Shenzhen SEG faces arbitration over subsidiary's unmet targets

Shenzhen SEG Co., Ltd. [SZSE:000058] has initiated arbitration proceedings with the Shenzhen International Court of Arbitration against the original owners of Shanghai Maqu Testing Technology Co., Ltd. after the subsidiary failed to meet agreed-upon performance targets. The dispute centers on a 2021 agreement where Shenzhen SEG and its subsidiary Suzhou Tester acquired a 47.5% stake in Shanghai Maqu, contingent on achieving specified profit levels from 2021-2023. When these targets were missed, Shenzhen SEG requested compensation per the original agreement; however, no compensation was forthcoming. Shenzhen SEG and Suzhou Tester are seeking a total of RMB 37.14 million in damages, representing equity repurchase payments, performance compensation, and late payment penalties. Shenzhen SEG has stated that the arbitration's outcome is uncertain and the financial impact on the current or future profit will only be known at a later stage.