Core Viewpoint - The Hong Kong-listed company Changhong Jiahua has resumed trading and experienced a significant stock price increase of 23.91% following the announcement of its privatization plan by its parent company Sichuan Changhong [1][2] Group 1: Company Overview - Changhong Jiahua is a key subsidiary of Sichuan Changhong, primarily engaged in ICT products, solutions, and digital intelligent comprehensive services [1] - Despite the recent stock price surge, Changhong Jiahua's total market value is only 1.7 billion HKD, while its net assets exceed 2.8 billion RMB [1] Group 2: Market Context - The trading activity of Changhong Jiahua has been notably low, with six months in the first eight months of the year recording transaction volumes below 10 million HKD, and January's total transaction volume being merely 720,000 HKD [1] - In 2023, a total of 20 Hong Kong-listed companies have opted for privatization as a means to delist, primarily due to low trading volumes and the inability to effectively utilize the capital market [2] Group 3: Industry Trends - Companies in the Hong Kong market are increasingly choosing privatization as a strategy to exit, driven by factors such as diminished financing capabilities and the high costs associated with maintaining a public listing [2] - A representative from a previously delisted company noted that only top-tier companies attract funding in the Hong Kong market, and once a company loses investor interest, even favorable financing mechanisms become ineffective [3]

Core Viewpoint - Sichuan Changhong announced that its subsidiary, Changhong Jiahua, will be privatized by its controlling shareholder, Changhong Holdings Group, through its wholly-owned subsidiary, Hongtu Investment, leading to the delisting of Changhong Jiahua's ordinary shares from the Hong Kong Stock Exchange [1] Group 1: Privatization Details - The privatization plan involves acquiring the remaining 580 million ordinary shares of Changhong Jiahua, which represent approximately 39.87% of the total ordinary shares, at a price of HKD 1.223 per share, totaling HKD 709 million [1] - The reason for privatization is attributed to Changhong Jiahua's stock price being consistently below its net asset value, making it difficult to leverage the Hong Kong stock platform for capital operations [1] Group 2: Financial Performance - For the fiscal year 2024, Changhong Jiahua reported a revenue of HKD 39.986 billion, reflecting a year-on-year growth of 7.58%, and a net profit of HKD 379 million, up 5.19% [2] - In the first half of 2025, the company achieved a revenue of HKD 21.169 billion, marking a year-on-year increase of 9.76%, with a net profit attributable to shareholders of HKD 181 million, a growth of 10.16% [2] - The ICT enterprise products have been identified as the core growth driver, generating revenue of HKD 8.378 billion in the first half of 2025, a significant increase of 23.67%, while the revenue from ICT consumer products slightly declined to HKD 8.471 billion [2] Group 3: Market Reaction - Following the announcement of the privatization plan, Changhong Jiahua's stock price opened 22.83% higher at HKD 1.13 per share on September 23, with a market capitalization reaching HKD 16.44 billion [2] - The acquisition price represents a premium of 32.93% compared to the last trading price of HKD 0.92 per share before the suspension [2]

Core Viewpoint - Sichuan Changhong Electric Co., Ltd. announced the privatization plan for its subsidiary, Changhong Jiahua Holdings Co., Ltd., by its wholly-owned subsidiary, Hongtu Investment Co., Ltd., which will lead to the delisting of Changhong Jiahua from the Hong Kong Stock Exchange [2][4]. Financial Overview - As of December 31, 2024, Changhong Jiahua's total assets were approximately 16.73 billion yuan, with total liabilities of about 13.97 billion yuan, resulting in a debt-to-asset ratio of 83.51% and net assets of approximately 2.76 billion yuan [2]. - For the fiscal year 2024, Changhong Jiahua reported revenue of approximately 36.48 billion yuan and a net profit of about 346 million yuan. For the first half of 2025, the unaudited revenue was approximately 19.48 billion yuan, with a net profit of around 167 million yuan [3]. Privatization Details - The privatization plan involves the cancellation of all planned shares, with a cash consideration of 1.223 HKD per share for the shareholders, excluding Sichuan Changhong's controlled shares [4]. - Following the privatization, Changhong Jiahua will issue new shares to the offeror to maintain the total number of shares consistent before and after the transaction [4]. - The Hong Kong Securities and Futures Commission has issued a no-objection letter regarding the privatization plan, which was announced on September 22, 2025 [4]. Strategic Implications - The privatization is expected to reduce the listing-related costs for Changhong Jiahua and allow for better resource allocation and planning under the umbrella of Sichuan Changhong Group, exploring new development opportunities [5]. - The ownership structure of Changhong Jiahua will remain unchanged post-privatization, and it is not anticipated to have a significant impact on the financial status or operations of Sichuan Changhong [5].