Strategic Asset Divestments in China's EV Charging Sector: A New Catalyst for Growth?

The China electric vehicle (EV) charging sector is undergoing a seismic shift as companies recalibrate strategies to align with a rapidly evolving market. At the forefront of this transformation is Jiu Rong Holdings (02358.HK), whose recent asset divestment and share price surge have sparked debates about whether such moves signal a broader industry trend or reflect isolated financial maneuvering. With the sector projected to grow at a compound annual growth rate (CAGR) of 10.9% from 2025 to 2029, reaching USD 572.13 billion by 2029, understanding the interplay between strategic divestments and market dynamics is critical for investors.

Jiu Rong's Strategic Shift and Market Reaction

Jiu Rong Holdings announced in May 2025 the sale of its New Energy Bus Charging Station assets in Hangzhou, valued at RMB 0.198 billion, according to its disposal announcement (https://www.marketscreener.com/quote/stock/JIU-RONG-HOLDINGS-LIMITED-6170982/news/Jiu-Rong-Announces-Disposal-Of-Its-New-Energy-Bus-Charging-Station-Assets-50076003/). This move, part of a broader strategy to transition from a capital-intensive model to an asset-light approach, aligns with the company's goal to reallocate resources to core or emerging business areas, as stated in the disposal announcement. The transaction, which includes an advance payment of RMB 90 million, reflects a calculated effort to reduce debt and optimize working capital, the company said in the same disposal announcement.

The stock's subsequent performance has been mixed. By early October 2025, Jiu Rong's share price rose from HK$0.010 to HK$0.012, a 20% increase, according to its stock page (https://www.moomoo.com/stock/02358-HK). However, this surge contrasts sharply with the company's financial struggles: revenue dropped 25.85% to 583.50 million in 2025, while losses widened to -204.18 million, figures also reflected on the stock page. Analysts suggest the price movement may be driven by speculative optimism about the asset sale rather than underlying profitability, as the company's price-to-sales (P/S) ratio remains misaligned with industry benchmarks reported on the stock page.

Broader Industry Trends and Strategic Rationale

Jiu Rong's actions mirror a sector-wide trend of asset rationalization. Major players like State Grid Corporation of China and Southern Power Grid are consolidating infrastructure to enhance efficiency, while private firms such as TELD and Star Charge are prioritizing high-power DC fast-charging stations, as noted in a Mordor report (https://www.mordorintelligence.com/industry-reports/china-electric-vehicle-charging-infrastructure). The government's push for a 1:1 vehicle-to-charging station ratio by 2030 is highlighted in the EV Charging Index 2025 (https://www.rolandberger.com/en/Insights/Publications/EV-Charging-Index-2025-Expert-insights-from-China.html) and has intensified competition, forcing companies to shed non-core assets to fund innovation.

For instance, PetroChina's 2023 acquisition of Potevio New Energy Co Ltd underscores the sector's shift toward vertical integration and technological dominance, as detailed in a Data Insights report (https://www.datainsightsmarket.com/reports/china-ev-industry-15273). Similarly, Tesla and Nio are expanding proprietary charging networks, leveraging economies of scale to outpace smaller operators, according to a CarNewsChina article (https://carnewschina.com/2025/08/27/chinas-ev-charging-network-hits-16-7-million-units-records-7-71-billion-kwh-monthly-usage/). These moves highlight a strategic pivot from infrastructure ownership to ecosystem control, where data, user experience, and grid integration matter more than physical assets.

Risks and Opportunities

While asset divestments can unlock liquidity, they also expose vulnerabilities. Jiu Rong's reliance on a single asset sale to stabilize its balance sheet raises concerns about long-term sustainability. The company's diversified business model-spanning digital video, new energy vehicles, and property development-lacks the scale of industry leaders like BYD or Nio, a point noted on the company's stock page. Without reinvesting proceeds into high-margin technologies (e.g., smart charging or vehicle-to-grid systems), Jiu Rong risks falling behind in a market dominated by innovation-driven players, as warned in a Data Insights charging report (https://www.datainsightsmarket.com/reports/china-electric-vehicle-charging-infrastructure-market-15067).

Conversely, the broader sector remains resilient. Government subsidies for ultra-fast charging hubs and the NEV dual-credit policy are fueling demand, particularly in urban corridors and commercial fleets. The shift to DC fast-charging stations, which grew at a 27.36% CAGR in 2024 according to the Mordor report, further validates the strategic value of asset-light models. Investors must weigh these macro trends against company-specific risks, such as Jiu Rong's weak financials and fragmented business segments.

Conclusion: A Catalyst or a Warning?

Jiu Rong's asset divestment and share price surge encapsulate the duality of China's EV charging sector: a market brimming with growth potential but rife with operational challenges. While the company's move aligns with industry trends toward capital optimization and technological focus, its financial underperformance suggests that not all players can ride the wave of expansion. For investors, the key lies in distinguishing between strategic adaptability and desperation. As the sector races toward a USD 572 billion valuation by 2029, only those firms that balance asset rationalization with innovation will emerge as long-term winners.