image credit: Bamboo Works
Key Takeaways:
Zhejiang Shibao reported its operating cash flow plunged by more than 85% year-over-year in the first quarter
The company's major shareholder abruptly announced a plan to trim its stake by up to 3% the day after the release of its latest quarterly report
Among companies that are dually traded on both China's domestic A-share market and in Hong Kong, automotive steering systems maker Zhejiang Shibao Co. Ltd. (1057.HK; 002703.SZ) stands out for a prolonged valuation gap between its pair of listings. Its share price is notoriously volatile and unpredictable. It continued that tradition with last week's release of its first-quarter financial results, which failed to impress investors, causing the Hong Kong-listed stock to sink by 7.1%.
Making matters worse, the company abruptly announced the next day that its controlling shareholder, Zhejiang Shibao Holding Group Co. Ltd., planned to reduce its holdings in the Shenzhen-listed company by up to 3%, involving the sale of 24.7 million shares, citing its own liquidity needs. That sparked an even bigger selloff, as the battered Hong Kong stock plummeted an additional 12.4% after that announcement.
It's worth noting that late last year, when Beijing published an initial pilot list for on-road operation of Level 3 (L3) autonomous and intelligent connected vehicles, investors saw Zhejiang Shibao as well positioned to take advantage of the policy move, sending its stock price on a steady climb. The good news continued this March, when the company reported its profit rose 21% in 2025. Buoyed by those positive catalysts, the stock was on a winning streak, which made the latest announcements all the more disappointing.
Zhejiang Shibao's latest report shows it posted revenue of 753 million yuan ($110 million) in the first quarter, up 4.88% year-on-year. But its profit went into reverse, falling by 14.1% to 41.87 million yuan. Even after excluding non-recurring items, its core net profit still slipped by 13.1% to 38.88 million yuan.
Top-line growth without bottom-line gains
The company attributed the lack of profit ...
