Recently, Shanghai Highly(Group)Co.,Ltd. announced that its controlling shareholder plans to reduce holdings. Not long ago, the company's stock price reached a historic high. Compared to last year's low point, Shanghai Highly's maximum stock price increase reached 468.80%. In recent years, Shanghai Highly has experienced rapid revenue growth, but net profit performance has been mediocre, with non-GAAP net profits continuing to remain in losses.
Why does Shanghai Highly show revenue growth without profit improvement? Under circumstances of mediocre net profit performance, why has the company's stock price been able to continue its bull run? Let's explore these questions in detail.
Currently, Shanghai Highly has initially formed two main business segments: "cooling and heating related solutions and core components" and "automotive parts." The cooling and heating related solutions and core components business mainly engages in R&D, production and sales of refrigeration rotary compressors, refrigeration motors and castings; the automotive parts business mainly engages in R&D, production and sales of automotive thermal management systems and key component products.
Over the past three years, Shanghai Highly has been in a state of revenue growth without profit improvement. In 2021, Shanghai Highly's net profit reached a historic high of 323 million yuan. After 2021, despite continued revenue growth, Shanghai Highly's net profit performance has been poor. From 2022 to 2024, the company's operating revenue was 16.503 billion yuan, 17.031 billion yuan and 18.747 billion yuan respectively, with net profits of 35.4562 million yuan, 30.5129 million yuan and 33.8485 million yuan respectively, while non-GAAP net profits have continuously remained in losses.
In the first half of this year, Shanghai Highly's net profit performance improved somewhat. In the first half of 2025, the company achieved operating revenue of 12.426 billion yuan, an increase of 13.16% compared to the same period last year; realized net profit of 33.3546 million yuan, a year-on-year increase of up to 693.76%; achieved non-GAAP net profit of 33.3546 million yuan, a year-on-year increase of 269.05%.
It's not difficult to see that although Shanghai Highly's net profit growth is considerable, the absolute value is not high. The reduction in financial expenses is the main reason for Shanghai Highly's significant net profit improvement. Shanghai Highly's 2025 interim report shows that the company's financial expenses in the first half were approximately -31.2652 million yuan, while the same period last year was as high as approximately 98.8009 million yuan, a year-on-year decrease of 131.64%!
The main reason for Shanghai Highly's reduced financial expenses is the year-on-year increase in foreign exchange gains in this period. From the revenue composition of the past three years, overseas market growth is the main source of Shanghai Highly's operating revenue growth. From 2021 to 2024, the company's overseas revenue scale was 4.588 billion yuan, 5.635 billion yuan, 6.333 billion yuan and 7.357 billion yuan respectively. In the first half of 2025, Shanghai Highly's operating revenue from other countries/regions was 4.521 billion yuan, accounting for 36.38% of total operating revenue. As of the end of June 2025, Shanghai Highly's overseas assets scale was approximately 4.715 billion yuan, accounting for 19.21% of total assets.
Why has the company's profitability level declined significantly despite rapid overseas revenue growth? When contacted about this matter, relevant staff from Shanghai Highly's securities department stated that they had not received authorization and therefore could not accept interviews, repeatedly suggesting that inquiries be directed to the company's disclosed announcements.
In recent years, Shanghai Highly's contract liability scale has grown rapidly. Rapid growth in contract liabilities usually means that enterprise products are in short supply, with customers paying in advance to lock in orders, indicating that future revenue will grow significantly. Data shows that from 2022 to 2024, Shanghai Highly's contract liability scale grew from 49.4261 million yuan to 799 million yuan by the end of 2024. At the end of June 2025, the company's contract liability scale was 1.161 billion yuan, compared to only 114 million yuan in the same period last year, a year-on-year increase of approximately 918%!
Data shows that Shanghai Highly has multiple hot concepts including lithography machines and chips. Due to the addition of hot concepts and other reasons, Shanghai Highly's stock price has continued its bull run. Calculated on a forward-adjusted basis, in July 2024, Shanghai Highly's stock price fell to a minimum of 4.81 yuan, while on September 2, 2025, the company's stock price hit a historic high with a maximum price of 27.50 yuan. Compared to last year's lowest price, in just over a year, Shanghai Highly's maximum stock price increase reached 468.80%!
Shortly after the stock price hit new highs, Shanghai Highly's controlling shareholder plans to reduce holdings. On the evening of September 8, Shanghai Highly released an announcement regarding the controlling shareholder's share reduction plan. The announcement shows that due to internal business arrangement needs, the company's controlling shareholder Shanghai Electric Group Co., Ltd. (hereinafter referred to as "Electric Holdings") plans to reduce holdings of no more than 10,733,444 company shares through centralized bidding transactions, with the reduction ratio not exceeding 1% of the company's total share capital. Currently, Electric Holdings and its persons acting in concert hold a combined shareholding ratio of 28.96%.
Prior to the controlling shareholder's planned reduction, Shanghai Highly's directors, supervisors and senior management had already planned reductions. The company's announcement disclosed in February 2025 showed that Mr. Li Yilong, Ms. Sun Jun, and Mr. Cui Rongsheng planned to collectively reduce no more than 56,300 A-shares through centralized bidding. However, according to the company's disclosure on June 17, 2025, when this reduction plan period expired, Mr. Li Yilong, Ms. Sun Jun, and Mr. Cui Rongsheng had not proceeded with any reductions.
On the trading day following the announcement of the controlling shareholder's planned reduction (September 9), Shanghai Highly's stock price opened at the limit down. Although there was some recovery during trading, it ultimately closed at the limit down with a decline of 9.98%. As of September 9, 2025, Shanghai Highly's closing price was 20.21 yuan, with a market value of 17.25 billion yuan, a dynamic P/E ratio as high as 344.3 times, and a P/B ratio of 3.55 times. If the company's controlling shareholder reduces 10,733,444 shares at 20.21 yuan, the cash-out amount will approach 217 million yuan.
Disclaimer: This content and data are for reference only and do not constitute trading advice. Please verify before use. Trading based on this information carries risks at your own responsibility.
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