Shahe Co., Ltd.'s Transformation Cannot Be Delayed; Acquisition of Jinghua Electronics Will Be the Key to Breaking the Deadlock

On the evening of March 17, Shahe Co., Ltd. (000014) disclosed its 2025 annual performance report. Data shows that the company achieved an operating revenue of 310 million yuan for the year, with a net profit attributable to shareholders of the listed company a loss of 150 million yuan. Considering industry development trends, this performance change is mainly influenced by adjustments in the traditional real estate industry environment. Against this backdrop, combined with policies supporting state-owned capital to layout advanced manufacturing, the company plans to acquire a 70% stake in Jinghua Electronics for 274 million yuan in cash. This restructuring transforms the company’s self-rescue into a strategic move to respond to policies and seize high-quality tracks, making it an important layout with strategic significance and developmental value.

From Magnetic and Electrical Industry Leader to Established Real Estate Developer, the 24-Year Profit Myth Comes to an End, and Transformation Is Urgent

Shahe Co.’s development trajectory is a typical example of Shenzhen state-owned enterprise transformation. The company was originally founded as Shenzhen Huayuan Magnetic and Electrical Co., Ltd. in 1987, restructured into a joint-stock company in 1991, and officially listed on the Shenzhen Stock Exchange on June 2, 1992, making it one of the earliest local state-controlled listed companies in Shenzhen. Around 2002, the company completed major asset restructuring, establishing real estate development and management as its main business, and renamed itself “Shahe Co.” It subsequently developed landmark projects such as “Century Village” and “Shahe City,” accumulating a solid reputation and resource reserves within the industry.

Over its 24 years of being listed, Shahe Co. has maintained steady operations through multiple real estate cycles. Even under the downward pressure in 2024 industry-wide, the company still achieved a net profit attributable to the parent of 16.45 million yuan, a rare record of continued profitability in the industry. However, as the real estate industry continues to undergo deep adjustments, sticking to traditional tracks may not only lead to sustained profit pressure but also cause the company to miss the window of industry transformation. Entering high-growth, high-value-added advanced manufacturing has become the only way to break business concentration risks and achieve sustainable development.

This transformation is not a blind choice by the company but a necessary response to industry trends and policy guidance. As the real estate sector enters a deep adjustment phase, the “housing is for living, not for speculation” positioning is being further reinforced, and growth space for traditional real estate companies is shrinking. Transforming into emerging industries has become a consensus. Shahe Co.’s transformation aligns with the era’s demand for high-quality development in advanced manufacturing and is a key step for the company to break through growth ceilings and rebuild core competitiveness.

Policy-Driven State-Owned Capital Transformation, Jinghua Electronics May Be the Optimal Solution for Breakthrough and Rebirth

Currently, at the national level, there is strong support for directing state capital toward advanced manufacturing and strategic emerging industries, encouraging state-owned enterprises to grow new productive forces through mergers and acquisitions. Local policies in Shenzhen also explicitly support municipal state-owned enterprises to deploy in high-growth emerging fields, helping to build a diversified industrial development system. As a Shenzhen state-owned listed enterprise under the actual control of the Shenzhen State-owned Assets Supervision and Administration Commission, Shahe Co.’s restructuring is a concrete practice in response to the national call to “cultivate new productive forces” and to implement Shenzhen’s state-owned enterprise reform requirements. It aligns with policies favoring strategic emerging industries and fulfills the responsibility of state-owned enterprises to serve urban industrial upgrading, achieving deep integration of business layout, state-owned asset strategy, and regional development.

Jinghua Electronics, as the core carrier of this transformation, is highly strategically compatible with Shahe Co., making the acquisition’s necessity obvious:

First, the industry track of Jinghua Electronics aligns closely with policy directions. Its focus on intelligent controllers and new display industries is a core part of the national strategic emerging industries. Benefiting from AIoT, 5G, Industry 4.0, and other technological advances, China’s intelligent controller market is expected to surpass 4.82 trillion yuan by 2026, and the new display industry exceeds 880 billion yuan. Policy support and market growth provide broad development space for Shahe Co. after transformation.

Second, Jinghua Electronics’ strong technological capabilities fill the company’s business shortfalls. As a national-level specialized and innovative “Little Giant” enterprise, Jinghua Electronics has been deeply engaged in the industry for nearly 40 years, building a complete technical system covering display optics, embedded software, and more. It holds 49 patents (including 11 invention patents) and 28 software copyrights, possessing industry-rare “display + intelligent control” integrated R&D and manufacturing capabilities. Its technological barriers are difficult to replicate, precisely filling Shahe Co.’s gap in advanced manufacturing.

Meanwhile, the company’s resilient performance and sustainable profitability can help Shahe Co. quickly reverse its losses. Jinghua Electronics’ clients include global industry leaders such as Daikin, Schneider, Kohler, and Gree, with over 50% of revenue from overseas markets. Its global layout is mature, and customer loyalty is high. From January to September 2025, the company achieved a net profit of 38.54 million yuan, with gross profit margins exceeding industry averages by 3-9 percentage points for three consecutive years, maintaining high profitability. The counterpart has also committed that from 2026 to 2028, the cumulative net profit excluding non-recurring gains will not be less than 121 million yuan. After the restructuring, the company will be directly consolidated, quickly reversing Shahe Co.’s losses, and promoting a new business pattern of “steady real estate operations + advanced manufacturing,” thoroughly optimizing the business structure and profitability.

The Shareholders’ Meeting on March 23 Will Be a Critical Battle, Voting Will Decide the Transformation

Currently, the restructuring is in its final decisive stage. The company completed a comprehensive reply to the Shenzhen Stock Exchange’s inquiry letter on the merger and restructuring in early March, addressing core concerns such as funding sources (full self-financing, no bank loans), valuation fairness (PE ratio of 15.01, PB ratio of 1.41, significantly below industry averages), and sustainability of performance. An independent financial advisor, China International Capital Corporation, issued verification opinions, solidifying the compliance foundation of the restructuring.

According to the announcement, the company’s second extraordinary general meeting in 2026 will be held on March 23, to review 21 special resolutions including the transaction plan, performance commitments, and related-party transaction recognition. All resolutions require approval by more than two-thirds of the voting rights of shareholders present, with related shareholders abstaining from voting. Shareholders recorded as of the close of trading on March 12, 2026, can participate via on-site or online voting (voting code: 360014). This vote is not merely about asset acquisition but a crucial battle to determine whether Shahe Co. can escape losses, avoid potential risks, and successfully enter high-growth tracks such as AIoT, industrial control, and smart vehicles—directly affecting the company’s future development. As owners, every shareholder’s vote directly impacts the company’s future asset quality, profitability, and long-term value. Under current pressures on the company’s fundamentals, fleeting transformation opportunities, and ongoing policy dividends, active participation and prudent decision-making by shareholders are key to ensuring the smooth implementation of the restructuring and injecting vital momentum for the company’s rebirth and high-quality development.