In 2025, net profit plummeted by 1014.24%, as Shahe Shares' real estate main business faced heavy losses. The company invested 274 million yuan to acquire Jinghua Electronics to turn the situation around.

On the evening of March 17, Shenzhen Shahana Industry Co., Ltd. (hereinafter “Shahana Co.”) (000014.SZ) disclosed that in 2025 (the reporting period), the company’s operating revenue and net profit both declined year over year. The net profit attributable to shareholders was a loss of RMB 150 million, a steep year-on-year drop of 1,014.24%. Its real estate core business fell into deep losses. Against this backdrop, Shahana Co. plans to spend RMB 274 million to cross-border acquire Shenzhen Jinghua Display Electronics Co., Ltd. (hereinafter “Jinghua Electronics”) and purchase 70% of its equity, officially entering the advanced manufacturing sector and seeking new points of profitable growth.

On March 19, in response to core issues of market concern—such as subsequent strategic adjustments to the real estate core business and the ratio settings between the advanced manufacturing industry and the real estate segments—reporters from Huaxia Times called Shahana Co. The company’s board secretary replied that all information the company could disclose to the public has been published in its annual report. Regarding the company’s arrangements for the advanced manufacturing segment going forward, the relevant details can be found in the restructuring draft that the company has already released. Among the independent financial advisers appointed in the restructuring, China International Capital Corporation Limited (CICC) has made corresponding remarks: “If there are any new plans or changes in the future, we will release an announcement in the first instance.”

Core business losses, insufficient land reserves

Public information shows that Shahana Co. was established in 1987 and achieved a listing in 1992. It is an established real estate enterprise in which the Shenzhen Municipal State-owned Assets Supervision and Administration Commission holds controlling ownership, and it is affiliated with Shenye Group. In 1993, the company entered the real estate sector, with its main business focused on real estate development and operations, as well as the operation and management of modern-service industrial premises.

With the real estate industry undergoing deep adjustment, the growth engine of the company’s traditional core business has continued to weaken. According to public information, since 2018 Shahana Co. has not added any new land reserve, relying mainly on development and operations of existing projects. Its performance has also shown a downward trend, and in 2024 it realized net profit of RMB 16.45 million.

In 2025, the magnitude of performance losses continued to expand. During the reporting period, Shahana Co. achieved operating revenue of RMB 310 million, down 13.35% year over year. Net profit attributable to shareholders of listed companies was a loss of RMB 150 million, down 1,014.24% year over year. Net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was also a loss of RMB 150 million, down 992.10% year over year. Meanwhile, because in 2025 Shahana Co.’s consolidated net profit attributable to shareholders was a loss of RMB 150 million and did not meet the cash dividend conditions in the Company’s Articles of Association, the company plans not to distribute cash dividends, not to issue bonus shares, and not to increase share capital through conversion of capital surplus into share capital.

Behind the massive losses is Shahana Co.’s multiple predicaments in its real estate core business—weak core-business growth, insufficient land reserves, and asset impairment provisions, which further intensified the loss situation.

In its annual report, Shahana Co. explained that the change in performance this time was mainly affected by adjustments in the industry environment in which its traditional real estate business operates. “The second- and third-tier cities where the company focuses its layout—such as Changsha and Xinxiang—still face challenges including weak demand, high inventory, and price pressure, which puts pressure on the company’s destocking efficiency and profitability.”

Asset impairment provisions have become another important factor dragging down the company’s performance. The annual report reveals that in 2025, the company recorded a total of RMB 85.2659 million in credit impairment losses and asset impairment provision. Of this, credit impairment provisions for accounts receivable and other receivables were negative RMB 60.7k, and inventory write-down provisions were RMB 85.3266 million. This provision reduced net profit attributable to ordinary shareholders of listed companies by RMB 84.9222 million, corresponding to a reduction of RMB 84.9222 million in the equity attributable to ordinary shareholders of listed companies at the end of 2025.

In terms of project layout, Shahana Co.’s business concentration is relatively high. At present, projects that are for sale and those under construction mainly concentrate in two major regions: Changsha in Hunan and Zhengzhou and Xingyang in Henan. Shenzhen’s headquarters only holds a small amount of existing properties; it no longer has new land reserves, and its business development lacks follow-up support. Among them, as a core layout area, Changsha’s market faced significant adjustment pressure in 2025. Although local governments introduced multiple policy measures to support the real estate market, the market rebound did not meet expectations, resulting in slower destocking and a longer cash collection cycle for the company’s Changsha projects. Full-year operating revenue was RMB 219 million and net profit was a loss of RMB 112 million, making it the main segment dragging down overall performance.

In terms of profitability indicators, in 2025 the company’s gross margin was negative 1.17%, down 52.88 percentage points year over year; its net profit margin was negative 48.24%, down 52.98 percentage points compared with the same period last year. Looking at single-quarter indicators, in the fourth quarter of 2025 the company’s gross margin was negative 2.81%, down 77.21 percentage points year over year and down 8.84 percentage points quarter over quarter; the net profit margin was negative 40.49%, up 50.44 percentage points compared with the same period last year and up 162.46 percentage points compared with the previous quarter.

However, despite the pressure on performance, the company has shown positive signals in terms of cash flow, providing funding support for its transformation and deployment. According to the annual report, in 2025 the company’s real estate sales cash inflow was RMB 357 million, up 127.06% year over year. In addition, considering the factor of undistributed cash dividends, the company’s full-year net increase in cash turned from negative to positive, rising from negative RMB 200 million in 2024 to RMB 71.2793 million, an increase of 135.58% year over year.

From real estate to advanced manufacturing

Facing the continued sluggishness of its traditional real estate core business, Shahana Co. has clearly set out in its 2026 operating plan a “two-track parallel” development strategy. It will treat transformation as the key to breaking the deadlock and will fully推进 (sic) advance the layout of the advanced manufacturing industry.

On one hand, the company will continue to deepen its real estate core business and plans to invest RMB 335.82M throughout the year to advance core-business operations. Of this amount, RMB 274 million is for the headquarters, RMB 60.57 million for the Changsha company, and RMB 1.5 million for the Xinxiang company. The company will draw cash back through precision marketing, optimizing destocking, and disposing of inventory assets. On the other hand, it will fully push forward the acquisition of Shenzhen Jinghua Display Electronics Co., Ltd., ensuring that the major asset restructuring is successfully completed in 2026. “A substantive step forward in Shahana Co.’s critical transformation and upgrading from traditional real estate development to advanced manufacturing,” the annual report noted.

According to an earlier announcement, on the evening of February 6 this year Shahana Co. disclosed a report (draft) on the major asset purchase and related-party transaction. The company plans to acquire 70% of the equity interest in Jinghua Electronics held by Shenzhen Yepengji (Group) Co., Ltd. (hereinafter “Yepengji”) for RMB 274 million in cash. After the transaction is completed, Shahana Co. will add businesses related to intelligent display controllers and LCD display components, changing the company’s current structure centered on a single real estate business.

As the key target of this acquisition, Jinghua Electronics’ earnings performance and industry outlook have become the focus of market attention.

It is reported that Jinghua Electronics is a national-level “specialized, refined, distinctive, and innovative” “little giant” enterprise, with a solid foundation for stable profitability. In the first three quarters of 2025, it achieved revenue of RMB 312 million, net profit of RMB 38.5366 million, and cash flow from operating activities of RMB 49.0867 million. Its net profit for the period has already exceeded the 2026 performance commitment (RMB 37.2022 million). As for industry prospects, the intelligent controllers and new display industry that Jinghua Electronics is in is a core component of the country’s strategic emerging industries. Benefiting from the widespread adoption of technologies such as AIoT, 5G, and Industry 4.0, the market size of China’s intelligent controller industry in 2026 will exceed RMB 4.82 trillion, and the new display industry size will exceed RMB 48.2k. With the combined effect of policy support and market growth tailwinds, this is expected to open up broad room for growth for Shahana Co. after the transformation.

On the necessity of this transformation, Shahana Co. stated directly that China’s real estate industry is undergoing profound transformation. Market resources are accelerating in their concentration on leading real estate developers. Some smaller and mid-sized developers are gradually exiting the market due to financing constraints, insufficient land reserves, and weaker ability to withstand risks. In this environment, the company may face multiple risks in the future, including increased difficulty in project profitability, rising investment risks, and insufficient land reserves. Therefore, the company will push hard to carry out a merger and acquisition of Shenzhen Jinghua Display Electronics Co., Ltd., ensuring that the major asset restructuring is successfully completed in 2026 and nurturing a new growth engine. In addition, both parties’ actual controllers are Shenzhen Municipal State-owned Assets Supervision and Administration Commission, which is also seen as an important measure within the Shenzhen state-owned asset system for optimizing resource allocation and supporting the transformation of traditional enterprises.

According to relevant announcements, the restructuring is currently at a critical stage. In early March, the company completed its response to the audit and inquiry letter for the merger and acquisition restructuring at the Shenzhen Stock Exchange. Detailed explanations have been provided on core issues such as whether the company’s own funds are sufficient to cover the payment, whether the valuation of the underlying assets is fair (P/E ratio 15.01x, P/B ratio 1.41x, significantly below the industry average), and the sustainability of performance. The independent financial adviser, CICC, has issued a verification opinion, further strengthening the compliance basis.

It is worth noting that Jinghua Electronics previously submitted a ChiNext IPO application in 2023 and withdrew it proactively in 2024. This time, after being acquired by Shahana Co., it becomes a path for the company to realize asset securitization through a “back door.” It also lays the foundation for coordinated development between the two sides.

Responsible editor: Zhang Bei; Editor-in-chief: Zhang Yuning

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