Amidst the buzz surrounding its "embodied intelligence" prospects, Zhejiang Sanhua Intelligent Controls Co.,Ltd. (SZ: 002050) has found itself in a public relations controversy over the stated reasons for a recent round of executive stock sales.
On May 26th, an investor inquired about the rationale behind a previous collective sell-off by company executives. The company responded that the chairman's sale was primarily for personal funding needs, while the other executives sold shares to cover their children's education expenses and daily living costs.
This collective divestment, which took place earlier this year, was largely completed by March. With the exception of executive Chen Yuzhong who terminated his plan early, Chairman Zhang Yabo sold 9.756 million shares at an average price of 43.1 yuan per share, raising approximately 420 million yuan. The other four executives collectively cashed out about 14.84 million yuan.
Notably, the company's 2025 annual report shows that the executives involved in the sales all received pre-tax compensation exceeding one million yuan, indicating a relatively generous remuneration package. Consequently, the company's explanation for the share sales has raised eyebrows among some investors.
Beyond the controversy over the share sales, the company is also confronting a challenge of slowing profit growth. In the first quarter of this year, Sanhua reported total operating revenue of 7.774 billion yuan, a year-on-year increase of 1.36%. Its net profit attributable to shareholders reached 928 million yuan, up 2.68% from the same period last year.
When compared to the year-on-year growth rates of 19.10% for revenue and 39.47% for net profit in the first quarter of 2025, the pace of growth for both key performance indicators has clearly moderated.
Simultaneously, the company's robotics business, seen as a new growth engine, has yet to make a substantial contribution to profits. Descriptions in the financial reports remain in the phase of "collaborating with clients on key product R&D, trial production, iteration, and sample delivery."
Scrutiny Over Stated Reasons for Share Sales
The explanation that executives needed funds for their children's education has sparked debate among the investment community. On stock forums, some investors questioned the rationale, with one asking how many children the executives have. Another commenter remarked more pointedly that the amount cashed out would be ample to support grandchildren and pets, suggesting the stated reason might not be the whole story.
The share sale plan was announced on January 22nd. At that time, fueled by its association with hot concepts like robotics, liquid cooling, and data centers, the company's stock price had surged to a historical high of 60.77 yuan.
Executive Compensation Details
According to the 2025 annual report, Chairman Zhang Yabo received total pre-tax compensation of 3.4454 million yuan. Executives Wang Dayong, Ni Xiaoming, Chen Yuzhong, Hu Kaicheng, and Yu Yingkui received 4.4371 million, 2.7545 million, 2.6293 million, 1.7903 million, and 2.0417 million yuan, respectively.
Analysis of Slower Growth
The deceleration in growth is potentially linked to broader market pressures on its two core business segments. Sanhua's main operations are divided into refrigeration and air-conditioning appliance components and automotive components.
Data indicates that in the first quarter, domestic air conditioner sales fell by 12% year-over-year. In the automotive sector, overall vehicle sales in China declined by 6%, with new energy vehicle sales dropping by 4%.
Furthermore, rising raw material costs and foreign exchange volatility, partly influenced by geopolitical tensions, have also pressured profit margins. The company's financial expenses surged dramatically in Q1 due to increased exchange losses.
Outside its main operations, securities investment losses amounted to a significant 105 million yuan in the first quarter. After adjusting for non-recurring gains and losses, the company's net profit growth rate improves to 15.52%.
Robotics Venture Still in Development Phase
Sanhua has been actively positioning itself in the robotics sector, a move connected to its role as a supplier to Tesla. In 2023, it entered a strategic partnership focused on harmonic reducers, a core component for humanoid robots.
The company has described the仿生robot industry as a potentially disruptive field with vast application prospects. It has established a dedicated robotics division and committed to a major investment project for R&D and manufacturing bases.
However, this business line has not yet generated stable revenue. Reports indicate that actual orders received from Tesla for Optimus actuators in the first half of 2025 were relatively modest. The latest annual report continues to characterize the robotics activities as being in a collaborative R&D and sampling stage with clients.
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