The new "Nine National Articles" and the "Eight Articles on Science and Innovation Board" have clearly expressed strong support for mergers and acquisitions (M&A) and reorganizations, leading to a continuous heating up of the M&A market this year. Notable cases have been emerging, focusing on three major areas: industrial M&A, technology M&A, and central state-owned enterprise (SOE) M&A. This indicates that the A-share market may have entered a new round of M&A and reorganization cycle.

Especially since August, the A-share M&A market has been vibrant, with a continuous stream of new M&A plans. The birth of "behemoths" from the merger and reorganization of several large central SOEs has ignited market speculation about their valuations.

Yanhu Gu Fen (000792.SZ) is set to reorganize in conjunction with China's largest metal mining group, Minmetals Group, and the upcoming China Salt Lake Group is expected to resolve historical issues. In the securities industry, Guotai Junan (601211.SH) and Haitong Securities (600837.SH) are planning a merger, and the market is optimistic about the emergence of a "Chinese version of Goldman Sachs". In the power industry, after Baobian Electric (600550.SZ), a subsidiary of China North Industries Group Corporation, announced that its controlling shareholder had initiated business integration, it ignited capital sentiment, and the company's stock price has risen by more than 90%.

Mergers and reorganizations are an indispensable and important part of the development process of the capital market. They are also a crucial way to achieve industrial integration and transformation, optimize resource allocation, and help listed companies achieve high-quality development. Especially for technology companies, M&A and reorganizations are one of the important means to achieve stronger competitiveness. With the progress of the published M&A plans and the potential release of new M&A and reorganization schemes, a new M&A and reorganization cycle is expected to become the biggest highlight of the A-share market.

The activity of central SOE M&A and reorganizations has increased.

Policy support and stronger encouragement for M&A and reorganizations are the main driving forces behind the active A-share M&A market this year. After February, the China Securities Regulatory Commission (CSRC) and the State Council frequently mentioned supporting M&A and reorganizations, including studying "fast-track reviews" for the reorganization of leading large-cap companies and promoting the absorption and merger of listed companies with high-quality leading companies as the "main force". Among them, after the new "Nine National Articles" were introduced, the CSRC further optimized the policy environment and took multiple measures to stimulate the vitality of the M&A and reorganization market.

According to Wind data and the First Financial Daily reporter's analysis, since 2024, there have been more than 150 M&A or M&A reorganization plans in the A-share market, which has already exceeded the level of the whole year of 2023 (about 130 cases). Since August, the M&A market has accelerated, and by September, eight major asset reorganization plans were announced, involving several central SOEs with a market value of over 100 billion, bringing expectations for the "world-class salt lake industry base", "Chinese version of Goldman Sachs", and "Chinese God Ship" to the market.

On September 8, Yanhu Gu Fen announced that the actual controller of the company, Qinghai Provincial Government State-owned Assets Supervision and Administration Commission, and the controlling shareholder Qinghai Guotou, together with China Minmetals, plan to jointly establish China Salt Lake Group. If the transaction is completed, the controlling shareholder of Yanhu Gu Fen will change from Qinghai Guotou to China Salt Lake Group, and the actual controller will change from Qinghai Provincial Government State-owned Assets Supervision and Administration Commission to China Minmetals.

On September 5, the announcement of the largest A-share listed securities company "A+H" merger "screened" the financial circle of friends, with the billion-dollar securities industry leader Guotai Junan and Haitong Securities planning a major asset reorganization, and the securities industry "super aircraft carrier" is imminent; on September 2, China Shipbuilding (600150.SH) and China Shipbuilding Heavy Industry (601989.SH) both announced that China Shipbuilding plans to absorb and merge China Shipbuilding Heavy Industry by issuing A-shares to all shareholders of China Shipbuilding Heavy Industry. Both companies are large shipbuilding enterprises with a market value of over 100 billion, and the actual controller is the State-owned Assets Supervision and Administration Commission of the State Council. This move will further focus on the country's major strategies and the main responsibility of strengthening the military, accelerate the high-quality development of shipbuilding assembly business, standardize competition in the same industry, and improve the operating quality of listed companies. As of the latest closing day, the total market value of China Shipbuilding and China Shipbuilding Heavy Industry reached 156.1 billion yuan and 113.6 billion yuan, respectively.

"Hard technology" is gradually becoming the mainstream field of M&A.Mergers and acquisitions (M&A) and restructuring of large central state-owned enterprises (SOEs) are aimed at focusing on core business development, integrating resources, enhancing quality and efficiency, playing a leading role in industries, and promoting further high-quality development of listed companies. In the "hard technology" sector, M&A is expected to strengthen the cultivation of advanced scientific and technological innovations. Acquirers can expand their business scale, increase market share, and avoid inefficient competition by purchasing assets or equity, especially in accelerating breakthroughs in key bottleneck technologies in strategic emerging fields such as integrated circuits, biopharmaceuticals, and high-end equipment manufacturing in China.

The "Science and Technology Innovation Board Eight Articles" released this year clearly propose to support listed companies on the Science and Technology Innovation Board to carry out M&A integration upstream and downstream of the industry chain to enhance industrial synergy; appropriately increase the valuation tolerance for M&A and restructuring of listed companies on the Science and Technology Innovation Board, and support listed companies to focus on enhancing their sustainable operating capabilities by acquiring high-quality unprofitable "hard technology" enterprises.

Since the policy was released, as of the latest closing day, nearly 20 listed companies on the Science and Technology Innovation Board have announced industrial M&A plans, involving listed companies such as Xilian Integration (688469.SH), PuYuan Precision Electronics (688337.SH), Aidi Pharmaceuticals (688488.SH), Sanyou Medical (688085.SH), Huitai Medical (688617.SH), and Guodun Quantum (688027.SH). Among them, the plans of Xilian Integration, FuChuang Precision (688409.SH), and Xidian Micro (688173.SH) are major asset restructurings, and several listed companies also plan to acquire unprofitable assets.

In the field of integrated circuits, Xilian Integration, a wafer foundry company listed last year, plans to acquire the remaining 72.33% equity of its controlling subsidiary Xilian Yuezhou Integrated Circuit Manufacturing (Shaoxing) Co., Ltd. (hereinafter referred to as "Xilian Yuezhou"), with a corresponding asset transaction price of 5.897 billion yuan. After the transaction is completed, the listed company's holding ratio of Xilian Yuezhou will be increased from 27.67% to 100%. The mid-year report shows that Xilian Integration's main business involves seven product lines, with automotive-grade semiconductors contributing nearly half of the operating income. The Xilian Yuezhou that the company plans to acquire this time mainly engages in the production of the third-generation semiconductors, and the wafer manufacturing capacities of both parties complement each other. This acquisition of a loss-making company reflects the "Science and Technology Innovation Board Eight Articles" to improve the orientation of M&A and restructuring valuation tolerance.

After the termination of the control rights acquisition of KunTeng Microelectronics Co., Ltd. (originally planned to go public independently) by the analog chip company NaXin Micro (688052.SH), the listed company announced its plan to acquire a total of 79.31% of the shares of Shanghai MaiGeEn Microelectronics in cash, with a total acquisition consideration of 793 million yuan. If the transaction is completed, Shanghai MaiGeEn Microelectronics will become a controlling subsidiary of NaXin Micro.

"The global semiconductor industry has already formed a top-tier pattern, where the top manufacturers continuously improve their product structure and increase market share through M&A and integration during their development. Mergers in the technology field are often two lines of thought: one is to merge and integrate target assets closely related to the company's main business, directly buying the product line to enhance competitiveness; the other is to merge upstream and downstream links of the industry chain to enhance supply chain capabilities, and through strong management capabilities, develop the acquired assets into new growth points of performance." An investment banker in the East China region said to the reporter, "In addition to policy support, the cooling of the IPO market is also one of the reasons for the increased activity of mergers and acquisitions in the technology field."

After the promulgation of the new "Nine National Articles", the Shanghai and Shenzhen stock exchanges have raised the listing standards. The number of new shares this year is 64, compared to 264 new shares listed in the first nine months of last year and 313 new shares issued throughout the year. In the past, IPO was the main way for investors in technology companies to exit, and unprofitable companies could also go public on the Science and Technology Innovation Board. After the IPO became stricter, the certainty of some independent listings was reduced, and companies sought to be acquired as the first choice for shareholders.