASX: 002600) is making another strategic move, planning to invest up to 4 billion yuan to participate in the restructuring investment of Futong Jiashan, aiming to enter the fiber optic communication materials application sector.
The restructuring target's parent company, Futong Group, is currently mired in heavy losses, with cumulative deficits reaching tens of billions. For Lingyi Itech, effectively integrating this asset will be a critical challenge. This series of acquisitions comes as its core AI terminal business faces decelerating growth and declining gross margins, while its automotive and low-altitude economy segments have yet to become major revenue drivers, leading to an overall slowdown in the company's revenue growth.
In the first quarter of 2026, impacted by rising raw material costs and increased R&D expenditures, the company experienced a situation where revenue increased but profits did not. While net profit is under pressure, its performance in the Hong Kong stock market has also been disappointing, with its share price persistently trading below the initial public offering price since listing.
Restructuring Target's Parent Faces Major Losses
The explosive growth in AI computing power demand continues to boost the fiber optic industry's prospects. Against this backdrop, leading companies like FiberHome have already initiated capacity expansion plans, attracting firms such as Lingyi Itech and Han's Laser to compete for a foothold.
According to an announcement from Lingyi Itech, the company plans to participate, through a controlling subsidiary, in the public solicitation for restructuring investors of Futong Group (Jiashan) Communication Technology Co., Ltd. It expects to spend no more than 4 billion yuan to gain control and operating rights over Futong Jiashan's relevant restructuring assets and business.
As a core subsidiary of the established optical communication giant Futong Group, Futong Jiashan possesses significant technical expertise and market share in the optical fiber and cable sector, with a product line covering single-mode fiber, multi-mode fiber, and special polarization-maintaining fiber.
However, since 2023, affected by relative overcapacity and intense competition in the domestic fiber optic cable industry, Futong Group has been deeply mired in losses. The cumulative losses for 2023, 2024, and the first half of 2025 have reached a staggering 11.068 billion yuan. As of the end of June 2025, Futong Group's asset-liability ratio stood at 83.76%, with overdue and unrepaid short-term and long-term borrowings and long-term lease payables amounting to 1.691 billion yuan.
Against this backdrop of poor performance, to effectively preserve the value of core assets in the optical communication segment and accelerate the resumption of production for core enterprises in this sector, Futong Group initiated an orderly bankruptcy restructuring process for Futong Jiashan in June 2025. The announcement indicates that the scope of restructuring assets includes approximately 620 acres of land use rights at Futong Jiashan's Jiashan base, along with nearly 500,000 square meters of buildings and structures thereon, as well as all machinery and equipment related to the production and operation of the optical communication business stored within the premises.
For Lingyi Itech, the company intends to use this restructuring investment to enter the fiber optic communication materials application field, aiming to create strategic synergies with its existing AI computing power business and further enrich its business layout in the AI hardware sector.
In the past year, Lingyi Itech has been active with acquisitions. In 2025, the company completed the acquisition of Zhejiang Xianglong and Jiangsu Keda, adding key components like new energy vehicle trim parts and transmission system shaft parts, achieving an upgrade from a Tier 2 to a Tier 1 supplier. In January 2026, the company completed the acquisition of liquid cooling supplier Liminda, strengthening its "cooling + power supply" layout in the AI server field.
However, some industry observers note that Lingyi Itech's previous accumulation in thermal management was more of a "point-based layout," while this restructuring participation aims to establish capacity barriers at the foundational material layer for AI computing power optical interconnects. The technological leap from thermal management to fiber preforms is significant, and how to achieve effective integration will be a key test.
Currently, this transaction is still in the stage of public solicitation for restructuring investors. It remains uncertain whether Lingyi Itech's controlling subsidiary will qualify as a restructuring investment participant, ultimately become the restructuring investor, or whether the restructuring plan (draft) will be approved.
Growth Slows in Two Core Business Segments
Multiple acquisitions have had a relatively limited effect on boosting Lingyi Itech's performance. Recent financial reports indicate that the company's revenue growth has shown signs of slowing down.
Lingyi Itech has expanded from the consumer electronics field into emerging application areas such as AI terminal hardware, automotive and low-altitude economy, clean energy, robotics, and servers. In 2025, the company achieved revenue of 51.429 billion yuan, a year-on-year increase of 16.2%, which declined from the previous year's growth rate of 29.56%. Its net profit attributable to shareholders was 2.288 billion yuan, up 30.34% year-on-year.
Behind this revenue slowdown, the growth momentum in its two main business segments—AI terminal business and automotive & low-altitude economy business—has weakened. In 2025, the AI terminal business (covering AI glasses & XR wearables, sensors and related modules, and other core terminal components) generated revenue of 44.793 billion yuan, accounting for 87.1% of total revenue. Its growth rate dropped from 32.75% in 2024 to 9.84%.
Within this segment, revenue from AI glasses and XR wearables contracted, reaching 3.774 billion yuan, a year-on-year decrease of 6.96%, making it the only product category within the AI terminal segment to experience a revenue decline.
Despite the company's continuous increase in R&D investment related to high-value-added AI hardware products and efforts to boost market share, the gross margin of its AI terminal business did not improve. During the reporting period, the gross margin for this business was 17.21%, down 0.19 percentage points year-on-year.
Currently, the company's automotive and low-altitude economy business struggles to become a major revenue pillar. In 2025, this segment generated revenue of 2.954 billion yuan, accounting for only 5.74% of total revenue. Its revenue growth rate fell from 52.9% in 2024 to 39.56%.
In the first quarter of 2026, affected by rising raw material costs and increased R&D investment for new AI hardware products, the company experienced revenue growth without corresponding profit growth. During the reporting period, the company achieved revenue of 12.643 billion yuan, with its growth rate dropping from 17.11% in the same period last year to 9.99%. Net profit attributable to shareholders was 392 million yuan, a year-on-year decrease of 30.7%. Net cash flow from operating activities was 792 million yuan, down 2.63% year-on-year.
As net profit declines, the company faces pressure from short-term debt. As of the end of the first quarter of 2026, the company's total cash and cash equivalents and financial assets at fair value through profit or loss amounted to 6.402 billion yuan. In the same period, its short-term borrowings and current portion of non-current liabilities totaled 9.908 billion yuan, indicating its cash holdings are insufficient to cover short-term debt.
Against this backdrop, the company chose to list in Hong Kong to alleviate funding pressure. In June of this year, Lingyi Itech successfully completed its H-share listing. The total number of H shares offered globally was 812 million, with an issue price of HK$10.18 per share, raising a total of HK$8.266 billion. However, the company's stock fell below its IPO price on its first trading day, closing at HK$9.71 per share. Subsequently, the share price fluctuated downward. As of the close on July 17, the share price was HK$6.2, representing a decline of approximately 39% from the issue price.
Comments