Recently, Konka Group Co., Ltd. (referred to as "Shen Konka A," stock code: 000016.SZ) announced its intention to transfer 70% of the shares held by Hongqiao Jiacheng Company, with a minimum listing price of 4.145 billion yuan. This proposal is expected to be approved by the general meeting of shareholders. This move is part of a broader trend where Shen Konka A has been actively divesting assets in recent months. According to its semi-annual report, the company reported negative net cash flow from operating activities and losses from its core business. These financial signals have raised concerns about whether the company's capital chain is under significant pressure. Although Shen Konka A's revenue reached 10 billion yuan, its profit margin remains below 1%. What factors are contributing to this low profitability? How much of the company’s revenue comes from TV sales? And which sectors can contribute to profits under its diversified investment strategy? To understand these issues better, the "Investor" reporter reached out to a representative from Shen Konka A, who provided a detailed and honest response. Konka's Asset Sale Strategy Shen Konka A recently held an extraordinary general meeting to discuss the proposal to transfer 70% of the shares in Hongqiao Jiacheng. The plan involves selling the stake for no less than 4.145 billion yuan. Shareholders overwhelmingly supported the motion, with 98.98% voting in favor. Hongqiao Jiacheng was established in 2016 with a registered capital of 1 billion yuan. It is a joint venture between Shen Konka A and OCT Group, with Shen Konka A holding 70% and OCT Group 30%. The company was created to develop the original headquarters factory urban renewal project of Konka Group. In 2016, the company signed land transfer contracts and paid the first phase of fees, although the overall design is still ongoing. Interestingly, the proposal initially faced resistance from minority shareholders, with 64% voting against it on July 17. As a result, Shen Konka A adjusted the shareholding percentage from 49% to 70%, and the new plan was resubmitted for approval. Additionally, OCT Group waived its right of first refusal in the new deal. Given the current market conditions, the sale of such a large asset has been approved, indicating the urgency behind the company's liquidity needs. Shen Konka A has also been selling other properties. On August 24, it announced plans to sell three commercial properties in Shanghai, valued at approximately 16.51 million yuan. Earlier in May 2017, it sold 22.935% of Bioray Optoelectronics (Shanghai) Co., Ltd. for around 120 million yuan. In June, it also sold a 51% stake in Kunshan Konka Electronics for no less than 224 million yuan. Based on these transactions, the company has raised approximately 4.5 billion yuan through asset sales, aiming to optimize its asset structure and improve liquidity. Financial Pressure and Strategic Shifts Despite reporting a 32% year-on-year increase in operating income to 11.4 billion yuan in the first half of 2017, the net profit was only 30.87 million yuan, up 141% year-on-year. However, the net loss attributable to the parent company dropped by 55% to 44.46 million yuan, raising questions about the company's performance. A company source explained that intense market competition and rising raw material costs led to a decline in gross margins for key products like color TVs. This contributed to the company's main business suffering losses. According to internal data, the TV business accounted for about 48% of total revenue in the first half of 2017, totaling 5.29 billion yuan — the lowest in five years. The company also reported a net cash flow from operations of -23 billion yuan, down 1703% year-on-year. Its current liabilities increased by 3.4 billion yuan compared to the beginning of the year. With numerous projects requiring capital investment, including the Kunzhuang Shuiyue Zhouzhuang and Konka Kechuang Center developments, the company faces serious funding challenges. According to insiders, the financial pressure stems from the need for business expansion and development. Diversification and Future Prospects In pursuit of growth, Shen Konka A has made several strategic investments. It acquired a 24% stake in Guangdong Chutianlong Smart Card for 588 million yuan and invested 172 million yuan in Shenzhen Yaode Technology, an upstream supplier. It also plans to set up an industrial fund with a maximum size of 5 billion yuan, focusing on TMT, smart manufacturing, and new energy sectors. However, despite its efforts, the company's profit margin remains below 1%. With so many new ventures, the question remains: which sectors will generate profits quickly? According to a company representative, the low profit margin is mainly due to rising costs and fierce competition. The company is now focusing on supply chain management to strengthen relationships with suppliers and customers, helping to control costs and improve efficiency. It also plans to expand into logistics and information services, creating new growth opportunities. Shen Konka A is currently undergoing a long-term transformation. Whether this shift will help or hinder its future remains to be seen. An insider noted: "Konka used to be China's top TV brand, but now it's facing leadership changes and internal instability. Whether in product development or marketing, it always seems to lag behind its competitors." 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