In-Depth Analysis of Sequoia Capital's Share Reduction in Dongpeng Holdings

Based on the latest collected data and market information, I will provide an in-depth analysis of Sequoia Capital’s share reduction in Dongpeng Holdings and its investment implications from multiple dimensions.

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According to public information, Sequoia Capital holds Dongpeng Holdings shares through two entities [1]:

• SCC Holdco B
  : 39.35 million shares, accounting for
  3.40%
  of the total share capital
• Shanghai Zede
  : 40.55 million shares, accounting for
  3.50%
  of the total share capital
• Total Shareholding
  : 79.89 million shares, accounting for
  6.90%
  of the total share capital

Sequoia Capital as an early institutional investor in Dongpeng Holdings, its investment dates back to the pre-IPO equity investment stage of the company. From the perspective of the investment cycle, Sequoia Capital’s investment has exceeded 5 years, which has entered the normal exit time window in accordance with the general investment term of VC/PE funds [2].

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Time Period	Price Change	Evaluation
Past 1 Month	+0.59%	Relatively Stable
Past 3 Months	-7.64%	Significant Pressure
Past 6 Months	+16.52%	High Volatility
Past 1 Year	+16.12%	Slightly Bearish
Past 3 Years	-25.93%	Sustained Downturn
Past 5 Years	-49.29%	Long-term Weakness

The current stock price of

is in the lower-mid range of the 52-week price band of , indicating relatively conservative market valuation expectations for the company [0].

Based on the latest financial data [0][3]:

• Price-to-Earnings (P/E) Ratio
  : 20.6x, lower than the industry average of approximately 25x
• Price-to-Book (P/B) Ratio
  : 1.0x, significantly lower than the industry average of 1.5x
• Return on Equity (ROE)
  : 4.86%, at the mid-range level of the industry
• Net Profit Margin
  : 5.87%
• Free Cash Flow (FCF)
  : Positive RMB 408 million, indicating acceptable cash generation capacity of the company
• Financial Stance
  : Conservative, with a debt risk rating of
  Low Risk

Based on the data from the company’s 2024 annual report [4]:

• Operating Revenue
  : YoY decrease of approximately
  15.64%
• R&D Investment
  : YoY sharp decrease of
  55.65%
• Advertising Expenses
  : YoY decrease of
  10.69%
• Accounts Receivable
  : Increase of approximately 1.82%

These data reflect that building materials enterprises are facing considerable operational pressure against the backdrop of the continuous downturn in the real estate industry.

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As a financial investor, Sequoia Capital’s goal in investing in Dongpeng Holdings is to realize capital exit and profit realization within a reasonable period. The investment cycle of over 5 years has exceeded the typical life cycle of a PE fund, so the share reduction is a normal investment management behavior [2].

The real estate industry has been undergoing continuous adjustments since 2020, with weak demand for building materials such as ceramic tiles. The overall valuation center of the industry has moved downward, and Sequoia’s choice to gradually exit in a relatively reasonable valuation range is a decision that conforms to investment logic.

The company’s revenue and profit declined in 2024, and R&D investment was significantly reduced, which may affect the company’s medium-to-long-term competitiveness and shake the confidence of institutional investors to a certain extent.

Since 2024, the A-share market has been volatile overall, and institutional investors have generally adopted defensive strategies, reducing non-core positions to cope with market uncertainty [2].

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1. Share Reduction Behavior Itself
   : The large-scale share reduction by an early heavyweight institutional investor sends a cautious signal to the market
2. Performance Decline
   : Double decline in revenue and profit in 2024, with significant reduction in R&D investment
3. Industry Dilemma
   : The downward cycle of the real estate sector continues, and demand for the ceramic tile industry is shrinking
4. Cash Preservation
   : The company’s reduction in advertising and R&D expenses reflects the management’s conservative attitude towards prospects

1. No Full Liquidation
   : Sequoia still retains nearly 7% of the shares, ranking among the important shareholders
2. Valuation at a Low Level
   : P/E of 20.6x and P/B of 1.0x have fully reflected pessimistic expectations
3. Sound Fundamentals
   : Positive free cash flow and low debt risk
4. Bullish Technical Indicators
   : MACD indicator is bullish, KDJ indicator shows a buy signal, and RSI is in the normal range [0]

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• Valuation is already in a historical low range with a relatively high margin of safety
• The company is a leading enterprise in the ceramic tile industry with strong brand influence
• Positive free cash flow and relatively sound financial conditions

• Continuous downturn in the real estate industry, with great pressure on the demand side
• Sequoia Capital’s share reduction may trigger follow-up selling in the market
• Reduction in R&D investment may weaken long-term competitiveness
• Intensified industry competition, squeezing profit margins

Sequoia Capital’s share reduction

, rather than a complete negation of the company’s fundamentals. Considering that the current valuation is already at a low level, if the company can survive the industry trough, there may be opportunities for valuation recovery in the future. It is recommended that investors pay close attention to the company’s 2025 performance and changes in industry policies.

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[1] Eastmoney - Dongpeng Holdings Shareholder Shareholding Data (https://stcn-main.oss-cn-shenzhen.aliyuncs.com/upload/wechat/20230803/20230803101349_64cb0d5d25bdb.png)

[2] 36Kr - Analysis of Share Reduction and Cash Out by Major Shareholders Worth RMB 170 Billion in A-Shares (https://m.36kr.com/p/3148833607539204)

[3] Jinling AI Financial Database - Dongpeng Holdings Financial Analysis Data [0]

[4] Sina Finance - Dongpeng Holdings 2024 Annual Report (https://money.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?stockid=003012&id=10907051)

[5] Jinling AI Technical Analysis - Dongpeng Holdings Stock Technical Indicators [0]