Core Viewpoint - The article discusses the privatization of Changhong Jiahua (03991.HK) by its parent company Sichuan Changhong (600839), highlighting the challenges faced by Hong Kong-listed companies in maintaining their public status due to low trading volumes and stock prices [1][6]. Group 1: Company Overview - Changhong Jiahua is a significant subsidiary of Sichuan Changhong, primarily engaged in ICT products, solutions, and digital intelligent services [3]. - Sichuan Changhong holds 60.13% of Changhong Jiahua's ordinary shares and 100% of its convertible preferred shares, indicating a strong controlling interest [3]. Group 2: Financial Performance - For the first half of 2025, Changhong Jiahua reported revenues of approximately HKD 21.169 billion, a year-on-year increase of 9.76%, with a gross margin of 3.07%, down by 0.27 percentage points due to intense market competition [3]. - The company's net profit attributable to shareholders was about HKD 181 million, reflecting a year-on-year increase of 10.16% [3]. Group 3: Market Conditions - Despite a recent stock price surge of 23.91%, Changhong Jiahua's total market capitalization remains only HKD 1.7 billion, while its net assets exceed RMB 2.8 billion [3]. - The trading activity of Changhong Jiahua has been notably low, with six months in the first eight months of the year recording trading volumes below HKD 10 million [3]. Group 4: Privatization Rationale - Sichuan Changhong stated that the privatization is necessary due to Changhong Jiahua's persistent low trading volume and stock price since its restructuring and listing in 2013, which has not improved even after moving to the Hong Kong main board [6]. - The privatization aims to reduce listing-related costs and leverage the resources of the controlling group to explore new development opportunities without affecting the financial status or operations of Changhong Jiahua [6]. Group 5: Industry Trends - The article notes that 20 Hong Kong-listed companies have opted for privatization this year, reflecting a broader trend of companies facing challenges in maintaining their public status due to low trading volumes and the inability to effectively utilize their listing for capital operations [8][10].

Core Viewpoint - Sichuan Changhong Electric Co., Ltd. plans to privatize its subsidiary, Changhong Jiahua Holdings Limited, through a scheme proposed by its controlling shareholder, Changhong Electronics Holding Group Co., Ltd. This move aims to enhance operational efficiency and reduce costs associated with being publicly listed [2][7]. Summary by Sections Privatization Overview - Changhong Jiahua, a significant subsidiary of Sichuan Changhong, will be privatized by its controlling shareholder's wholly-owned subsidiary, Hongtu Investment Co., Ltd. The plan involves acquiring all issued ordinary shares of Changhong Jiahua, excluding those controlled by Sichuan Changhong, leading to the delisting of Changhong Jiahua from the Hong Kong Stock Exchange [2][5]. - The privatization plan has received a no-objection letter from the Hong Kong Securities and Futures Commission [2][6]. Financial and Shareholding Structure - As of now, Changhong Jiahua has issued 1,454,652,000 ordinary shares and 1,115,868,000 convertible preferred shares. Sichuan Changhong indirectly holds 874,650,000 ordinary shares, representing 60.13% of the total ordinary shares [5]. - The privatization will involve the acquisition of 580,002,000 ordinary shares from other shareholders, which constitutes approximately 39.87% of Changhong Jiahua's ordinary shares and 22.57% of its total issued shares [5][7]. Impact on Company and Subsidiary - The privatization is expected to have no significant impact on the financial status or operations of Sichuan Changhong, as its ownership percentage in Changhong Jiahua will remain unchanged [7]. - The long-term underperformance of Changhong Jiahua's stock price has hindered its ability to leverage the Hong Kong stock market for capital operations, making privatization a strategic move to reduce listing costs and explore new growth opportunities [7][9]. Board Approval and Procedures - The privatization proposal was approved by the board of directors during the 36th meeting of the 12th board session, with a voting outcome of 4 in favor and 5 abstentions [19][20]. - The board's decision does not require shareholder approval as per the company's articles of association [14]. Future Arrangements - Following the completion of the privatization, Hongtu Investment will become a minority shareholder of Changhong Jiahua, and the company will continue to provide necessary financial support as per regulatory requirements [10][12].