Core Viewpoint - Derin Hai (688069) is facing significant challenges, including a major shareholder's plan to reduce holdings and ongoing financial losses, particularly due to litigation related to the Xingyun Lake project [2][3][4]. Group 1: Shareholder Actions - On May 15, 2024, Derin Hai announced that shareholder Chen Hong, holding 7.88% of the company, plans to reduce holdings by up to 3% of the total share capital, equating to a maximum of 339,000 shares over three months [2]. - Chen Hong previously reduced holdings in November 2024, selling 2.2 million shares at 14 CNY per share, totaling 30.8 million CNY [2]. Group 2: Financial Performance - Derin Hai has experienced a continuous decline in net profit since 2021, with net losses reported for both 2023 and 2024 [3]. - In 2024, the company reported revenues of 448 million CNY, a year-on-year increase of 44.62%, but a net loss of 86.1 million CNY, worsening from a loss of 13.4 million CNY in the previous year [3]. - The company attributed the losses primarily to the impact of litigation related to the Xingyun Lake project, leading to a provision for expected liabilities of 48.1 million CNY [3][4]. Group 3: Legal and Operational Challenges - Derin Hai is currently involved in a legal dispute regarding the Xingyun Lake project, with a first-instance court ruling against its subsidiary, which has since appealed [4]. - In Q1 2025, the company reported revenues of 46.4 million CNY, a 21.4% increase year-on-year, but net losses further expanded to 4.7 million CNY [4]. - The company noted that macroeconomic conditions have led to budget tightening in some regions, causing delays in business expansion and procurement orders, although no significant impact on operations has been reported [5].