Juchen Co., Ltd.: Why Is the Controlling Shareholder's Group Intensively Reducing Holdings Despite Strong Performance Growth? | Insights into the Science and Technology Innovation Board

Ask AI · How does the reduction of holdings by the actual controller affect the valuation of Jucheng Co., Ltd. in Hong Kong stocks?

“Science and Technology Innovation Board Daily” March 23 (Reporter Chen Junqing) Leading storage chip manufacturer Jucheng Co., Ltd. is experiencing high performance growth, but the actual controller’s camp is reducing holdings and cashing out.

The “Science and Technology Innovation Board Daily” notes that over the past year, the actual controller Chen Zuotao and associated persons have intensively started reducing holdings. If the latest reduction plan is implemented, the total cash-out by the actual controller’s camp in the past year will be nearly 1 billion yuan.

On one side, the actual controller’s camp is reducing holdings intensively; on the other, the company’s performance driven by DDR5 chips and automotive-grade products has hit record highs, and it is preparing for a secondary listing in Hong Kong. This has raised questions in the market about Jucheng’s long-term valuation, shareholding stability, and development prospects.

The actual controller’s camp has cashed out nearly 1 billion yuan in total

On March 15, Jucheng disclosed a reduction plan. The company’s actual controller, Chen Zuotao’s Beijing Luojia Tianhao Investment Center (Limited Partnership) (“Beijing Luojia”), plans to reduce no more than 4.12411 million shares from April 7 to July 6 through block trades (not exceeding 1.61%) and centralized bidding (not exceeding 1%), accounting for 2.61% of the company’s total share capital, which is also Beijing Luojia’s entire current holding.

Based on the March 20 closing price of 124.62 yuan per share, this corresponds to a cash-out amount of about 514 million yuan.

The reduction reason, as disclosed by Jucheng, is “LP capital needs,” and will not lead to changes in the company’s controlling shareholder or actual controller.

The “Science and Technology Innovation Board Daily” notes that this is not the first reduction by Beijing Luojia. Since January 2023, Beijing Luojia has reduced a total of 3.02 million shares of Jucheng, with a total cash-out of about 243 million yuan. If the current plan is fully implemented, Beijing Luojia’s total cash-out may exceed 700 million yuan, achieving a complete exit.

In addition to Beijing Luojia, the actual controller Chen Zuotao has also reduced holdings multiple times through associated entities such as Wuhan Luojia and Tianhao Technology in recent years.

2025 is expected to be a period of intensive reduction by the actual controller’s camp.

From March to June 2025, Beijing Luojia and Wuhan Luojia both reduced holdings, totaling 2.99% through block trades and centralized bidding, amounting to 369 million yuan. From October 2025 to January 2026, Wuhan Luojia reduced 4,124,125 shares (2.61%), with a cash-out of about 605 million yuan. Total cash-out reaches 974 million yuan.

Additionally, Jucheng has also experienced reductions by shareholders unrelated to the actual controller. From April to July 2024, Jucheng Hong Kong, holding over 5%, reduced 1.220546 million shares via centralized bidding, and on July 26, 2024, transferred 3.18 million shares at 55.49 yuan per share through inquiry transfer. Currently, Jucheng Hong Kong has exited the list of shareholders holding over 5%.

In June 2025, the company’s second-largest shareholder, Yiding Investment, reduced 3.8 million shares via inquiry transfer at 63.19 yuan per share, totaling 240 million yuan. Yiding Investment’s original shareholding ratio of 7.22% decreased to 4.82%, exiting the top five shareholders.

Looking back at Jucheng’s development in the capital market, the company listed on the STAR Market in December 2019, issuing 30.210467 million ordinary shares at 33.25 yuan per share, raising approximately 1.004 billion yuan. After deducting 89.3104 million yuan in issuance costs, the net funds raised were about 915 million yuan. Over the past two years, the actual controller’s camp has cashed out more than the company’s net proceeds from this A-share listing.

Shareholding structure shows that by the end of 2025, among the top ten circulating shareholders, Yiding Investment holds 4.26%, Dengxi Quan Investment holds 1.82%; Yiding Investment’s shareholding has decreased by 7.93 percentage points since listing; new shareholders include CITIC Bank Co., Ltd.-Yongying Pioneer Semiconductor Smart Selection Hybrid Securities Investment Fund, China Everbright Bank Co., Ltd.-Yinhua Innovation Growth Hybrid Securities Investment Fund, and China Everbright Bank Co., Ltd.-Xingquan Business Model Preferred Hybrid Fund (LOF).

Doubts about sustained high growth?

Contrasting sharply with the reduction of holdings by the actual controller and related parties is the recently disclosed 2025 annual performance report of Jucheng.

The annual report shows that in 2025, Jucheng achieved operating revenue of 1.221 billion yuan, up 18.77%; net profit attributable to parent company of 364 million yuan, up 25.25%; net operating cash flow of 399 million yuan, up 32.11%. Core operational indicators such as revenue, net profit, and cash flow all hit record highs since listing. The company plans to pay a cash dividend of 7 yuan per 10 shares (tax included), totaling 111 million yuan, with a dividend payout ratio exceeding 30%.

Regarding this growth, Jucheng stated that since 2025, the demand structure of downstream application markets has been significantly differentiated, with large variations in sales performance across different product lines. Some product lines experienced significant fluctuations. The shipment volume of DDR5 SPD chips, automotive-grade EEPROM chips, and high-performance industrial-grade EEPROM chips increased rapidly compared to last year. Optical image stabilization (OIS) camera motor driver chips have been commercialized in multiple mainstream high-end smartphone models, optimizing product sales structure and increasing the company’s overall gross profit margin by 2.48 percentage points compared to last year.

Jucheng is one of the companies directly supplying supporting chips to major industry memory module manufacturers. Revenue from DDR5 SPD chips and DDR4 SPD chips is the main source of income for its storage module supporting chip business.

The annual report shows that the sales volume and revenue of DDR5 SPD chips increased rapidly year-on-year. Sales and revenue of DDR4 SPD chips declined as DDR4 memory module market share decreased. Revenue and profit from storage chips in consumer electronics also declined.

A securities analyst told “Science and Technology Innovation Board Daily” that the storage chip industry has strong cyclical characteristics, benefiting greatly from the upward cycle of the storage industry. However, when the industry cycle reverses and demand from AI servers and other sectors declines, product prices and shipment volumes will face shocks. Currently, the storage chip industry remains in a strong cycle with no obvious turning point.

The automotive electronics sector is Jucheng’s second growth driver. The company now has a full range of industrial-grade EEPROM chips covering 1Kb-4Mb and industrial-grade NOR Flash chips covering 512Kb-64Mb. In 2025, shipment scale has significantly expanded. Additionally, the company’s WLCSP EEPROM chips have been widely used in mainstream AI glasses products, and optical image stabilization camera motor driver chips have been introduced into several high-end smartphones.

Despite excellent annual performance, the fluctuations in Q4 2025 have sparked market discussions about the sustainability of its growth. Financial data shows that in Q4 2025, Jucheng achieved revenue of 288 million yuan, up 11.3%; net profit attributable to parent of 43.724 million yuan, down 44.59%; non-recurring net profit of 42.971 million yuan, down 32.65%. Quarterly profit declined sharply.

2025 Equity Incentive Performance and Share-based Payment Recognition

Regarding the Q4 performance fluctuations, Jucheng did not provide specific explanations in the annual report. However, financial analysis suggests that share-based incentive expenses may be a key factor dragging down profits. The announcement shows that in October 2025, the company granted 1.747 million restricted shares to core team members, with a total share-based payment of about 109 million yuan, allocated in three batches. The annual report indicates that the company recognized 16.1675 million yuan in share-based payments, directly eroding current profits.

In addition, seasonal revenue decline should not be overlooked. In Q4, revenue fell 19.6% from the high point of 358 million yuan in Q3, raising doubts about whether AI demand can sustain high DDR5 SPD chip shipments.

On the capital market front, Jucheng has submitted an H-share listing application to the Hong Kong Stock Exchange in January 2026, initiating a “A+H” dual-capital platform layout, planning acquisitions of overseas packaging and testing factories, and R&D of advanced packaging technologies for global expansion.

Some investors told “Science and Technology Innovation Board Daily” that the Hong Kong stock market is sensitive to reductions by controlling shareholders and actual controllers, and reduction plans may impact the company’s valuation and investor willingness to subscribe in Hong Kong stocks.

Currently, Jucheng’s growth in EEPROM and DDR5 SPD chips is evident, and it has certain advantages in the high-growth sectors of AI and automotive electronics. However, the continued reduction by the actual controller and related parties forces the market to reassess Jucheng’s long-term development, requiring subsequent performance and industry layout to provide answers.

(Reporter Chen Junqing, “Science and Technology Innovation Board Daily”)