Zhejiang Sanhua Intelligent Controls Co.,Ltd. recently held an earnings conference, during which an investor inquired about the concentrated share reductions by company executives this year. The company responded that funds from some executives' sales were intended for their children's living and educational expenses, a statement that subsequently sparked discussion on social media. Other investors asked about the company's non-GAAP net profit performance and the status of its energy storage and robotics businesses.
Following the release of the investor activity record, the company's A-share price fell 6.28% on May 27, while its H-share price declined 4.89%. On May 28, the A-share price closed down 4.72% at 48.61 yuan per share, and the H-share price closed down 4.9% at 32.9 HKD per share.
During the conference, when asked why executives were collectively reducing their holdings, Sanhua stated: "The Chairman's share reduction was primarily due to personal funding needs, with the proceeds to be used for industrial investment. The share reductions by the other five directors or senior managers mainly involved equity incentive shares accumulated over the years, with the funds intended for children's education costs and living expenses." This explanation led to mixed reactions online, with some users dismissing it as a fabricated excuse and others viewing the sales as justifiable.
In January, Sanhua's stock price reached a high of 60 yuan per share. On January 23, the company announced that its actual controller and Chairman Zhang Yabo, along with President Wang Dayong, Director Ni Xiaoming, Chief Engineer Chen Yuzhong, Board Secretary Hu Kaicheng, and CFO Yu Yingkui, planned to reduce their holdings of the company's A-shares. By March 30, Zhang Yabo, Wang Dayong, Ni Xiaoming, Hu Kaicheng, and Yu Yingkui had completed their reduction plans; Chen Yuzhong did not execute the plan and terminated it early.
Specifically, Zhang Yabo sold 9.756 million shares at an average price of 43.1 yuan per share, realizing approximately 420 million yuan. The other four executives collectively sold 343,300 shares, with the lowest average selling price being 43.11 yuan per share, resulting in total proceeds of about 14.8 million yuan. During the executives' selling period from March 27 to 30, the stock price fell to around 43 yuan per share. From its January high of 60 yuan to March 31, the share price had declined by over 25%.
According to the company's 2025 annual report, among the executives who reduced their holdings, Wang Dayong received the highest compensation at 4.4371 million yuan, exceeding Chairman Zhang Yabo's 3.4454 million yuan. This was followed by Ni Xiaoming at 2.7545 million yuan, Yu Yingkui at 2.0417 million yuan, and Hu Kaicheng at 1.7903 million yuan.
An investor also questioned the significant discrepancy between the Q1 year-on-year growth in net profit attributable to shareholders of 2.68% and the 15.52% growth in non-GAAP net profit. The investor asked what one-time gains or losses caused this gap and how management planned to accelerate profit growth in the second half to support the reiterated full-year net profit growth target of 15%.
Sanhua responded that the difference was mainly due to non-recurring factors such as securities investment gains and losses. The company stated it would continue to focus on enhancing product competitiveness and comprehensively driving cost reduction and efficiency improvements in the second half to support the annual profit growth target.
The impact of securities investment losses on net profit was evident in the 2025 annual report. In 2025, revenue was 31.012 billion yuan, a year-on-year increase of 10.97%; net profit attributable to shareholders was 4.063 billion yuan, up 31.10%; and non-GAAP net profit attributable to shareholders was 3.958 billion yuan, up 26.95%. For Q1 2026, revenue was 7.774 billion yuan, up 1.36%; net profit attributable to shareholders was 928 million yuan, up 2.68%; and non-GAAP net profit attributable to shareholders was 986 million yuan, up 15.52%.
The company reported securities investment losses of 74.7563 million yuan in 2025 and 105 million yuan in Q1 2026. The 2025 annual report indicated that Sanhua's securities investments primarily consisted of overseas stocks such as Seres and Fortior.
Investors also inquired about the business scale related to Sanhua's data center, energy storage, and robotics operations. The company stated that its data center business was progressing smoothly, with existing products for server racks and CDUs, and ongoing R&D to improve the product line based on future customer needs. It is also engaged in technical discussions with a renowned international chip client to jointly define future product directions. For the facility side, the company has a rich product line and has supplied related products to numerous global clients. The energy storage business is experiencing rapid growth, and the company will continue to increase product R&D iteration and resource investment in this area. Regarding robotics, the company is customer demand-driven and is orderly advancing capacity allocation and other tasks according to project timelines.
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