The demand for liquidity has led major shareholders to take action again.
Just as Shenzhen Economic Special Zone Real Estate (Group) Co., Ltd. (hereinafter referred to as "深深房A", 000029.SZ) shares hit a new high, the company received a notice of stock reduction from its controlling shareholder.
On the evening of October 20, 深深房A disclosed that Shenzhen Investment Holding Co., Ltd. (hereinafter referred to as "深投控") plans to reduce its stake by no more than 1% of the company’s total share capital, which amounts to approximately 10.12 million shares. Following this announcement, on October 21, the company’s stock price nearly hit the daily limit down.
As one of the earliest established real estate development enterprises in Shenzhen, 深深房A gained considerable attention due to its association with Evergrande's backdoor listing plan, becoming a popular "Evergrande concept stock." However, following the termination of that plan, the company has faced significant challenges, including difficulties in project sales, a lack of land reserves, and the failure of the controlling shareholder to fulfill commitments regarding industry competition issues.
On October 22, representatives of 深深房A indicated that they are currently unclear about 深投控's plans regarding the competition issue. Until this matter is resolved, the company can only focus on advancing its core business and seeking better profit growth opportunities.
━━━━ State-Owned Major Shareholder Reduces Stake Again
The announcement indicated that 深深房A recently received a letter from 深投控 regarding its plan to reduce its stake in 深深房A, which is scheduled to take place in up to three months following the disclosure of the announcement, starting from the 15th trading day thereafter under a centralized bidding process, for a total of up to 10.12 million shares, equaling no more than 1% of the total share capital.
As of the announcement date, 深投控 directly held approximately 564 million shares of 深深房A, accounting for 55.78% of its total share capital.
Prior to this, 深深房A's stock price had just reached an all-time high. In 2025, the stock price surged from ¥14.81 per share to as high as ¥33.58 per share by September 30. Although there was a slight pullback, the closing price on October 20 still reached ¥29.53 per share.
This marks the second time 深投控 has reduced its stake. In July 2022, the company announced plans to reduce its shares in 深深房A by up to 2023.32 million shares (no more than 2% of total capital). Over the following five months, 深投控 ultimately reduced its holdings by approximately 14.24 million shares, accounting for 1.4% of total share capital, with the sale price ranging from ¥8.37 to ¥14.81 per share, netting roughly ¥150 million.
Despite the current reduction being half the planned amount from the initial announcement, the high stock price of 深深房A is expected to significantly increase the cash outflow for 深投控.
According to 深深房A, the reason cited by 深投控 for the reduction is operational development needs. 深投控 serves as an important state-owned capital investment entity in Shenzhen, primarily engaging in technology finance, technology industry, commercial trade, and urban operations, with total assets exceeding ¥1.2 trillion. It has been listed on the Fortune Global 500 for six consecutive years.
A credit rating report from Zhongcheng Credit International indicates that in 2024, 深投控 had operating revenue of ¥271.38 billion, down 6.56% year-on-year, and a net profit of ¥13.098 billion, down 23%. As the business continues to develop and its scope of consolidation expands, the company’s debt scale has grown rapidly. By the end of March 2025, its consolidated debt totaled ¥544.88 billion, with short-term debt comprising 50.94%, indicating a high proportion of overall short-term debts, highlighting the need for further optimization of its debt structure.
━━━━ Industry Competition Issues Remain Unresolved
The increase in 深深房A's stock price this year can be partly attributed to improved performance. In 2024, its net profit attributable to the parent company was -¥177 million, narrowing compared to a loss of ¥251 million in 2023. In the first half of 2025, the company reported operating revenue of ¥637 million, a year-on-year increase of 374.85%, with a net profit of ¥103 million, a significant year-on-year increase of 1732.32%. Following the announcement of this performance forecast, 深深房A's stock price hit the limit up the next day.
However, the positive results in the first half of 2025 do not mean that 深深房A is out of danger, as the shortage of land reserve resources continues to constrain its development. In October 2016, 深深房A announced a restructuring agreement with China Evergrande to purchase 100% of Evergrande's equity either through A-shares or cash and aimed to achieve the latter's backdoor listing. As a result, the company suspended major financing activities and new project expansions. However, four years later, this major asset restructuring still did not materialize.
In its 2020 annual report, 深深房A indicated that its current available land development resources are nearly exhausted, presenting challenges for sustainable operation. In 2021, the company added new projects in Shenzhen and Huizhou, but there have been no new land reserves since then.
As of June 30, 2025, 深深房A had only three projects for sale and under construction, located in Shenzhen, Huizhou, and Shantou, with only 264,000 square meters of remaining developable area in its land reserves.
In early June, during a board meeting, 深深房A approved a proposal to authorize its management to determine participation in bidding for state-owned land use rights through auction, competitive tendering, or listing. This indicates that the company still has aspirations for scale expansion, although it has yet to see tangible results.
For the latter half of 2025, 深深房A indicated it will accelerate efforts for 深投控 to fulfill commitments to avoid competition with its peers and actively explore new development paths in the future.
It has been noted that both 深深房A and 深物业A, both subsidiaries controlled by 深投控, are involved in real estate development and the sale of commercial housing, which presents a competitive challenge. As early as August 2018, 深投控 made promises to address these competitive issues; however, the timeline for compliance has been extended multiple times since then.
In late 2024, 深投控 stated that since making its promise, it has explored solutions through asset sales or swaps, equity transfers, and other measures to effectively address the competition issue between 深物业A and 深深房A. However, due to market downturn challenges, both listed companies have found it difficult to sell or swap assets, and the conditions for equity transfer have not yet been established. Consequently, the commitment has been postponed to November 9, 2026.
This means that until 深投控 clarifies its development plans for both companies, 深深房A cannot aggressively pursue new business explorations, and its operating challenges are unlikely to improve in the short term.
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