A Hong Kong-listed smart vehicle company has set its sights on a mainland firm known for faucets, tiles, and bathtubs. This surprising acquisition has captured significant market attention, especially with a notable investor emerging behind the scenes.
On the evening of August 21, Seagull Kitchen & Bath Products Co., Ltd. (SHE: 002084) announced a control change plan. Its controlling shareholder, Zhongyu Investment, agreed to transfer 20% of the company's shares to Pateo Connect (HKG: 2889) for 800 million yuan. Simultaneously, Fuqing Yaohong Enterprise Management Partnership, established just three days earlier, planned to invest approximately 200 million yuan to acquire another 5.01% stake. Both transactions were priced at 6.19 yuan per share, representing a premium of about 72.4% over the company's closing price of 3.59 yuan before the trading halt.
Once completed, Pateo Connect will become the controlling shareholder of Seagull Kitchen & Bath, with founder Ying Zhenkai assuming the role of actual controller. This marks the second major acquisition by Pateo Connect within two weeks. Just 14 days earlier, the company announced plans to acquire approximately 70% of communication chip maker Chengdu Mingyi Electronics Technology for up to 1.4 billion yuan. Together, these two deals could total as much as 2.2 billion yuan.
What makes the transaction more intriguing is the investor lineup. Fuqing Yaohong's partners include Sanfeng Holdings, which is ultimately owned by Cao Hui, the son of "glass king" Cao Dewang and current chairman of Fuyao Glass Industry Group Co., Ltd. (SHA: 600660). On August 24, Seagull Kitchen & Bath disclosed its semi-annual report showing continued revenue decline and a loss expansion of over 50% year-on-year. Despite the bleak numbers, the stock hit the daily limit-up at 3.95 yuan per share upon resumption of trading, while Pateo Connect closed at HKD 170.1 per share with a market capitalization of HKD 27.5 billion.
Ying Zhenkai, founder of Pateo Connect, is also known by another name: Ying Yilun. According to media reports, he once ran a photography company with friends before entering the advertising industry. In 2001, he borrowed 60,000 yuan to establish an advertising agency. By 2009, he pivoted to the internet of vehicles and smart cockpit technology, founding Pateo Connect. The company listed on the Hong Kong Stock Exchange in September 2025, and its product portfolio includes smart cockpit domain controllers, vehicle networking systems, in-car software, and cloud services.
Where the expansion strategy leads
Following its listing, Pateo Connect has accelerated external expansion. The proposed acquisition of Chengdu Mingyi, a fabless chip design firm specializing in high-speed optical communication chips and RF chips, includes a performance commitment. The target company pledges revenue of at least 480 million yuan, 620 million yuan, and 800 million yuan for 2026 through 2028, with pre-tax profits of no less than 45 million yuan, 90 million yuan, and 120 million yuan respectively.
The industrial logic between the two deals spans a wide spectrum. Chengdu Mingyi sits upstream in the chip industry with direct links to Pateo Connect's smart vehicle business, while Seagull Kitchen & Bath derives its main revenue from faucets, sanitary hardware, tiles, and integrated bathrooms. The financial commitment is substantial. Pateo Connect's 2025 annual report shows revenue of 3.51 billion yuan, up approximately 37%, with smart cockpit domain controller deliveries reaching 1.3 million units. However, the company recorded an annual loss of 1.094 billion yuan under IFRS, nearly doubling from 541 million yuan in 2024. Excluding share-based payments and listing expenses, the adjusted loss narrowed to 240 million yuan from 352 million yuan.
The combined 2.2 billion yuan price tag for both acquisitions represents about 1.52 times the company's cash and cash equivalents at the end of 2025. While the payments are not due all at once, the Chengdu Mingyi acquisition will use self-owned funds and loans, and the Seagull Kitchen & Bath purchase requires at least 50% self-owned funds, meaning Pateo Connect must allocate at least 400 million yuan of its own capital. The company has been securing additional financing, obtaining letters of intent for up to USD 1 billion from Ping An Capital and a credit line of up to 2.5 billion yuan from Minsheng Bank.
The mystery partner with deep pockets
Compared to the 800 million yuan from Pateo Connect, Fuqing Yaohong's 200 million yuan investment is smaller but highly significant. Established on August 18, 2026, the partnership signed an agreement just three days later to acquire 32.3674 million shares of Seagull Kitchen & Bath, representing 5.01% of total equity, for 200.4 million yuan. The partnership's registered capital matches the transaction price exactly. Its four partners include Chengdu Zhengyue Electronic Technology (49.9%), Sanfeng Holdings (38.67%), Shanghai Puchao Enterprise Management (6.44%), and Xiang Silong (4.99%).
Sanfeng Holdings' ultimate beneficial owner is Cao Hui, who became chairman of Fuyao Glass in October 2025 after Cao Dewang stepped down. This is not the first capital connection between Cao Hui and Pateo Connect. In May 2026, Pateo Connect allotted 896,000 new H-shares to Sanfeng Holdings at HKD 127.35 per share, raising net proceeds of approximately HKD 114 million. About 68.17 million yuan was earmarked for AI application and product development, with the remainder for working capital. Sanfeng Holdings thus invested directly in Pateo Connect first, then months later participated in buying Seagull Kitchen & Bath shares through Fuqing Yaohong.
Despite these connections, Seagull Kitchen & Bath clarified that no related-party relationships, acting-in-concert arrangements, shareholding-on-behalf arrangements, or joint decision-making mechanisms exist among Pateo Connect, Fuqing Yaohong, and the partnership's partners. Pateo Connect committed to not reducing its stake in Seagull Kitchen & Bath for 60 months post-closing, no pledges for 36 months, and no backdoor listings or related asset injections through the listed company for 36 months. Fuqing Yaohong's shares will be locked for 12 months.
Decoding the premium price tag
The acquisition price of 6.19 yuan per share values Seagull Kitchen & Bath at approximately 4 billion yuan, about three times its net assets attributable to shareholders of 1.327 billion yuan at the end of 2025. The high premium reflects more than just a 20% stake, as Pateo Connect gains control of the company's board. It can nominate four non-independent directors and three independent director candidates, as well as propose the chairman, general manager, CFO, and board secretary. In essence, a 20% ownership stake translates into full control over the board and core management.
However, the new controlling shareholder inherits a challenging business situation. Seagull Kitchen & Bath reported 2025 revenue of 2.621 billion yuan, down 8.18%, with a net loss of 118 million yuan attributable to shareholders. The company has recorded losses for three consecutive years. In the first half of 2026, revenue fell 11.09% to 1.216 billion yuan, with losses widening 53.43% to 39.9612 million yuan. Traditional business segments still dominate: hardware and faucet products contributed 793 million yuan (65.25% of total revenue), while tiles brought in 263 million yuan (21.59%). Together, these account for 86.84% of total revenue.
Pateo Connect's stated rationale is to extend its smart cockpit, in-car software, cloud platform, and AI capabilities into smart home scenarios, exploring a "car-home integration" concept. Both environments require voice interaction, identity recognition, device control, and cloud services, creating some technical synergies. Yet transforming these commonalities into profits requires product redesign, channel coordination, brand positioning, and R&D investment. Seagull Kitchen & Bath's current revenue base remains firmly rooted in faucets, hardware, and tiles.
Notably, the seller has made performance commitments. Starting in 2027, as long as the original controlling shareholder and its affiliates retain shares in Seagull Kitchen & Bath, they must ensure existing business generates annual net profit of at least 1 million yuan with positive operating cash flow. Failure to meet these targets triggers compensation obligations.
Pateo Connect also cited the acquisition's benefits for cross-capital-market positioning and broadening its investor base. As a Shenzhen-listed company, Seagull Kitchen & Bath offers financing channels, capital operation flexibility, and the inherent value of an A-share platform. Industry observers note that A-share listing quotas remain scarce, and acquiring control through equity transfer saves significant time and communication costs compared to a lengthy IPO process. This platform value carries substantial weight, even when the target company's short-term operations underperform.
Still, Pateo Connect has committed to not using Seagull Kitchen & Bath for backdoor listings or injecting related assets within 36 months. From chip companies to sanitary ware enterprises, Ying Zhenkai's acquisition map is expanding rapidly, while Cao Hui's capital involvement adds layers of industrial and family capital imagination. Whether Pateo Connect can manage its funding arrangements and debt pressure, and what role Fuqing Yaohong and its backers will ultimately play, remain open questions. What do you think drives Pateo Connect's premium acquisition of Seagull Kitchen & Bath?
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