China Oriental Group (00581) announced that on December 22, 2025, its subsidiary Jinxi Heavy Industry acquired 2 million shares of Jiangsu Shentong Valve Co., Ltd. (002438) on the Shenzhen Stock Exchange at an average price of approximately RMB 15.46 per share (equivalent to about HKD 17.10 per share). The shares represent approximately 0.39% of Jiangsu Shentong's issued share capital as of the announcement date, with a total consideration of around RMB 30.91 million (equivalent to about HKD 34.20 million). The acquisition will be fully funded by the group's internal resources in cash.
This follows the group's previous announcements on December 2, 9, and 11, 2025, regarding earlier acquisitions of Jiangsu Shentong shares. Prior to this transaction, the group held a total of 7.0035 million shares (1.38% of issued capital) in Jiangsu Shentong. Post-acquisition, the group's stake increases to 9.0035 million shares (1.77%).
Jiangsu Shentong serves as the group's valve supplier and equipment maintenance service provider. Beyond supplying metallurgical valves to steel manufacturers, the company has developed a valve information management system utilizing 5G IoT technology to track detailed lifecycle and maintenance data for each valve. This system helps steel producers, including the group, optimize maintenance schedules and reduce unnecessary inventory levels. Jiangsu Shentong has also successfully implemented multiple energy-saving technological upgrades for the group's blast furnaces.
Through deep integration into the group's core production processes, Jiangsu Shentong has jointly developed comprehensive technical solutions combining production expertise with specialized equipment. As a long-standing upstream supplier, this acquisition represents Jinxi Heavy Industry's vertical investment in a minority stake, aimed at strengthening commercial ties and fostering deeper collaboration for potential strategic initiatives.
Additionally, as a strategic customer, the group seeks to benefit from Jiangsu Shentong's sustained growth and technological advancements. The company has demonstrated consistent growth over the past three years, with 2024 revenue and net profit attributable to shareholders increasing by approximately 9.6% and 29.6% respectively compared to 2022 levels.
The equity investment may also yield financial benefits, including potential share price appreciation and dividends. Since its 2010 listing on the Shenzhen Stock Exchange, Jiangsu Shentong has maintained a track record of cash dividend distributions. Over the past three fiscal years, its dividend payout has shown a clear upward trend, rising from RMB 0.5 per 10 shares in 2022 to RMB 1.6 in 2023 and RMB 1.75 in 2024.