Core Viewpoint - Zhonggong Gaoke (603860) reported a significant decline in performance in its 2024 annual report, raising concerns among investors about its future prospects under the new chairman Cheng Ning's leadership [1][2]. Financial Performance - In 2024, the company's total revenue was 260 million yuan, a year-on-year decrease of 0.22% [1]. - The net profit attributable to shareholders was 44.62 million yuan, down 13.48% year-on-year [1]. - The net cash inflow from operating activities was 50.97 million yuan, a decline of 17.57% compared to the previous year [1]. - The company had stable performance from 2021 to 2023, with revenue growth exceeding 10% annually and positive net profit growth for three consecutive years [1]. Business Overview - Zhonggong Gaoke, as a state-owned enterprise, holds a significant position in the highway maintenance sector, focusing on consulting, rapid detection system development, and maintenance analysis system sales [1]. - The highway maintenance consulting business accounted for 65.36% of the company's revenue in 2024, but it did not show strong growth to boost overall performance [1]. Industry Context - The highway maintenance industry is characterized by its long-term, public welfare, and foundational nature, lacking significant cyclicality [2]. - The market size for highway maintenance in China reached approximately 985.5 billion yuan in 2023 and is expected to exceed 1 trillion yuan in 2024, indicating steady growth in the industry [2]. Management and Investor Sentiment - Following the poor performance report, investors expressed distrust towards the new chairman, Cheng Ning, despite his short tenure [3]. - Some investors voiced dissatisfaction on public platforms, indicating a lack of confidence in the new leadership [3]. - In contrast to declining performance, the compensation for several executives, including the new chairman, increased, raising further concerns among investors [3]. Executive Shareholding Behavior - High-level executives have been reducing their shareholdings significantly, with former vice president Li Qiang reducing his holdings 14 times for a total of 6.18 million yuan from 2020 to 2023 [4]. - The acting general manager, Pan Zongjun, reduced his holdings 21 times, totaling over 4 million yuan [4]. - Cumulatively, executives have reduced their holdings by over 200 million yuan since 2018, with no records of any shareholder increasing their holdings or the company conducting buybacks [4].