Core Viewpoint - The planned divestment by Suzhou Shunwei, controlled by Lei Jun, raises concerns about the future development of Longqi Technology, given its high dependency on Xiaomi and low profit margins in its core business [2][5]. Group 1: Shareholder Actions - Suzhou Shunwei plans to divest up to 19.19 million shares of Longqi Technology, representing 4.09% of the total share capital, with a market value of approximately 881 million yuan based on the closing price of 45.92 yuan per share [2]. - Suzhou Shunwei and Tianjin Jinmi, both controlled by Lei Jun, collectively hold 9.04% of Longqi Technology's shares, indicating their significant influence as major shareholders [2]. Group 2: Business Dependency and Financial Performance - Longqi Technology's revenue heavily relies on its ODM/OEM smartphone business, with sales to Xiaomi accounting for 37.83% of total revenue as of the first half of 2023, down from a peak of 57.66% [3]. - The smartphone business is projected to contribute 77.90% of total revenue in 2024, but it has a low gross margin of only 4.92%, limiting overall profitability [4]. - In the first half of 2025, Longqi Technology reported total revenue of 19.908 billion yuan, a year-on-year decline of 10.65%, while net profit slightly increased by 5.01% to 356 million yuan, indicating a concerning revenue trend [4]. Group 3: Market Concerns and Competitive Landscape - The planned divestment reflects market worries about Longqi Technology's growth prospects, particularly its reliance on low-margin smartphone manufacturing [4][5]. - Compared to competitors like Huaqin Technology, which has diversified into higher-margin sectors such as laptops and automotive electronics, Longqi Technology appears to be lagging in its transformation efforts [4].

Company Overview - Hubei Xiangjiang Electric Co., Ltd. is a manufacturer of household products in China, primarily operating under ODM/OEM models and serving a client base that includes well-known brands such as Walmart, Telebrands, SEB Asia Ltd, Sensio, Hamilton Beach, and Philips [3][4] - The company focuses on the research, design, production, and sales of both electrical and non-electrical household products, with a significant portion of revenue derived from kitchen small appliances [3][4] Market Position - According to a report by Frost & Sullivan, Xiangjiang Electric ranks as the tenth largest company in China's kitchen small appliance industry, holding a market share of 0.8% based on export value projected for 2024 [3][5] - The company has a notable market share in specific product categories, with approximately 24.6% and 59.6% market shares in electric kettles exported to the U.S. and Canada, respectively, and around 3.8% market share for electric mixers [3][5] Financial Performance - The company's revenue for the fiscal years 2022, 2023, and 2024 is projected to be approximately RMB 1.097 billion, RMB 1.188 billion, and RMB 1.501 billion, respectively [5][6] - Net profit for the same periods is expected to be around RMB 80.26 million, RMB 121.46 million, and RMB 140.43 million [5][6] - The gross profit margins are expected to improve, with gross profits of RMB 223.87 million, RMB 286.02 million, and RMB 328.52 million for the fiscal years 2022, 2023, and 2024, respectively [6] Industry Insights - The global household goods market is projected to reach a retail value of USD 1,071.2 billion in 2024, with the small appliance sector expected to grow significantly, reaching USD 183.5 billion [4] - The kitchen small appliance segment is anticipated to account for the largest share of the small appliance market, with a projected retail value of USD 74.1 billion in 2024 [4]