Shares of Dongfang Electric Corporation Limited (DEC) tumbled 5.02% in intraday trading, despite the company reporting robust third-quarter financial results. The sharp decline comes in the wake of a proposed major overhaul to the company's corporate governance structure, raising concerns among investors.

In a statement released on October 30, DEC announced plans to amend its Articles of Association, which includes the controversial decision to abolish the Supervisory Committee. The company stated that the Audit and Risk Committee under the Board would take over the supervisory functions as specified by law. This move, while aligning with recent regulatory changes in China, appears to have unsettled the market, potentially due to concerns about reduced oversight.

Paradoxically, the stock's plunge occurred despite DEC reporting strong financial performance for the third quarter of 2025. The company's total operating income reached RMB17.37 billion, marking a 20.69% increase year-over-year. Net profit attributable to shareholders also grew by 13.22% to RMB1.06 billion. For the first nine months of 2025, DEC's cumulative net profit rose 13.02% to RMB2.97 billion, with basic earnings per share increasing to RMB0.90.

The conflicting signals of positive financial results and negative stock performance suggest that investors may be more focused on the long-term implications of the governance changes rather than the company's current financial health. The market reaction indicates that shareholders might be concerned about the potential risks associated with removing the Supervisory Committee, even as the company aims to streamline its governance structure in line with regulatory updates.