Shenzhen Konka A cannot fully recover the principal and interest of 226 million yuan borrowed, incurring a loss of over 12.5 billion yuan, possibly due to insolvency and being marked as a special treatment company.

Ask AI · How can a company with high liabilities resolve its delisting risk?

Yangtze Business Daily News ● Yangtze Business Daily Reporter Huang Cong

Shenzhen Konka A (000016.SZ) was hit hard again while it was being placed under a delisting risk warning.

On the evening of April 1, an announcement released by Shenzhen Konka A showed that its investee, Yantai Kangyun Industrial Development Co., Ltd. (hereinafter referred to as “Yantai Kangyun”), was unable to repay on time the principal of the shareholder loan provided by the company of approximately 226 million yuan and the interest due to project sales falling short of expectations and insufficient funds, resulting in the loan being overdue.

In the announcement, Shenzhen Konka A stated clearly that, currently, due to factors such as policy adjustments and market changes, the company may be unable to fully recover the principal and interest of the shareholder loans.

In terms of performance, recently, Shenzhen Konka A’s performance forecast showed that the company expects operating revenue of 9 billion to 10.5 billion yuan in 2025; and a net profit attributable to shareholders of a loss of 12.581 billion to 15.573 billion yuan.

More seriously, Shenzhen Konka A warned that if the net assets attributable to shareholders of the listed company at the end of 2025 after audit are negative, after the company discloses its “2025 Annual Report,” its stock trading will be subject to a delisting risk warning (with “*ST” prefixed to the stock abbreviation).

As of the end of the third quarter of 2025, Shenzhen Konka A’s asset-liability ratio had already reached 96.78%. Combined with huge losses, the company is very likely to be “capped with a star and a hat” due to insolvency.

Yantai Kangyun lacks funds to repay the loan on time

On the evening of April 1, an announcement released by Shenzhen Konka A showed that its investee, Yantai Kangyun, was unable to repay on time the principal of the shareholder loan provided by the company of approximately 226 million yuan and the interest due to project sales falling short of expectations and insufficient funds, resulting in the loan being overdue.

Currently, Yantai Kangyun is held 34% by Shenzhen Konka A, 33.66% by Yantai Huayi, and 32.34% by Yikang Holdings (an affiliate acting in concert with Yantai Huayi).

Yantai Kangyun was established in December 2019, with a registered capital of 30 million yuan. At the time of its establishment, the company held 51% of the equity in Yantai Kangyun, and Yikang Holdings held 49% of the equity.

In November 2020, Yantai Kangyun won the Environmental Technology Town project for approximately 637.2 million yuan. Because Yantai Kangyun’s registered capital was insufficient to pay the above consideration, Shenzhen Konka A and other shareholders of Yantai Kangyun jointly provided shareholder loans to Yantai Kangyun in the amount of approximately 665 million yuan according to their shareholding proportions. Among them, the company provided approximately 339 million yuan in shareholder loans on a pro rata basis with the same rights; Yikang Holdings, which held 49% and also on a pro rata basis with the same rights, provided approximately 326 million yuan in shareholder loans. The funds were used to pay land price and construction costs, relevant taxes, and other preliminary funding needs for the project.

In March 2021, Shenzhen Konka A transferred 17% of its equity interest in Yantai Kangyun to Yantai Huayi through a public listing on a state-owned property rights exchange.

To smoothly advance the Environmental Technology Town project, in February 2021, Shenzhen Konka A’s board of directors agreed that after the 17% equity interest in Yantai Kangyun was transferred via public listing, the company and other shareholders of Yantai Kangyun would provide shareholder loans to Yantai Kangyun according to their shareholding proportions. The amount of the company’s shareholder loans would not exceed 226 million yuan, the loan term would not exceed 3 years, and the annualized interest rate on the loans would be no less than 8%.

As commercial and residential land development requires prior planning and construction approval procedures, and sales did not meet expectations, when the initial approved financial assistance expired, Yantai Kangyun had no funds to repay the shareholder loans. To ensure the construction progress of the Environmental Technology Town project, in February 2024, Shenzhen Konka A’s board of directors approved that the company provide Yantai Kangyun with financial assistance not exceeding 226 million yuan according to its shareholding proportion. The loan term would not exceed 3 years, and the annualized interest rate would be 8%.

By the end of 2025, shareholders had provided a total of approximately 665 million yuan in shareholder loans to Yantai Kangyun, including approximately 439 million yuan provided jointly by Yantai Huayi and Yikang Holdings, and approximately 226 million yuan provided by the company. Yantai Kangyun has used the shareholder loans to pay land price, relevant taxes, and expenses required for project development and construction.

Due to project sales progress of the Environmental Technology Town not meeting expectations, to exert pressure to accelerate project progress and to safeguard the safety of funds, Shenzhen Konka A required Yantai Kangyun to repay the principal of approximately 226 million yuan and the interest on the shareholder loans provided by the company in accordance with the contract. However, Yantai Kangyun was unable to repay in a timely manner because project sales fell short of expectations and funds were insufficient, resulting in the shareholder loans becoming overdue.

Shenzhen Konka A stated that, currently, due to factors such as policy adjustments and market changes, the company may be unable to fully recover the principal and interest of the shareholder loans.

The scale of losses keeps increasing year by year

In fact, Shenzhen Konka A, whose loans are difficult to recover, is currently “unable to protect itself.”

From 2022 to 2024, Shenzhen Konka A’s operating revenue was 29.608 billion yuan, 17.849 billion yuan, and 11.115 billion yuan, respectively. It declined for three consecutive years, with the decline in each year close to 40%. Net profit attributable to shareholders was -1.470 billion yuan, -2.164 billion yuan, and -3.296 billion yuan, respectively, recording losses for three consecutive years with the loss scale increasing year by year.

Shenzhen Konka A introduced that in 2024, its TV business improved production efficiency and product competitiveness gradually strengthened. However, due to factors such as intensifying market competition, ongoing supply-chain fluctuations, and limited room to reduce rigid expenses, its TV business continued to face pressure and remained in a loss position.

At the same time, to accelerate the industrialization of its semiconductor business, Shenzhen Konka A continued to increase its investment in the industrialization of MLED (a collective term for Micro LED and Mini LED) and made some progress in the sales of Mini LED display products. However, because its semiconductor business is still in the early stage of industrialization and has not achieved scaled and efficiency-driven output, it has affected the company’s profitability.

Shenzhen Konka A also introduced that in 2024, based on the principle of prudence, the company made asset impairment provisions according to its accounting policies and accounting estimates, which reduced profits. In addition, changes in the price of financial assets measured at fair value led to a fair value change loss of approximately -250 million yuan.

Recently, Shenzhen Konka A released a performance forecast showing that the company expects operating revenue of 9 billion to 10.5 billion yuan in 2025; a net profit attributable to shareholders loss of 12.581 billion to 15.573 billion yuan; and a net loss from profit attributable to shareholders after deducting non-recurring gains and losses of 9.953 billion to 10.263 billion yuan.

Shenzhen Konka A explained that in 2025, based on the principle of prudence, the company, according to its accounting policies and accounting estimates, made impairment provisions and recognized some estimated liabilities for inventories, accounts receivable, equity investments, financial assistance, and inefficient or non-viable assets. These increased significantly year over year, resulting in net profit attributable to shareholders for 2025 to be a loss and the net assets attributable to shareholders of the listed company to be negative.

Meanwhile, Shenzhen Konka A stated that in 2025, its consumer electronics business was affected by insufficient product competitiveness, causing operating revenue to decline. Although overall expenses decreased year over year, gross profit still did not effectively cover expense expenditures, and the consumer electronics business remained in a loss position.

It is worth noting that Shenzhen Konka A reminded that if, after audit, the company’s net assets attributable to shareholders at the end of 2025 are negative, following the disclosure of its “2025 Annual Report,” the company’s stock trading will be subject to a delisting risk warning (with “*ST” prefixed to the stock abbreviation after disclosure).

As of the end of the third quarter of 2025, Shenzhen Konka A’s asset-liability ratio had already reached 96.78%. Coupled with huge losses, the company is very likely to be “capped with a star and a hat” due to insolvency.