Over nearly 60 trading days, G-Bits Network Technology's stock price has surged 66% (as of August 27), reaching an annual high of 479.99 yuan. Against this backdrop, Vice Chairman Chen Tuolin announced on August 21 a plan to reduce holdings by 250,000 shares, expected to generate approximately 110 million yuan in proceeds. Following suit, Company Secretary Liang Lili announced on August 26 a reduction of 3,350 shares, expected to generate over 1.5 million yuan.
Both executives set their reduction windows between mid-September and December, coinciding with the stock price highs following positive interim report releases. Particularly noteworthy is that Chen Tuolin, as an original shareholder before IPO (holding 11.44%), had never previously reduced holdings. This "first reduction" timing reveals cautious judgment about the stock price's sustainability.
**Performance Quality Concerns: Sustainability Crisis of High Growth**
Despite the interim report showing revenue and net profit growth of 28.49% and 24.50% respectively, the core support is singular and concerning:
**New Product Dependency**: Above-expectation performance mainly relies on "Legend of Swords and Staffs" launched in late May (monthly revenue of 424 million yuan). However, the game dropped out of iOS top ten bestsellers in June and stabilized around 30th place in August, raising questions about revenue sustainability.
**Legacy Product Fatigue**: "Ask Mobile" saw revenue decline 7.25% year-over-year in the first half, with Q2 sequential growth dependent on "anniversary celebration" activity stimulus, showing exhausted natural growth momentum.
**Overseas Business Contraction**: International revenue declined 21.01% year-over-year in the first half, with management frankly stating "low probability of breakout hits among pipeline products," bringing globalization strategy to near standstill.
**Governance Structure Risks: Interest Transfer and R&D Hollowing**
**Dividend Policy Favoring Controlling Shareholder**: Interim dividend proposal of 6.6 yuan per 10 shares represents a 73.46% payout ratio. Controlling shareholder Lu Hongyan's 29.72% stake would receive 141 million yuan in dividends, while company R&D investment represents only 14.17% of revenue (357 million yuan), with R&D personnel numbers halved over four years.
**Executive Incentive Monetization Impulse**: Liang Lili's share reduction largely comes from 2018 equity incentives (grant price 141.19 yuan/share). The 225% floating profit and rush to cash out reflects weak long-term commitment from core team.
**Strategic Predicament: Product Gap and Transformation Inability**
**SLG Project Delays**: Pipeline product "Wild Land of Nine Shepherds" remains in testing phase with undefined launch timeline, unable to resolve the gap in new products.
**"Small Steps, Fast Progress" Becomes Empty Slogan**: While the company claims to focus on "producer-passionate" projects, actual resources tilt toward short-term monetization. The 2023 anime-style game "Non-Anonymous Orders" was shut down after one year of operation, showing deteriorated innovation and trial-and-error capabilities.
**AI Strategy on Paper**: Despite claims of cooperation with NVIDIA on AI gaming platforms, technology remains in incubation stage without contributing actual revenue, with resource dispersion weakening core business investment.
**Funding Alerts: Institutional Exodus and Liquidity Risks**
**Sharp 16.51% Decline in Shareholder Count**: While appearing as chip concentration, this actually signals retail investor exodus, consistent with institutional holdings dropping from 53 to 14 entities in 2024.
**Executive Selling Triggering Copycat Effect**: Five days after Chen Tuolin's reduction announcement, main capital saw net outflows of 29.99 million yuan, with market concerns about more original shareholders cashing out.
**Conclusion: Warning Bell at the End of the Rally**
G-Bits Network Technology's executive selling wave essentially results from the resonance between performance expectation overdraft and governance defects:
**Short-term**: Stock price gains have overdrafted new product dividends. Revenue decline of "Legend of Swords and Staffs" and SLG project delays may trigger a Davis double-kill.
**Long-term**: Deep-seated contradictions including insufficient R&D investment, overseas expansion incapability, and controlling shareholder interest priority have trapped the company in a vicious cycle of "living off past achievements." If Q3 new products fail to extend the lifecycle, the current high valuation of 479 yuan (dynamic P/E 23.5x) may become a bubble peak.
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