From Sheet Metal Factory to PCB Giant: The Expansion Path of DSBJ Alongside Debt

Dongshan Precision, which started with metal sheet processing, has entered the PCB field through multiple acquisitions and has now submitted a listing application in Hong Kong.

Key Points:

• Dongshan Precision, which has transformed from metal sheet processing to the world's third-largest PCB supplier, has applied for a listing in Hong Kong.
• The company's active expansion in the AI and automotive markets, accompanied by increasing debt, may lead to the risk of financial overextension.

Chen Zhu

If not, just buy it.

This seems to have become the guiding principle of Suzhou Dongshan Precision Manufacturing Co., Ltd. (002384.SZ). The company officially submitted its application to the Hong Kong Stock Exchange last week, hoping that investors will also buy into its growth story driven by mergers and acquisitions. Dongshan Precision was initially a traditional sheet metal processing company, but over the past decade, it has successfully transformed into an important player in the printed circuit board (PCB) industry through a series of acquisitions.

This year, Dongshan Precision has accelerated its acquisition strategy again, announcing two major transactions to expand its footprint in the optical communication and automotive components sectors. Along with the continuous acquisition activities, the company also hopes to raise funds through its Hong Kong listing to support its ongoing acquisition expenditures.

The company has hired five advisors for this potential public offering, led by UBS and CITIC Securities Co., Ltd., a leading Chinese brokerage. Although Dongshan Precision has not disclosed the specific fundraising scale, it is speculated that the IPO size will be considerable, with the fundraising amount possibly exceeding $100 million based on its strong advisory lineup.

So far, the company's growth strategy driven by acquisitions has been quite effective. Its asset acquisitions in the PCB field have made it the world's third-largest PCB supplier, and PCBs are essential core components of various electronic devices. The company clearly views this as a winning formula and lists "strategic acquisitions" as one of its core competitive advantages, emphasizing that this is a proven growth model that effectively drives business expansion into new areas.

However, the aggressive expansion has also burdened Dongshan Precision with heavy debt, which poses a significant risk for the company, and we will analyze this in more detail later. Additionally, entering entirely new fields such as optical communications does not guarantee success, as the operational mechanisms of related industries vary and come with new management challenges that may test the company's capacity boundaries.

Acquisition-Driven Growth

The predecessor of Dongshan Precision can be traced back to Dongshan Steel Plate, established in 1980. Although the company has long sought to enter the consumer electronics business, it was not until 2016, when it acquired the American company Mflex (specializing in flexible printed circuits, FPC) for $600 million, that it truly succeeded in entering this market. FPC is a type of flexible printed circuit board used in smartphones, tablets, and other portable devices.

Two years later, the company further acquired Multek, a subsidiary of the contract manufacturing giant Flex, focusing on rigid printed circuit boards (RPCB) for $293 million, enabling it to produce all major types of PCBs.

Since then, PCBs have become the core business of Dongshan Precision, effectively replacing its traditional precision metal components and castings business. In the first half of this year, the PCB business recorded revenue of 11 billion yuan, accounting for 65% of the company's total revenue. In contrast, its traditional precision components business currently only accounts for 13.9% of revenue Although the company's overall revenue is still growing, the growth rate is not fast. In the first half of this year, revenue increased from 16.6 billion yuan in the same period last year to 17 billion yuan, a rise of 2.4%. In contrast, profit grew faster, rising from 560 million yuan to 758 million yuan, an increase of 39%. However, the company's relatively low profit margin still reflects the fierce competition characteristic of the industry.

In the PCB business, DSBJ mainly focuses on flexible printed circuits (FPC) used in mobile devices such as smartphones and laptops, which accounted for 84% of its PCB sales during the period. According to third-party research cited in its application documents, DSBJ was the second-largest FPC supplier globally last year and the third-largest overall PCB shipper worldwide.

The company ranks second in the global FPC market with a corresponding market share of 23.8%. However, it is worth noting that while it ranks third in the overall PCB market, it only holds a 4.8% market share, highlighting the highly fragmented nature of the PCB industry and reflecting the particularly fierce competition in this mature market.

Despite Chinese companies currently producing most of the PCBs globally, industry competition remains intense. According to a recent research report released by Shenzhen Venture Capital, as of April this year, there were 43 PCB companies listed in the Chinese A-share market, many of which are located in Shenzhen, where the technology industry is more concentrated, including Shenghong Technology (300476.SZ), Shennan Circuit (002916.SZ), and HuiDian Co., Ltd. (002463.SZ).

In such a competitive environment, it is not surprising that DSBJ is seeking further diversification of its business. The company has once again initiated its consistent strategic acquisition model, continuing its effective growth formula.

In June, the company announced it would acquire Taiwan's Solstice Optoelectronics for 5.9 billion yuan. Solstice Optoelectronics focuses on producing optical transceiver modules, providing high-speed data transmission for data centers and telecommunications networks, and is an important component of optical communication infrastructure. This acquisition marks DSBJ's official entry into the optical communication field.

Before acquiring Solstice Optoelectronics, the company also announced in May that it would acquire French automotive component manufacturer Groupe Mécanique Découpage for 100 million euros (115 million dollars), adding another significant transaction to its acquisition layout.

Through the acquisition of Solstice Optoelectronics, DSBJ is attempting to capture the strong demand driven by the artificial intelligence boom, including AI servers and various infrastructures needed to handle massive data processing. AI servers not only require the optical transceiver modules provided by Solstice Optoelectronics but also highly complex PCBs, creating potential synergies between the two that could help DSBJ penetrate and expand its customer relationships in the high-end circuit board market.

Seizing this opportunity, the company announced in July that it would invest up to 1 billion dollars to build high-end PCB production facilities in Zhuhai and Thailand.

Entering the high-end server market seems strategically reasonable, as this sector is currently the main driver of growth in the PCB industry. However, this massive investment of up to 1 billion dollars, like the company's long-standing reliance on acquisitions for growth, further accumulates risks to its already considerable debt DSBJ's debt-to-asset ratio has long remained high, resulting in heavy financial costs. According to documents submitted by the company to the Shenzhen Stock Exchange, as of the end of the third quarter of 2025, the company's short-term liabilities reached 98.36 billion yuan (over 13 billion USD), a significant increase of 35% compared to the end of last year.

Despite this, Chinese investors seem quite optimistic and are very enthusiastic about DSBJ's merger and acquisition growth story, with its shares listed in Shenzhen surging 133% so far this year. However, its expected price-to-earnings ratio remains only 17 times, similar to Shenghong Technology and Huadian Co., Ltd., reflecting the intense competition in the industry, which has entered a relatively mature stage.

Overall, strategic mergers and acquisitions have indeed brought significant results for DSBJ, successfully transforming it from a traditional sheet metal processing company into a global PCB supply giant. However, as the company embarks on its most ambitious expansion to date amid rising debt, external parties are beginning to question whether this repeatedly validated growth model can continue to work without excessively stretching its balance sheet