Cubic Sensor and Instrument, a publicly listed company on the Shanghai Stock Exchange, has recently announced its strategic investment in Zhongshan LOPE Thermal Technology and Guangzhou Jingding Electric. This move marks a significant expansion in Cubic's portfolio and deepened cooperation within the gas heating industry. Cubic will acquire a 57.14% equity stake in LOPE and a 51% stake in Jingding Electric through a combination of capital transfer and capital increase.
According to data released at the annual Chinese gas heating industry conference, China's market inventory for wall-mounted gas boilers exceeds 34 million units, with over 10 million units more than eight years old and around 5 million aged between 10 and 15 years. This highlights a substantial potential market for replacements. Currently, the majority of these boilers are direct gas-fired types, which are notably inefficient in terms of combustion and produce high emissions. In contrast, condensing wall-mounted gas boilers, which are more efficient and environmentally friendly, make up only about 2.3 million units, or 7% of the total inventory. This situation underscores a critical need for China to shift towards developing smart premixed condensing wall-mounted gas boilers.
Cubic has established a strong R&D team in 2022 and initiated the development of low-carbon gas combustion technologies, aiming to build an industrial ecosystem for residential, commercial, and industrial gas-fired boilers with sensors, actuators, and controllers as the core supply chain. The company has made breakthroughs in the R&D of gas sensors for new types of full premixed condensing wall-mounted gas boilers, as well as in brushless direct current fans and intelligent gas combustion controllers.
Through the strategic investment, Cubic aims to integrate resources related to stainless steel heat exchangers, burners, gas proportional valves, variable frequency BLDC fans, gas sensors, intelligent gas combustion controllers, and other components involved in full premixed condensing wall-mounted gas boilers, establishing a "sensor-actuator-controller" one-stop supply chain solution in this field.
LOPE, one of the few enterprises globally capable of mass-production of stainless-steel condensing heat exchangers, has achieved an impressive coverage rate of over 80% in the market for Chinese branded full premixed condensing wall-mounted gas boilers. Jingding Electric, with nearly two decades of experience in the gas proportional valve field, is an important standard drafting or participating member in the China gas appliance industry.
Dr. Youhui Xiong, Chairman of Cubic, has high expectations for this strategic investment. He believes that by leveraging the significant industrial opportunities and the expansive, cohesive domestic market fostered by the 'low-carbon' goals, their tripartite collaboration and deep cooperation are set to powerfully accelerate the evolution of China's full premixed condensing wall-mounted gas boiler sector towards premium branding.
Mr. Qi Wang, director of the Utilization Committee and Gas Heating Committee of China Gas Society of China Civil Engineering Society, states that the trend of leveraging sensor technology for intelligent upgrades and applying full premixed condensing technology to improve thermal efficiency and reduce pollutant emissions is becoming increasingly evident in the wall-mounted gas boiler industry. He anticipates that Cubic's collaboration with LOPE and Jingding Electric will contribute significantly to the development of the industry.
