(Yicai) May 20 -- Shares of Jinlihua Electric rose by the exchange-imposed daily trading limit after the Chinese maker of functional glass and insulation products said it plans to enter the commercial aerospace sector by assets acquisition.

Jinlihua Electric [SHE: 300069] closed 20 percent up at CNY36.72 (USD5.39) today in Shenzhen today. The stock suspended trading on May 6 because of preparations for the deal.

Jinlihua Electric will acquire a nearly 83 percent stake in Xiopm Space, a commercial satellite design, manufacture and operating company set up by the Xi’an Institute of Optics and Precision Mechanics under the Chinese Academy of Sciences, from 11 shareholders through cash payment and share issuance, the Zhejiang province-based buyer announced yesterday.

The shares sold to the 11 shareholders of Xiopm Space will be priced at CNY16.80, a discount of 45 percent to Jinlihua Electric’s closing price on April 30. China’s stock market was closed from May 1 to 5 for the Labor Day holiday.

To raise funds for the cash consideration payment and intermediary service fees payment, Jinlihua Electric will also carry out a private placement, issuing new shares priced at CNY19.06 to its controlling shareholder Shanxi Red Sun Tourism Development. The price represents a discount of 38 percent to the company’s closing price on April 30.

The huge discounts are partly because Jinlihua Electric’s stock surged 45 percent in April.

Xiopm Space is one of a few Chinese commercial aerospace firms that possess both satellite research and manufacturing qualifications and constellation networking construction qualifications. Its customers span multiple industries, including agriculture and forestry, soil and water conservation, mineral exploration, and carbon emission monitoring. All of its 10 satellites have been successfully launched into orbit.

Driven by favorable policies, accelerated industrial development, and sustained capital, commercial aerospace has emerged as a booming sector in China’s capital market.

The CSI Satellite Industry Index, which covers the whole industrial chain from satellite manufacturing and launch services to communication, navigation, and remote sensing applications, has climbed more than 31 percent so far this year and over 68 percent in the past 12 months, reflecting robust market investment enthusiasm.

Editor: Futura Costaglione