Giant Network Group Co., Ltd. (002558.SZ) recently disclosed that its second-largest shareholder, Tengpeng Investment, has completed a portion of its share reduction via a centralized bidding process. While the company enjoys a significant earnings boost from a hit mobile game, the controlling shareholder, Shi Yuzhu, is using his investment platform to cash out, all amid a prior regulatory warning for related-party transaction disclosure violations.
From July 16 to August 7, 2026, Tengpeng Investment reduced its holdings in Giant Network by 18.9356 million shares, representing 1% of the company's total equity. This reduction was part of a previously disclosed plan, which allows for the sale of up to 56.807 million shares, or 2.99% of total shares. As of August 7, the centralized bidding portion of the plan has been completed. Based on the closing price of 29.34 yuan per share on that day, Tengpeng Investment has cashed out over 500 million yuan from this round. With the centralized bidding portion settled, the remaining shares under the plan can still be sold, potentially unlocking another 1.1 billion yuan in sales at the same price. The proceeds from the sale are primarily intended to repay bank loans.
After the reduction, Tengpeng Investment's stake stands at 9.29%, solidifying its position as the second-largest shareholder of Giant Network. Equity data shows that Tengpeng Investment is acting in concert with the controlling shareholder, Giant Investment, both ultimately controlled by Chairman Shi Yuzhu, who uses these two platforms to maintain control over the listed company.
Against the backdrop of this major shareholder sell-off, Giant Network has delivered impressive financial results. In the first quarter of 2026, the company reported revenue of 2.329 billion yuan, a 221.70% year-on-year increase, and a net profit attributable to shareholders of 1.08 billion yuan, up 210.58%. The earnings surge is primarily driven by higher game revenue. The company's half-year performance forecast suggests this growth trend is continuing. Giant Network expects a net profit attributable to shareholders of 2 billion to 2.2 billion yuan for the first half of 2026, representing a 157.38% to 183.12% year-on-year increase. The hit mobile game "Supernatural Action Team" continues to generate high revenue, serving as the core pillar of this performance.
Amid this earnings boom, the company's past internal control shortcomings have been flagged by regulators. On April 29, the Chongqing Securities Regulatory Bureau issued an administrative supervision measure. An investigation revealed that in September 2020, a wholly-owned subsidiary of Giant Network transferred all equity in Hefei Lingxi Interactive Network Technology Co., Ltd. The transaction counterparty's equity transfer payment actually originated from a related party of the listed company, with a related-party loan facilitating the deal, making it essentially a related-party transaction. However, Giant Network failed to properly disclose and deliberate on this related-party transaction. The regulatory body issued warning letters to Giant Network, Shi Yuzhu, General Manager Liu Wei, and Board Secretary Meng Wei, with the matter recorded in the securities and futures market integrity file.
With a blockbuster product driving strong earnings growth on one hand, and the controlling shareholder's related investment platform continuously reducing its holdings on the other, combined with a history of disclosure violations, the market is now focused on two key issues. First, the pace of Tengpeng Investment's upcoming block trades, and second, the sustainability of the hit game's revenue, as well as the effectiveness of the company's improvements in internal controls and information disclosure.