FULONGMA Stock Surges on Huawei Autonomous Tech Deal and Supply Chain Acquisition

Shares of FULONGMA (603686.SH) surged by the daily 10% limit after the environmental sanitation equipment manufacturer announced two major strategic initiatives: a 200 million yuan partnership with Huawei Cloud to develop autonomous vehicles and a 257 million yuan cash acquisition to secure its upstream supply chain.

A High-Stakes Push into Autonomy

FULONGMA has entered into a three-year, exclusive strategic cooperation agreement with Huawei Cloud to develop autonomous driving systems for its sanitation vehicles. The 200 million yuan contract focuses on creating intelligent, unmanned solutions for 3-ton and 6-ton street sweeping vehicles, according to a company filing.

The partnership aims to position FULONGMA in the high-growth intelligent sanitation market, which saw its annualized value jump 77% year-over-year in the first half of 2026, according to industry data cited in the source. However, the company's current footing in this sector is small, with related sales totaling just 9.91 million yuan in 2025 and 4.95 million yuan in the first half of 2026.

Investor attention has focused on the intellectual property terms. While both parties retain their background IP, the AI models developed using FULONGMA's data will be owned by Huawei Cloud. FULONGMA will need to subscribe to Huawei's cloud services to utilize the technology it helped create—a common model in the cloud services industry but one that cedes significant control to the technology partner.

Acquisition Secures Supply Chain Amid Scrutiny

In a concurrent move to solidify its core business, FULONGMA announced the acquisition of 100% of Fujian Huanhai Environmental Protection Equipment Co., a local upstream supplier of components like waste containers. The 257 million yuan cash deal was struck at an 11.40% discount to the target's appraised value, a move FULONGMA said was intended to lock in key manufacturing capacity and stabilize its supply chain.

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The acquisition has raised questions due to two key factors:

• No Performance Guarantee: The deal lacks any earnings commitment or "performance bet" from the sellers, meaning FULONGMA assumes all financial risk if the acquired company underperforms.
• Related-Party Involvement: Among the 11 sellers are relatives of FULONGMA's controlling shareholder and chairman, Zhang Guifeng. While their collective stake did not trigger a formal related-party transaction disclosure, their inclusion has been noted by market observers.

Furthermore, Huanhai's debt-to-asset ratio has risen sharply, from 37.35% at the end of 2025 to 67.58% as of May 2026, indicating increased financial leverage.

Context: Navigating a Competitive Market

These strategic moves come as China's sanitation industry shifts from rapid expansion to a period of intense competition over existing market share, with state-owned enterprises gaining a dominant position. For a privately-owned company like FULONGMA, this dual strategy of investing in next-generation autonomous technology while simultaneously securing its traditional manufacturing base represents a critical effort to maintain a competitive edge.