Core Viewpoint - Shanghai Xiba (603200) is returning a land parcel originally acquired for 1.28 billion yuan to build an environmental technology industrial park, resulting in an estimated loss of 36.42 million yuan, which constitutes 85% of the company's projected net profit for 2024 [1][2]. Group 1: Project Background - The land parcel, measuring 8,867 square meters, was acquired in May 2020 for 1.28 billion yuan with plans to invest 2.1 billion yuan over three years to complete the industrial park [1]. - The project aimed to enhance the company's talent attraction, technical research capabilities, information technology level, and service efficiency to improve core competitiveness [1]. Group 2: Reasons for Project Cancellation - The project faced significant delays due to public health events and unaddressed underground municipal pipeline issues, which adversely affected cash flow [2]. - Market research indicated that the office property market in the area was not performing well, prompting the company to seek to minimize losses and protect overall interests [2]. Group 3: Financial Impact - The return of the land use rights is expected to result in a direct loss of approximately 36.42 million yuan, which includes 29.43 million yuan in direct land costs and 6.99 million yuan in design, surveying, and construction expenses [2]. - This loss is substantial for the company, as it represents 85% of the projected net profit of 42.95 million yuan for 2024 [2]. Group 4: Future Outlook - The operational loss from this strategic adjustment is anticipated to pressure the company's performance in 2025, with a significant decline in net profit and revenue observed in the first quarter of 2025 [3]. - The company plans to focus on its core water treatment services while reducing involvement in engineering construction and exploring advanced materials in the renewable energy sector, although this segment has not yet generated stable revenue [3].