Liu’s removal is more than just a change in title—it carries profound implications for the company’s leadership and strategic direction. In many cases, when a director is removed, their position as chairman also comes under scrutiny. This opens up the possibility that Zhao Feng, as the new board member, will likely ascend to the chairman's seat, a move that seems both expected and necessary given the context. What makes Liu's removal particularly compelling is that she was the only board member to vote against her ousting, signaling her resistance to relinquishing the influential role she has held at Dali Kap for several years.
Liu Xibi's background is noteworthy, especially considering her pivotal role in the company's rise. Before taking on the role of chairman and general manager in October 2018, Liu was a senior investment manager at Fengnian Capital, a venture capital firm that holds significant controlling interests in Dali Kap. Under her leadership, Dali Kap became a recognized "little giant" enterprise in China, specializing in RF microwave MLCC (multi-layer ceramic capacitors) products. The company has achieved remarkable success in the global market, where it ranks fifth overall, with an even stronger position domestically. This success story, however, appears to have stalled after Dali Kap went public.
Despite Dali Kap’s historical achievements, the company’s post-IPO performance has not lived up to investor expectations. While it initially appeared poised for success, the company's growth trajectory has faltered in recent years, leading to widespread dissatisfaction among shareholders. A key piece of evidence of this decline comes from the third-quarter 2024 financial report, which showed a notable decrease in operational revenue. For the quarter, Dali Kap reported 251 million yuan in revenue, marking a year-on-year decline of 8.02%. In addition, the net profit attributable to the parent company dropped by a staggering 11.05%, reflecting a steep 46.73% decline compared to the same period the previous year. This sharp decline in profitability following the IPO raises critical questions about the effectiveness of Liu's management, especially in navigating the post-listing phase of growth.Adding to the company’s woes, Dali Kap’s stock price has been in a freefall throughout 2024, plummeting by 43.17%. This steep drop stands in sharp contrast to the performance of the broader Passive Electronic Component Manufacturing Industry Index, which saw an increase of 16.23% during the same period. Even more striking is the underperformance of Dali Kap’s stock following the central government’s comprehensive policy shift in late September 2024, aimed at boosting technology stocks. While the ChiNext Index—an index of growth stocks—soared by 45.48%, Dali Kap’s stock price appreciated by a mere 6.4%. This divergence has left investors perplexed and questioning why Dali Kap has missed out on the broader tech rally that has fueled much of the market’s recent growth.
These underwhelming financial results and market performance paint a troubling picture of Dali Kap’s post-IPO journey. The company’s decline in profitability and market valuation raises concerns about the effectiveness of Liu Xibi's leadership. The initial enthusiasm surrounding the company's public listing appears to have evaporated, and the once-promising future has become clouded by stagnation and underperformance.
In light of these challenges, it’s clear that Dali Kap needs a major strategic recalibration if it hopes to regain its footing in the competitive market. The company's post-IPO struggles highlight the importance of aligning leadership decisions with the dynamic needs of the market. Profitability and market valuation, both of which are critical indicators of success, have not been favorable to Liu’s management style, suggesting that the company may require a new direction to restore growth and investor confidence.
The recent reshuffling of the board is seen by many as a step toward addressing these challenges. With Zhao Feng’s appointment, there is a sense of cautious optimism among stakeholders, who hope that his leadership will bring a fresh perspective and a renewed focus on profitability and long-term value creation. Zhao, as the company’s actual controller, has a deep understanding of the business and its operational dynamics, and his experience in the industry may be just what Dali Kap needs to reset its trajectory. His strategic vision could provide the clarity and focus necessary to guide Dali Kap through its current period of transition and emerge as a more resilient player in the market.
For Dali Kap, this transition represents an opportunity to reassess its approach and reorient its strategy. The company has, for all its successes, been somewhat reactive in its approach to the challenges of a post-IPO environment, with a leadership that has struggled to adapt to the rapid shifts in the tech and capital markets. Zhao Feng’s potential appointment as chairman could provide the company with the decisive leadership it needs to pivot toward a more sustainable and profitable future.
As Dali Kap navigates this leadership change and the ongoing challenges posed by market conditions, the company’s ability to adapt and recalibrate its strategy will be crucial. Stakeholders, including investors, employees, and partners, will be closely watching to see whether the reshuffling at the top can lead to a significant turnaround or if the company will continue to grapple with the issues that have plagued its post-IPO performance.
Ultimately, the unfolding situation at Dali Kap underscores a broader lesson for companies in the tech sector: the path to sustained growth is rarely linear, and success in the public markets requires constant adaptation to shifting market forces. As Dali Kap enters this critical phase in its history, the question remains: will the new leadership usher in a period of renewed growth, or will the company’s challenges continue to mount? Only time will tell, but the next few months could prove to be pivotal in determining the company’s long-term success.