In-Depth Analysis of the Share Reduction by Desay SV's Largest Shareholder

Based on the above data and analysis, I will provide you with a detailed thematic research report.

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According to the announcement released by Desay SV on January 7, 2026, the company’s largest shareholder, Guangdong Desay Group Co., Ltd. (hereinafter referred to as “Desay Group”), plans to reduce its holdings by no more than 7,106,250 shares over the next 3 months, accounting for 1.1906% of the company’s current total share capital. Excluding the number of shares in the company’s share repurchase special account, the share reduction ratio is 1.1964%. [1]

Key Indicators	Data
Current Shareholding	157,106,250 shares (157 million shares)
Current Shareholding Ratio	26.32%
Upper Limit of Planned Share Reduction	7,106,250 shares (7.1063 million shares)
Upper Limit of Planned Share Reduction Ratio	1.19%
Lower Limit of Shareholding Ratio After Reduction	25.13%
Share Reduction Method	Concentrated Auction or Block Trade
Reason for Share Reduction	Own Capital Needs

Notably, the timing of this share reduction plan announcement is rather special. From December 2025 to January 2026, Desay SV’s stock price performed strongly, rising from approximately $110 in early December to $137.57 in early January, representing a whopping 25.04% increase in one month. [4] Against the backdrop of the relatively high current valuation level, the largest shareholder’s decision to implement the share reduction plan may reflect its periodic recognition of the current stock price.

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According to the announcement, the reason for Desay Group’s share reduction is clearly stated as “own capital needs”. As a state-owned enterprise controlled by the State-owned Assets Supervision and Administration Commission of Huizhou Municipality, Desay Group’s capital allocation usually complies with state-owned asset supervision requirements, and the funds are mainly likely to be used for the following directions:

In recent years, the State-owned Assets Supervision and Administration Commission has continued to promote state-owned enterprises to optimize their capital structure and improve capital operation efficiency. Through moderate share reduction, Desay Group can recoup funds for other strategic investments or reform and reorganization arrangements.

Regulators encourage state-owned enterprises to focus on core businesses and gradually withdraw from non-main business investments. Through this share reduction, Desay Group can moderately optimize its shareholding structure while maintaining controlling stakes.

State-owned capital operation platforms usually need to maintain reasonable capital liquidity to cope with sudden capital needs or strategic investment opportunities.

From a valuation perspective, Desay SV’s current dynamic price-to-earnings ratio (PE) is approximately 31.25 times, and the price-to-book ratio (PB) is approximately 5.31 times, both of which are in the middle-to-high range of its historical valuation interval. [2] Combined with the following factors, the largest shareholder’s choice to reduce holdings at the current point in time is reasonably justified:

Desay SV’s stock price has risen by approximately 34.87% cumulatively in the past year, and by 37.23% in the past 6 months, with the current stock price approaching the high point range within 2025. [3]

According to the latest financial report data, the company’s third-quarter 2025 revenue and net profit both fell short of market expectations. The actual EPS was $1.01, lower than the analysts’ expected $1.33, with a performance surprise of -24.06%. [3]

As the smart driving sector has seen significant gains in the early stage, market sentiment may undergo periodic adjustments, and the largest shareholder can lock in some gains by reducing holdings at this time.

Although Desay Group plans to reduce its holdings by 1.19%, after the completion of the share reduction, its shareholding ratio will drop from 26.32% to 25.13%, and it will still be the company’s largest shareholder, with a shareholding ratio exceeding the key threshold of 25%. According to relevant regulations, major shareholders holding more than 25% of shares are required to disclose their share reduction plans in advance, and the transferee shall not transfer the shares within 6 months after the transfer. The restriction clause that the transferee cannot transfer the shares within 6 months effectively prevents the risk of sudden changes in control.

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According to the 2026 Investment Strategy Report for the Automotive Industry by Hua Chuang Securities, the current valuation of the auto parts sector presents the following characteristics: [5]

The PE ratio of the auto parts sector is approximately 28 times, which is at the historical central level. Although the stock prices of some individual stocks are at historical highs, profit growth has digested valuation pressure to a certain extent.

The PB ratio of the auto parts sector is approximately 2.9 times, close to the valuation level of the ChiNext Index, and still in a slightly above-central range.

The auto parts sector has outperformed the ChiNext Index since mid-2021, mainly benefiting from sustained performance growth brought about by the wave of independent electrification.

As an absolute leader in the intelligent automotive electronics sector, Desay SV occupies a leading position in niche markets such as domain controllers and intelligent cockpits. The largest shareholder’s share reduction behavior may be interpreted by the market as a periodic judgment on the sector’s valuation level, which may trigger the following market reactions:

• Short-term Emotional Disturbance:
  Some investors may interpret this as the largest shareholder’s recognition of the current valuation, or cautious expectations for the subsequent stock price trend, thus causing short-term adjustment pressure on the sector.
• Valuation Anchoring Effect:
  As a valuation anchor for the industry, changes in Desay SV’s valuation will have a demonstration effect on the entire smart driving supply chain.

Assuming the calculation is based on the stock price around the announcement date (January 7, 2026) (approximately RMB 120-125), Desay Group’s cash-out scale from this share reduction is approximately RMB 850-890 million. Although the absolute amount accounts for a small proportion relative to the company’s market value (approximately RMB 74.5 billion), the impact on the capital side may be amplified considering the following factors:

• Share reduction through block trades may have a direct impact on short-term stock prices;
• The time window for share reduction through concentrated auctions (3 months) is relatively long, which may form expectations of continuous selling pressure.

From a fundamental perspective, the actual impact of this share reduction on the intelligent auto parts sector is limited:

• Share Reduction Does Not Affect the Company’s Fundamentals:
  Desay SV clearly stated that this share reduction plan will not have a significant impact on the company’s governance structure and continuous operation. [1]
• Sector Prosperity Continues:
  The global intelligent connected vehicle market size is expected to reach $1.2 trillion in 2026, with a compound annual growth rate of as high as 25%, and the sector’s growth logic has not undergone fundamental changes. [6]
• Continuous Policy Support:
  Access for L3-level autonomous driving models has been approved, and the commercialization process of smart driving is expected to accelerate in 2026. [7]

The degree of impact may vary across different niche sectors:

• High-Valuation Niche Sectors:
  High-valuation niche sectors with significant early gains, such as autonomous driving chips and domain controllers, may face greater valuation adjustment pressure.
• Low-Valuation Niche Sectors:
  Niche sectors with relatively reasonable valuations, such as wire-controlled chassis and automotive electronics, may have limited adjustment space.
• Incremental Market Sectors:
  Emerging incremental sectors such as humanoid robot components and embodied intelligence are less affected by the traditional auto parts valuation system.

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According to the 2026 investment strategy reports of major securities firms, the core investment logics for the intelligent auto parts sector include: [5][7]

Autonomous driving vehicles and humanoid robots, as two important carriers of embodied intelligence, are expected to achieve phased progress of 1-10 or 0-1 in 2026. The targets of core links in the industrial chain are expected to have high flexibility.

Auto parts targets that lay out core incremental links of autonomous driving include Desay SV (domain controllers), Huayang Group, Bethel (wire-controlled chassis), etc. These enterprises have obvious advantages in technology accumulation and customer resources, and are expected to fully benefit from the increase in the penetration rate of smart driving.

2025-2026 is a period of intensive implementation of overseas production capacity by independent automotive enterprises. It is expected that 8 overseas factories will be put into production, corresponding to a designed production capacity of 805,000 vehicles. Auto parts enterprises are expected to follow whole vehicle enterprises to go global and gain incremental market space.

Changes in consumer mindsets and preferences in the AI era are forcing passenger vehicle enterprises to improve the intelligence level of their products, build know-how capabilities such as AI large models and smart driving algorithms, and realize the transformation from manufacturing enterprises to technology enterprises & platform enterprises. [5]

• Revenue Model Transformation:
  As L3-level autonomous driving enters mass production and application, the revenue model of automotive enterprises is expected to expand from one-time vehicle purchase revenue to a model of sustainable subscription revenue relying on continuously expanding existing users.
• Valuation Framework Reconstruction:
  Referring to Tesla’s valuation model, businesses such as Robotaxi and Optimus have become the main parts supporting market value. With the accelerated development and transformation of AI capabilities of domestic automotive enterprises, the valuation framework is expected to undergo changes.

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• Short-term:
  The share reduction plan may exert certain pressure on the stock price in the short term, but considering the company’s stable leading position in the industry and solid fundamentals, the adjustment range may be limited.
• Medium-to-long-term:
  As a leader in the domain controller track, the company benefits from the increase in the penetration rate of smart driving and the accelerated commercialization process of L3-level autonomous driving, and its medium-to-long-term growth logic remains unchanged.

• Short-term Impact:
  As an industry valuation anchor, Desay SV’s share reduction behavior may trigger short-term valuation adjustments in the sector, especially in high-valuation niche sectors with significant early gains.
• Medium-term Impact:
  The adjustment range depends on changes in industry fundamentals. If the penetration rate of smart driving continues to increase and L3-level autonomous driving models accelerate mass production, the sector’s valuation is expected to receive support.
• Long-term Impact:
  The intelligent auto parts industry is still in a growth stage of increasing penetration rate. The expansion of new businesses such as embodied intelligence and humanoid robots is expected to reconstruct the valuation framework, and the long-term growth space remains broad.

• Risk of policy falling short of expectations
• Risk of passenger vehicle market sales falling short of expectations
• Risk of autonomous driving progress falling short of expectations
• Risk of intensified competition
• Risk of performance falling short of expectations

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The share reduction plan of Desay Group, the largest shareholder of Desay SV, is mainly based on its own capital needs and periodic valuation considerations. As a state-owned enterprise, its share reduction behavior complies with the policy guidance of state-owned asset supervision and is reasonably justified. From the perspective of market impact, as an absolute leader in the intelligent automotive electronics sector, the largest shareholder’s share reduction may cause certain emotional disturbances and capital pressure on the sector’s valuation in the short term. However, considering the stability of the company’s controlling stake, the continued positive industry fundamentals, and the long-term trend of increasing penetration rate of smart driving, the impact of this share reduction on the sector’s valuation is expected to be mainly short-term disturbance, with limited medium-to-long-term impact.

The intelligent auto parts sector is still in a critical period of AI-enabled transformation and embodied intelligence expansion. It is recommended that investors pay attention to leading enterprises with core technological advantages and customer resource barriers, and lay out investment opportunities in core incremental links of smart driving at low prices during valuation adjustments.

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[1] Sina Finance - “Desay SV’s Largest Shareholder Desay Group Plans to Reduce Holdings by No More Than 7.1063 Million Shares, Accounting for 1.19% of Total Share Capital” (https://finance.sina.com.cn/stock/aigc/zjchg/2026-01-07/doc-inhfnvii6095801.shtml)

[2] Xueqiu - “Desay SV (SZ002920) Stock Price” (https://xueqiu.com/S/SZ002920)

[3] Jinling API Company Profile Data (2026-01-07)

[4] Jinling API Stock Daily Data (2025-12-01 to 2026-01-07)

[5] Eastmoney - “2026 Investment Strategy Report for the Automotive Industry: Seeking New Growth Poles and Embracing Opportunities in Embodied Intelligence” (https://caifuhao.eastmoney.com/news/20251229180158998530270)

[6] Eastmoney - “Interpretation of Desay SV’s First Three Quarters 2025 Financial Report: Hidden Worries and Opportunities Behind Double Growth” (https://caifuhao.eastmoney.com/news/20260104101914307755440)

[7] Eastmoney Securities Research Report - “Changan Arcfox Obtains L3 Product Access Approval, Maintains Optimism on the Automotive Sector” (https://pdf.dfcfw.com/pdf/H3_AP202512221805785902_1.pdf)

[8] Jinling API Market Index Data (2025-11-24 to 2026-01-06)