Fujian Star-Net Communication Co.,Ltd. (002396) has announced a cash acquisition of a 46% equity stake in its subsidiary, Guangzhou Xinde Communication Technology Co., Ltd., for 396 million yuan, according to a filing on August 14.

Guangzhou Xinde, in which Star-Net previously held a 21% stake, is a recognized national "Little Giant" specializing in optical communication access for nearly two decades. It is a supplier of PON and wireless router/CPE products, with end-to-end capabilities in R&D, manufacturing, and sales. The company recorded revenues of 742 million yuan in 2025 and net profit of 65.91 million yuan, while in the first two months of 2026, it posted 143 million yuan in revenue and 10.65 million yuan in net profit.

The valuation for Guangzhou Xinde stands at 862 million yuan, representing a 165.11% premium over its book value of 325 million yuan. Upon completion of the deal, Star-Net will hold 67% of Guangzhou Xinde, making it a controlling subsidiary.

Rationale for the Acquisition

Star-Net stated that Guangzhou Xinde, as an international-focused optical access equipment manufacturer, offers strong complementarity and synergy with its own optical communications business. The move aligns with the company's core strategy and is expected to enhance, strengthen, and optimize its income structure in the optical communications sector, ultimately boosting overall profitability.

Recent Performance and Market Activity

Star-Net provides enterprise-level IT solutions. In the first half of the year, the company reported revenue of 10.73 billion yuan, up 20.73% year-on-year, with net profit attributable to shareholders of 373 million yuan, a 75.86% increase. As of the August 14 close, Star-Net's stock price stood at 32.67 yuan, having surged over 32% since the start of August, bringing its market capitalization to 24.85 billion yuan.

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