According to Cailian Press on January 1 (reporter Wang Bin), to relieve itself from the burden of the European subsidiary business, Shanzi Gaoke (000981.SZ) decided to 'shed the burden'.

On the first day of 2025, Shanzi Gaoke announced that the company held the second extraordinary meeting of the ninth Board of Directors on December 31, 2024, to review and approve the proposal for the debt restructuring of the European subsidiary. The announcement showed that as of June 30, 2024, the company's wholly-owned subsidiary, Punch Powertrain N.V. (referred to as 'PPS'), had a total syndicate loan of 0.247 billion euros (including interest) and that the company recently reached an agreement with the European syndicate to restructure the aforementioned syndicate loan by paying 0.032 billion euros.

Shanzi Gaoke stated that the successful completion of the syndicate debt restructuring for PPS will further revitalize the company's assets, reduce liabilities and financial costs, and improve the profitability of its subsidiaries, with the impact on profits for 2024 still being calculated, pending the final audit report.

At the same time, Shanzi Gaoke issued an announcement stating that based on the operational status of the joint venture company Punch Powertrain PSA e-transmissions NV (referred to as PPET) and the company's strategic planning, PPS negotiated with the French Peugeot Citroën Group (referred to as 'PSA') to adjust PPET's operational strategy, with the company hoping to achieve certain shareholder returns and exit in a timely manner.

According to the announcement, PSA proposed to increase investment in PPET and purchase the equity held by PPS in PPET according to the joint venture agreement; after the business restructuring is completed, Shanzi Gaoke will no longer hold equity in PPET. Additionally, according to the discussions, Stellantis Group will exercise its purchase rights under the previous joint venture agreement and acquire the equity held by PPS in PPET by paying the relevant equity funds to PPS. As of the end of September 2024, the company had received a prepayment equivalent to 1.05 billion yuan from Stellantis Group. It is reported that Stellantis Group is an auto manufacturer with 50% ownership held by PSA Group and Fiat Chrysler Group.

The announcement showed that in June 2020, PPS signed a joint venture agreement with PSA and established the joint venture company PPET in September of the same year. In terms of equity, PPS holds 61.11% of the equity in PPET, while PSA holds 38.89%. The business scope of PPET includes transmission gear design and manufacturing of core components.

According to the announcement, the main projects undertaken by PPET (components for hybrid dual-clutch transmissions) officially entered mass production at the end of April 2023. However, due to supply chain issues and other internal coordination factors, the performance fell short of expectations, resulting in significant losses. By the end of 2023 and by the end of September 2024, PPET reported net losses of 0.468 billion yuan and 0.671 billion yuan respectively.

Financial data shows that in the first three quarters of 2024, Shanzi Gaoke had a net loss of 0.817 billion yuan. Furthermore, from 2018 to 2023, Shanzi Gaoke reported losses of approximately 1.099 billion yuan, 7.174 billion yuan, 1.087 billion yuan, 2.614 billion yuan, 0.969 billion yuan, and 2.057 billion yuan respectively, accumulating losses of around 15 billion yuan over six years.

In this warm spring season, it is exciting to announce that after experiencing a continuous loss period of 24 quarters, totaling over 15 billion yuan, Shanzi Gaoke achieved a net profit of over 0.45 billion yuan in the first quarter of 2024, finally turning a profit and achieving non-recurring profit! In April 2024, the new actual controller and chairman Ye Ji eagerly wrote 'When Happiness Knocks on the Door - A Letter to Shareholders' at the beginning of the 2023 annual report.

However, three months later, Shanzi Gaoke faced a crisis that triggered delisting at par value, and Ye Ji encountered the greatest challenge since taking over the company. To save the continuously plummeting stock price, Shanzi Gaoke took multiple measures for self-rescue to 'preserve the shell': initially launching a 'buyback + Shareholding' combo, then Chairman and CEO Ye Ji issued another 'Letter to Shareholders' through the company's official WeChat account, in addition to apologizing, reflecting, and reconsidering, he also disclosed significant operational information and promised not to take a salary until the company's stock price rose above 1.6 yuan.

Currently, although Shanzi Gaoke has temporarily escaped the delisting crisis at par value, the company's performance remains deeply mired in losses. 'Through this business restructuring, the company will reduce the losses of PPS and improve the overall profitability of the company.' said Shanzi Gaoke.