A shareholder meeting for Shanghai Vital Deeptech Co., Ltd. held on July 29 in Shanghai saw a small turnout of just six shareholders, representing a mere 0.1456% of voting shares. This was a stark contrast to the 2 billion yuan transaction under discussion. The meeting, chaired by director Ye Mengmeng and attended by executives including Vice President and Board Secretary Zhou Weifang, was held online for Chairman Zhu Shihui and Vice Chairman Yu Shuting.
The sole agenda item, a 2 billion yuan investment to acquire 50.63% of Guangdong XianDao Microelectronics, passed with 96.62% approval. However, the real focus for shareholders was a deleted WeChat article and the exclusion of the indium phosphide business from the deal. This intense scrutiny stems from dramatic stock price swings.
From June 30 to July 2, the stock hit its daily limit three times, reaching a record high of 48.24 yuan. This rally was fueled by narratives around "indium phosphide," "semiconductor materials," and "domestic substitution." The trend then reversed sharply, with three consecutive daily limit-downs on July 16, 17, and 20. The stock fell another 4.11% on the meeting day to 27.55 yuan, and continued to drop to 24.80 yuan the next day, nearly halving from its peak. Investors who bought at the high are now facing significant losses.
Where Shareholder Concerns Begin
The turmoil started on June 15 when the company's WeChat account announced a "milestone" release of a new ultra-precision non-contact contour profiler, claiming it "breaks through barriers" in high-end optical inspection. The post was quickly deleted. That evening, the company issued a warning that the product was only at the R&D success stage, had no commercial orders, and generated no revenue. This created two conflicting narratives on the same day: one highlighting potential and the other emphasizing commercial reality.
At the meeting, Secretary Zhou explained that the post was deleted because it lacked necessary risk warnings about the product's commercialization stage. The company confirmed the product remains in a laboratory environment and will seek external orders. It will only disclose the product's impact on revenue through official announcements or periodic reports once it generates income. This situation mirrors regulatory cases like a 2026 incident where Shuangliang Eco-Energy Systems Co., Ltd. was warned for a misleading WeChat post about overseas orders, or a 2026 case where Mei Hu Co., Ltd. was also warned for inaccurately describing the nature of a large order. The dual messaging on the same day has become a key reason for shareholder questions about the company's information disclosure practices.
Why Just a 10% Decline in Share Value?
The company's financial performance further amplifies investor concern. In 2025, revenue surged 218.5% to 1.852 billion yuan, but net profit attributable to the parent turned to a loss of 127 million yuan, with a massive operating cash flow outflow of 4.131 billion yuan. While the company forecasts a net profit of 160-230 million yuan for the first half of 2026, profit excluding non-recurring items is expected to show a loss of 90-160 million yuan.
Another major point of contention was the current status of the indium phosphide business. When asked if the target company's compound semiconductor business includes indium phosphide substrates, the company clarified that the entity being acquired, Guangdong XianDao Microelectronics, no longer contains the indium phosphide business. Secretary Zhou stated that all related personnel, assets, patents, production lines, and operations have been transferred to another entity, XianDao XianRui, which is held by Guangzhou Yuchen Optoelectronics Co., Ltd.. The remaining business for XianDao Microelectronics now focuses on gallium arsenide, germanium substrates, high-purity metals, semiconductor precursors, and electronic specialty gases.
This key divestment was not initially disclosed by the company itself but became public through an acquisition announcement by the other company. On June 26, Guangzhou Yuchen Optoelectronics announced plans to invest 301 million yuan for a 50.08% stake in XianDao XianRui, revealing that all indium phosphide assets had been transferred out of XianDao Microelectronics. When the company announced its own plan to acquire XianDao Microelectronics on July 1, it only vaguely mentioned acquiring "electronic materials business," without any direct mention that the indium phosphide business had been entirely removed. Even in the formal transaction announcement and the exchange's inquiry response on July 14, the product list no longer included indium phosphide, but the company still failed to provide a direct, specific explanation about the asset's removal and destination.
It was not until the shareholder meeting on July 29, facing persistent shareholder questions, that the company first confirmed verbally that all indium phosphide resources had been moved to the other company. The core problem is this: the company explained it was "preparing to acquire XianDao Microelectronics," but failed to simultaneously clarify that the "most attention-grabbing indium phosphide business of XianDao Microelectronics had been divested." Because XianDao Microelectronics was long associated with indium phosphide, the market naturally interpreted the July 1 announcement as an injection of that asset, leading to the three consecutive limit-up days. Investors were then left to piece together the complete asset picture from another company's announcements and different regulatory filings. This is the fundamental reason for shareholder frustration: given that the market interpreted the deal as an indium phosphide injection and drove the stock price up, the company should have clarified the asset's status promptly and explicitly, rather than waiting for a shareholder meeting to answer the question of "where did the indium phosphide go?"
Comments