Hengbo Co., Ltd. plans to acquire equity in an Indonesian auto parts company to deepen overseas expansion

On the evening of March 24, Hengbo Co., Ltd. (301225) released an announcement disclosing that the company’s wholly owned subsidiary, GENERAL EXCELLENCE TECHNOLOGY LIMITED (hereinafter referred to as “the Hong Kong wholly owned subsidiary”), plans to acquire 75% of the equity interest in Indonesian PT OPTIMA ELEKTRONIK MANUFAKTUR (hereinafter referred to as “PT.OEM”) with its own funds or self-raised funds. The transaction amount is 86.118 billion Indonesian rupiah, equivalent to RMB 35.7128 million.

According to the announcement, PT.OEM was established on October 7, 2019. Its registered capital is 3 billion Indonesian rupiah. Its business scope includes the installation of industrial machinery and equipment, wholesale trade of various commodities, wholesale retail of automotive and motorcycle parts, and the manufacturing of electronic audio and video equipment, among others. The company mainly focuses on automotive parts-related business. By the end of 2025, the company’s total assets were 104 million, its total liabilities were RMB 92.7572 million, and its net assets were RMB 10.9862 million. In 2025, it achieved operating revenue of RMB 294 million, operating profit of RMB 34.102 million, and net profit of RMB 26.599 million. After the completion of this acquisition, PT.OEM will be included in Hengbo Co., Ltd.’s consolidated financial statements.

Hengbo Co., Ltd. stated that the core purpose of this acquisition is to move into the automotive instrument cluster field, deepen its overseas layout, and further expand the company’s industrial value chain. The company’s existing business focuses on automotive parts-related areas. By acquiring PT.OEM, it can integrate PT.OEM’s localized R&D and manufacturing capabilities in Southeast Asia, rely on its established supply chain and distribution channel network, and achieve industrial chain synergy with the company’s existing motorcycle smart instrument cluster business. This will broaden the scope of business, improve the company’s competitiveness in overseas markets, and align with the company’s long-term development strategy.

The acquisition also includes performance commitments and compensation arrangements. Seller HENDRY commits that in the 2026, 2027, and 2028 fiscal years, the audited non-recurring profit and loss after deducting “non-recurring” items (excluding the impact of foreign exchange losses within RMB 8 million; amounts exceeding RMB 8 million will not be excluded) attributable to the target company will be no less than RMB 11.19 million, RMB 12.46 million, and RMB 13.50 million, respectively, and the cumulative total over the three years will be no less than RMB 37.15 million. In addition, seller HENDRY commits that within one year after the signing of the equity transfer agreement, the target company will be included in the PT TOYOTA ASTRA MOTOR supplier roster; and within three years after the signing of the equity transfer agreement, it will achieve actual sales to PT TOYOTA ASTRA MOTOR or its affiliated enterprises.

During the performance commitment period, if the target company’s net profit cumulatively achieved over the three years is lower than the performance commitment amount, HENDRY shall compensate the buyer in cash or by equity. The specific compensation method will be finally determined by the buyer.

According to publicly available information, Hengbo Co., Ltd. mainly engages in the R&D, production, and sales of products such as automotive and motorcycle air filters and engine air intake systems. Its products are widely used in transportation vehicles such as automobiles and motorcycles, and it is one of the important companies in the relevant domestic field. In recent years, the company has gradually advanced its overseas layout. This acquisition of the equity interest in Indonesian PT.OEM is an important step for the company to expand the Southeast Asian market and improve its overseas business layout, and it is also a concrete reflection of the global development trend of the automotive parts industry.

From the overall industry operating situation, the domestic automotive parts industry is currently entering an important window for global development. In 2025, Chinese automakers’ global cumulative sales were nearly 27 million vehicles, officially surpassing Japan for the first time and ranking first globally in automobile sales for the first time, driving domestic automotive parts companies to accelerate their “going global” layout. As Southeast Asia is a key region for global automotive industry growth—where Indonesia is the first automotive market in Southeast Asia—vehicle sales in 2024 reached 866,000 units, with a vehicle ownership of over 20 million vehicles. The market size for automotive components and parts exceeded USD 8 billion, with the compound annual growth rate maintained at 6%-8%, making it a hot track for domestic automotive parts companies to go global.

The Indonesian government has introduced multiple policies to support the development of the automotive parts industry. It provides subsidies to companies with high local content rates for electric vehicle components, and offers incentives such as import duty exemptions and income tax reductions for companies producing high value-added components or EV parts, further lowering the cost for domestic companies to set up operations locally. At present, domestic automotive parts companies’ going global has shifted from simple product exports to deeper layouts featuring localized production and localized R&D. By acquiring local companies and establishing production bases, among other approaches, companies can get closer to original equipment manufacturers (OEM) customers, avoid trade barriers, and enhance market competitiveness.

Multiple securities firms, in their research reports on the automotive parts industry, have analyzed and forecast the industry’s globalization trend. Soochow Securities stated that Chinese automakers have broad room to expand overseas. After excluding markets where there are substantive entry barriers, the size of global markets that can be accessed is approximately 27 million vehicles. It is expected that in 2026, the total export volume of Chinese automakers will reach 6.58 million vehicles, up 15% year over year. Among them, the share of exports of new energy vehicles will rise to 55%, providing broad space for automotive parts companies to go global.

Securities firms generally believe that globalization and localized layout in the automotive parts industry will become the core development trend in the future. Companies with overseas operational capabilities, technical advantages, and strong industrial chain synergy capabilities will hold an advantage in industry competition. At the same time, the industry also faces challenges such as overseas policy changes, exchange rate fluctuations, and cultural differences. Companies need to do a good job in risk management and steadily advance their overseas layout.

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