In a stunning twist of events, the market has witnessed a remarkable surge connected to Nvidia's innovative solution involving high-speed copper connectorsWithin a mere four trading days, Walden Material  experienced an impressive trifecta of trading haltsThe timing is curious, as this spike in their stock value coincided with a sudden announcement from the company to halt the listing plan for a subsidiary directly linked to the very technology prompting the surge in investor interest.

The connection to Nvidia's concept has propelled Walden Material into a financial upswing.

On March 25, the leading manufacturer of heat-shrink materials, Walden Material, saw its shares soar by 7.81%, achieving four trading halts within just three days and a staggering 43.60% increase in stock value, reaching an all-time high since 2021.

The catalyst for this growth stemmed from Nvidia’s announcement regarding a next-generation chip employing copper interconnections

Following this, the sector focused on high-speed copper connectors began to heat up significantlyFurthermore, Walden Material's subsidiary, Letin Intelligent, strategically positioned itself by developing 400G and 800G high-speed DAC copper cables, thus riding the wave created by Nvidia's announcement.

Interestingly, just as the stock began to surge, Walden Material made the unexpected decision to terminate the IPO of its previously planed listing for Letin Intelligent, which produces these lucrative copper connectors.

The sudden cessation of the subsidiary's IPO plan has taken many investors by surprise.

At the recent GTC conference, Nvidia officially unveiled its groundbreaking GB200 super chip

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This new chip integrates two Blackwell GPUs alongside one Grace CPU, with a single GB200 NVL72 rack capable of accommodating 72 GPUs, which offer extraordinary training performance at 720 PFLOPs and inference capabilities at 1440 PFLOPs.

What distinguishes this technology is the connection system used between the GPUs and the NVSwitch, which utilizes copper interconnections via high-speed backplane connectorsThis not only reduces costs but also allows for much higher performance levels.

Research from Huajin Securities suggests an optimistic forecast for the high-speed copper cable market, predicting a compound annual growth rate of 25% between 2023 and 2027, with an anticipated shipment volume of 20 million units by 2027. The expansion of data center infrastructure is expected to spur demand for high-speed transmission cables and their related connection products.

As a result of these developments, various high-speed connection firms on the A-share market experienced trading halts; notable instances include Xinya Electronics with four consecutive halts, and Walden Material with three successive halts, alongside Ding Tong Technology and Shenglan Corporation each hitting the 20% limit upside.

In contrast to Xinya Electronics, which has repeatedly denied any claim to a "copper cable connection" concept, Walden Material embraced the market dynamics and publicly aligned itself with this growing narrative.

On March 22, Walden Material made an unexpected announcement regarding the termination of the listing process for its subsidiary, Letin Intelligent.

It is worth noting that last June, Walden Material had expressed through interactive platforms that their subsidiary’s products — the 400G and 800G high-speed communication lines — utilized DAC copper cables; these cables are beneficial for short-distance signal transmission thanks to their low power consumption, high cost-effectiveness, and remarkable speed, leading to widespread applications in data centers and servers.

Remarkably, prior to the market frenzy, Walden Material's preparations to list Letin Intelligent were systematically progressing

In December 2023, the company had just reviewed and approved a proposal allowing Letin Intelligent to apply for listing on the New Third Board, including authorization for the management of both the company and Letin Intelligent to handle the listing procedures.

When discussing the rationale for the planned spin-off, Walden Material stated that it would facilitate the further optimization of Letin’s market position and maximize the utilization of capital market funding for the company's growth.

However, the recent abrupt withdrawal from this spin-off initiative was met with a somewhat nonchalant response from Walden Material, citing a comprehensive evaluation of market conditions alongside the operational status of its subsidiary Letin Intelligent as the primary factors for their decision to cancel the plans for listing on the Growth Enterprise Market.

Whether driven by shifts in the market environment or an unexpected alignment with the burgeoning opportunity, Walden Material has displayed a notably open approach to capital operations.

Several hundred billion private equity funds have been orchestrating asset allocations for the company.

As of the end of the third quarter of 2023, the landscape of Walden Material's shareholding structure revealed the involvement of numerous high-stake private equity firms.

Among them, Xuan Yuan Private Equity was revealed as the fifth largest shareholder via its Xuan Yuan Ke Xin Fund 109, holding 1.40% of total equity

Additionally, the Ying Fu Hui Zhi Fund held the 12th and the 13th tracks with 12.54 million shares and 12.63 million shares, respectively.

Moreover, Tong Yi Investment Management Company is identified as the tenth largest circulating shareholder, possessing 12.50 million sharesPreviously, all four funds under Tong Yi’s management ranked within the top ten shareholders of Walden Material, each holding a stake of 0.99%.

It is noteworthy that the shares held by Xuan Yuan, Ying Fu Hui Zhi, and Tong Yi Investment were all transferred from the company's primary shareholders, Zhou Heping and Qiu LiminThis indicates that the holdings of these private equity firms originated from internal shareholders rather than external investments.

Interestingly, Zhou Heping and Qiu Limin are the co-founders of Walden Material and were previously married

However, in 2009, merely two years post-IPO, Zhou and Qiu registered their divorce without any immediate division of the shares registered under Zhou’s name in the company.

It wasn't until 2019 that they formalized an agreement to partition the shares, with Zhou Heping transferring 157 million shares—approximately 12.48% of total equity—to Qiu Limin, concurrently resigning from the role of chairmanEven after this handover, Zhou Heping retained his position as the largest shareholder, but Walden Material transitioned into a state without a controlling shareholder or practical controller.

Following 2019, the shareholding of both Zhou Heping and Qiu Limin underwent a constant reshuffling towards private equity vehicle

Both claimed that these transactions were necessitated by “family asset planning requirements.”

Collectively, Zhou and Qiu have “reduced their holdings” by transferring approximately 126 million shares, amounting to around 854 million RMB, with Xuan Yuan and Ying Fu Hui Zhi acquiring shares from Qiu, and Tong Yi acquiring shares from ZhouAdditionally, Qiu has also divested 35.06 million shares on the secondary market.

As of the third quarter of 2023, Zhou Heping remains the top shareholder, albeit with a reduced stake of 11.08%, while his ex-wife Qiu Limin holds 5.12% as the second-largest shareholder.

However, a pertinent question arises: how does the delegation of actual ownership to private equity products serve the “family asset planning needs” of these significant shareholders?

For instance, consider Su Tong Development which, in February 2022, saw its controlling shareholder, Lang Guanghui, transfer shares to Xuan Yuan Private Equity—his only beneficiary

This deal occurred at 15.89 RMB per share, involving around 919,870 shares that comprised 2% of the total capital.

Just two months post this transaction, the share price of Su Tong Development skyrocketed, peaking at 49.13 RMB per share, leading to an impressive gain of 183.30% over that period, amassing profits exceeding 300 million RMB for the fund.

Recent developments hinted at a legal dispute involving Walden Material.

As Walden Material’s stock price soared, a civil lawsuit filed in February commanded the market’s attention.

On February 25, Longyuan Group, a listed company on the A-share market, announced it had received a civil lawsuit from Walden Material regarding false securities claims, with the disputed amount around 56.08 million RMB.

In a twist of fate, just months prior, Longyuan Group filed a lawsuit against Walden Material, accusing it of breach of surplus distribution agreements, claiming 88.35 million RMB owed in profits and interest.

The ongoing litigation between these two A-share firms seems to stem from the long-term battle over control that Walden Material had with Longyuan Group.

Notably, Longyuan Group was previously part of Li Ka-shing's company portfolio

However, following aggressive divestment from Longsands Investments since 2014, Longyuan Group has operated without an actual controlling owner.

Amid this scenario, Walden Material and its aligned partners began acquiring shares in Longyuan Group, eventually amassing 26.79% of the company’s shares by June 2015.

As Walden's acquisition efforts intensified, Longyuan Group's management initiated a robust counter-offensive strategy, bringing in allies to safeguard management interests, including Fosun High-Tech, and executing a "poison pill" plan within the company bylaws.

During this maneuvering, despite Walden Material’s percentage of shares, Longyuan Group maintained that it was lacking active control.

By 2018, a mediation between the two entities put a halt to the war over shares, allowing Longyuan Group to sell its significant asset, Longyuan Electronics, to Walden Material, albeit at the expense of a simmering legal rivalry that still persists.