A 2.8 billion-yuan valuation adjustment agreement has brought down the veteran industry giant.

Listed for 34 years, KONKA has reached the cliff edge of delisting. The final straw that crushes KONKA will most probably be a VAM (valuation adjustment mechanism) agreement signed five years ago.

On August 15, KONKA announced another equity repurchase lawsuit. Xiyue Xinmei No. 2 Equity Investment Fund requires Konka Group to perform its equity repurchase obligation and pay 121 million yuan — this is the fifth investor that has sued KONKA after Yisquare's failure to meet the VAM terms. Before that, Hainan Huilong Investment claimed 200 million yuan in compensation, the consortium consisting of Yancheng Kanghui, Yancheng Oriental and Jiangsu Huanghai Financial Control claimed 424 million yuan, while Hunan Jiuyue and Hunan Jiucheng each claimed 6.71 million yuan. The total amount involved in the five lawsuits has risen to 758 million yuan.

At this point, KONKA's debt crisis has shown signs of getting out of control. As its attributable net profit to shareholders at the end of 2025 was negative and its non-recurring profit and loss deducted net profit has been negative for three consecutive years, the Shenzhen Stock Exchange officially imposed a delisting risk warning on KONKA on April 30, and its stock was renamed "*ST KONKA A".

According to the rules of the Shenzhen Stock Exchange, if KONKA's audited ending net assets in 2026 are still negative, the company will be directly delisted.

KONKA is a childhood memory for many people born in the 1980s and 1990s. At its peak, it once occupied 15% of China's color TV market share, and the first color TV many families bought was a KONKA product. Can this former "Color TV King" survive this crisis?

The "Drawer Agreement" Behind a RMB 2.8 Billion Transaction

The story dates back to 2021.

In November of that year, Konka Group completed a seemingly very successful transaction: it transferred 70% equity of its Internet operation platform, Chongqing Yisquare Technology Co., Ltd., to a consortium of 17 investment institutions at a consideration of RMB 2.8 billion.

Founded in 2015, Yisquare is a core digital platform under Konka Group that focuses on cross-screen operation of smart TV terminals, content distribution and Internet advertising marketing. In the years when the concept of the Internet TV ecosystem was the most popular, Yisquare was regarded by KONKA as a key piece in its transformation from traditional hardware manufacturing to the "Hardware + Content" two-wheel drive model.

At that time, the smart TV big screen ecosystem was regarded as a blue ocean of traffic, and the OTT advertising market was in the ascendant. Yisquare's equity attracted a very strong lineup of investors, including Shanghai Huandian Information Technology Co., Ltd. affiliated to Bilibili, Kunyu Innovation Smart Private Equity Fund with Chongqing state-owned capital background, Shenzhen Qiaoyi Digital Technology, etc.

This transaction looked almost perfect in the financial statements at that time: KONKA received the full RMB 2.8 billion equity transfer payment, and recognized a total of about RMB 1.79 billion of equity disposal income at one time, which greatly increased the book profit of the current period. It is worth noting that KONKA's attributable net profit to shareholders in 2021 was only RMB 905 million. Without this transaction, KONKA would have suffered a huge loss of nearly RMB 1 billion that year. At that time, the outside world also interpreted this transaction as a benchmark operation of KONKA to "revitalize existing assets and promote business transformation".

No one knew that under the curtain of this transaction, there was a "devil's agreement". It was not until April 29, 2026, forced by lawsuits, that KONKA made it public through a supplementary announcement.

It turns out that in addition to the public listing transaction of Yisquare's equity, Konka Group also privately signed a supplementary agreement with rigid repurchase obligations with 11 of the investors. The core clause is directly related to IPO: if Yisquare fails to complete its initial public offering and listing before the end of 2025, the investors have the right to require KONKA to repurchase all the equity at the price of "investment principal + 6% to 8% annual simple interest".

This is a typical VAM agreement. When everything goes well, it can be treated as non-existent. But once the listing fails, the equity transfer payment that KONKA received back then will turn into a huge debt.

Up to now, Yisquare has not even entered the IPO counseling filing stage.

This outcome is not unexpected. Yisquare's business foundation is OTT, which relies on smart TV terminals to carry out content distribution and advertising marketing. As we all know, China's TV market has shrunk rapidly after 2021. In 2025, its retail volume plummeted by 10.4% year on year to only 27.63 million units. The traffic increment that Yisquare relies on KONKA's TV shipments to maintain naturally stagnated. In addition, under the full registration system of the A-share market, the review of "sci-tech innovation attributes" and "business independence" of to-be-listed enterprises has become stricter. It is extremely difficult for an "Internet advertising" company with a traditional advertising agency model and lack of core underlying technology to get listed.

On December 31, 2025, the VAM period expired, and the investors took action quickly.

In April 2026, Hainan Huilong filed the first lawsuit, claiming 200 million yuan; in May, the Yancheng Kanghui consortium followed up, claiming 424 million yuan; in July, Changsha Jiuyue and Hunan Jiucheng filed lawsuits respectively, each claiming 6.71 million yuan. In August, Xiyue Xinmei No. 2 joined the lawsuit, claiming 121 million yuan. All five lawsuits are concentrated in Shenzhen and are currently in the first instance trial stage.

However, the 758 million yuan claimed by these 5 investors is far from the total amount. KONKA conducted a "prior accounting error correction" in April 2026, and retrospectively recorded this VAM as a financial liability. The announcement shows that this VAM has a cumulative impact of -1.326 billion yuan on the listed company's profits, including about -1.017 billion yuan directly offsetting the current profit and loss in 2025, and about -309 million yuan of retrospective adjustment to the profit and loss of previous years.

In fact, this is not the first time that KONKA's VAM has exploded. In 2018, when KONKA transferred the equity of its subsidiary "Kai Kai Vision" to Alibaba, it also signed a similar undisclosed IPO VAM agreement. After Kai Kai Vision failed to be listed, Alibaba filed a lawsuit in 2024, forcing KONKA to pay a huge repurchase payment in 2025.

The successive outbreaks of VAM agreements have completely pushed KONKA, which was already mired in huge losses, into a corner.

The End of an Era: From "Color TV King" to ST Labeled

KONKA's current predicament is very lamentable. It is one of the first batch of Sino-foreign joint venture electronic enterprises after China's reform and opening up, and the first-generation benchmark of Shenzhen. As early as 1992, KONKA's A shares and B shares were listed on the Shenzhen Stock Exchange at the same time, and it has been a listed company for 34 years so far.

In 1998, KONKA surpassed another established TV manufacturer Sichuan Changhong and ranked first in the national color TV sales. From 2003 to 2007, KONKA color TV won the championship of China's retail sales for five consecutive years, and its market share once reached 15%. "Choose KONKA when buying a TV" was almost a collective memory of Chinese families in that era.

However, in the following 20 years, KONKA no longer had its former glory. It not only gradually fell out of the ranks of first-tier TV brands, but even its listing status was at risk.

Looking back at history, at its most brilliant time, KONKA made a mistake that many people still sigh for. Around 2007, the global display technology shifted from CRT to LCD flat panel. TCL invested heavily in TCL CSOT to get through the upstream panel manufacturing; Hisense continued to focus on picture quality chips and laser display. However, at this critical node, KONKA invested a lot of capital in real estate, missing the golden window for LCD transformation. It was not until the end of 2008 that KONKA built an LCD module factory in Kunshan, but the first-mover advantage had already been lost.

By 2016, KONKA's color TV shipment market share had dropped to 9%, and it was squeezed out of the first tier. Later, the rise of "Internet TV" brands such as LeTV, Xiaomi and Huawei further squeezed KONKA's living space.

Since 2018, KONKA, whose color TV main business has been declining, has chosen another path full of "gambling flavor" — cross-industry expansion. KONKA announced its transformation into an "investment holding platform", and its business territory expanded rapidly to supply chain industry and trade, environmental protection water services, semiconductors, industrial park development and other fields.

Diversification did bring high revenue growth in the short term. Taking the industry and trade business as an example, it contributed 29.683 billion yuan of revenue in 2021, accounting for 60.45% of KONKA's total revenue that year.

However, since 2022, KONKA's main business has fallen into continuous huge losses. From 2022 to 2025, KONKA's operating profit was -2.221 billion yuan, -2.681 billion yuan, -4.115 billion yuan, and -10.508 billion yuan respectively, losing nearly 200 billion yuan in four years. Under the situation of continuous losses in the main business, KONKA had to recycle funds by transferring the equity of subsidiaries, or even selling land and factories.

By the end of 2025, KONKA's net assets had dropped to -6.083 billion yuan, which was seriously insolvent.

What Cards Does KONKA Still Have?

On April 30, 2026, the Shenzhen Stock Exchange imposed a delisting risk warning on KONKA. To avoid delisting, KONKA must make its net assets positive by the end of 2026, that is, fill the 6.083 billion yuan gap.

This difficulty is almost as high as climbing to the sky. To make things worse, after being labeled as ST, lawsuits against KONKA are pouring in like snowflakes, involving repurchase and compensation claims. The first-half 2026 performance forecast shows that KONKA's attributable net profit to shareholders is expected to be between -130 million yuan and -180 million yuan, and the gap is still expanding.

Under KONKA's devastated financial statements, there are not many valuable assets left in KONKA's hands.

The most valuable one may be its subsidiary KONKA Optoelectronics. This is a semiconductor display enterprise established by KONKA in 2019 in cooperation with Bishan state-owned capital platform of Chongqing. It was officially put into operation in September 2022, and has built a full-process production line from MLED epitaxial chips, mass transfer to module packaging.

The core bottleneck of Micro LED industrialization lies in "mass transfer" — transferring millions of micro LED chips to the substrate accurately. The full-process technology of "stamp + laser + inspection and repair" independently developed by KONKA Optoelectronics has increased the comprehensive yield of mass transfer to more than 99.999%, with the engineering capability of repairing more than a thousand micro chips at a single time. Up to now, KONKA Optoelectronics has completed more than 1900 valid global intellectual property proposals, and ranks first in the world in the number of public patents in the field of Micro LED mass transfer technology in the past three years.

However, technical highlights do not equal commercial success. This business is still in the early stage of industrialization and continues to lose money. MLED chips are currently mainly supplied for KONKA's own TV use, and the expansion of external customers is limited. There is still a gap between technical reserves and large-scale profitability that needs time and capital to fill.

Another noteworthy subsidiary is Kangxinwei. Founded in 2018, Kangxinwei focuses on the independent R&D and design of embedded storage master chips. Its first eMMC 5.1 master chip (KS6581A) has achieved mass production, which can be adapted to smart TVs, mobile phones, automotive electronics and IoT terminals. Under the wave of automotive intelligence and domestic substitution, this self-developed chip has strategic value, but there is still a distance from large-scale revenue.

There is also Feiyue, which is also a once widely known brand. The famous saying goes "Feiyue's advertisement is good, but Feiyue's refrigerator is even better". In 2018, KONKA won 100% equity of the bankrupt and reorganized Henan Feiyue Electric Appliance for 455 million yuan, taking in 90 trademarks, 293 patents and production bases under Feiyue. Under the dual-brand operation of "KONKA + Feiyue", Feiyue still has stable manufacturing capacity and channel foundation in the fields of frequency conversion refrigeration, commercial freezers and deep cold cold chain. This is a traditional asset that can provide stable cash flow, although it is not high-growth.

In addition, KONKA now has a major shareholder with strong strength. In July 2025, Overseas Chinese Town Group transferred all its 29.999997% shares of KONKA to China Resources for free. The controlling shareholder of KONKA was changed to China Resources. After China Resources took over, it gave KONKA a combination of prescriptions from emergency blood transfusion to radical reform, striving to reverse the company's situation as soon as possible. The market generally expects that China Resources will promote KONKA's shell preservation and restructuring through methods such as "perpetual bond + asset disposal + debt-to-equity swap". Whether KONKA will be reborn from the ashes or fade away sadly, the answer will be revealed within half a year.

This article is from WeChat Official Account "China Venture", author: TAO Huidong, editor: WANG Qingwu, authorized for release by 36Kr.