Ferrotec (6890): Announces Strategic Partnership with InnoLight and Acquisition of Semiconductor Device Parts Firm AMTD as Consolidated Subsidiary

Ferrotec announced that its wholly owned subsidiary, FTH, will raise its stake in AMTD from 20.3% to 67.6% through an additional acquisition, making AMTD a consolidated subsidiary, with the share transfer scheduled for November 30. AMTD manufactures aluminum showerheads and reported F3/26 revenue of RMB480mn, an operating loss of RMB350mn, total assets of RMB6.85bn and net assets of RMB5.76bn. Ferrotec also announced a strategic partnership with InnoLight covering product development, joint R&D, quality enhancement and supply chain integration in high-speed optical communications; Ferrotec currently supplies TECs, thermistors and insulated heat-dissipation substrates for submounts to InnoLight. Near-term earnings impact is likely limited, but the expanded product portfolio and stronger optical interconnect business should support medium-term growth. Maintain Overweight with a ¥15,000 price target.