Shenzhen Investment Limited (00604) released additional information regarding the disposal of 70% equity interest in Jinghua Electronics. The supplemental announcement highlights a Profit Guarantee arrangement under the Performance Compensation Agreement involving Shum Yip Pengji, a wholly owned subsidiary of Shenzhen Investment, and Shahe Industrial, which is listed on the Shenzhen Stock Exchange.

According to the announcement, Shum Yip Pengji’s provision of the Profit Guarantee to Shahe Industrial aligns with PRC securities regulatory requirements. Under the Guidelines for the Application of Regulatory Rules – No. 1 of the Listing Category issued by the China Securities Regulatory Commission, transactions involving a controlling shareholder or its controlled entities in A-share listings are subject to performance compensation arrangements. The Profit Guarantee was therefore instituted to secure requisite approvals for the transaction.

The supplemental information clarifies that the obligation to maintain stable management and operations at Jinghua Electronics remains a priority, with existing core operating management holding a 30% equity interest in the company through Shenzhen Ruijin Investment Co., Ltd. Combined with Shahe Industrial’s stated commitment to preserving continuity, the arrangement is structured to protect profitability and safeguard shareholder interests.

Shenzhen Investment further notes that the aggregated compensation payable by Shum Yip Pengji for any net profit shortfall or impairment will not exceed the total consideration received in the transaction. The announcement reiterates the commitment of all parties to uphold stable business operations and management at Jinghua Electronics during the Profit Guarantee period.