SCHEDULE 13D/A: Zhihu Inc. Shareholder Plus Channel Limited Increases Stake to 7.0% Through Continued Repurchases

Plus Channel Limited and Kastle Limited, reporting persons for Zhihu Inc., have increased their beneficial ownership of Class A ordinary shares to 7.0% through ongoing share repurchases funded by the Issuer's working capital.

Summary

• This document is Amendment No. 2 to the Schedule 13D filing by Plus Channel Limited and Kastle Limited concerning their beneficial ownership of Zhihu Inc.'s Class A ordinary shares.
• The Reporting Persons continued to conduct share repurchases on both the New York Stock Exchange and the Stock Exchange of Hong Kong Limited.
• Funds for these share repurchases were provided by Zhihu Inc. from its working capital.
• As of February 28, 2025, the Reporting Persons collectively own 17,514,458 Class A ordinary shares of Zhihu Inc.
• This aggregate ownership includes 16,646,958 Class A ordinary shares held in the form of 5,548,986 American Depositary Shares (ADSs) and 867,500 Class A ordinary shares held directly by Plus Channel Limited.
• The total beneficial ownership represents 7.0% of the 249,124,676 issued and outstanding Class A ordinary shares of Zhihu Inc. as of February 28, 2025.
• A specific repurchase of 98,646 Class A ordinary shares (equivalent to 32,882 ADSs) on May 29, 2025, led to the increase in shareholding to 7.0%, which is considered a material change.
• The Class A ordinary shares beneficially owned by the Reporting Persons are held on trust under Zhihu Inc.'s share incentive plan adopted in 2022.

Sentiment

Score: 7

Explanation: The continued share repurchases, funded by working capital, suggest financial health and a commitment to shareholder value, which is generally positive. The shares are held for an incentive plan, aligning interests.

Positives

• Continued share repurchases indicate management's confidence in the company's valuation and a commitment to returning value to shareholders.
• The increase in beneficial ownership by entities holding shares for the Issuer's share incentive plan aligns their interests with long-term shareholder value.
• Repurchases are funded by the Issuer's working capital, suggesting financial liquidity and stability.

Future Outlook

The document primarily reports past and current ownership status and share repurchases. The shares are held on trust under the Issuer's share incentive plan adopted in 2022, implying a long-term holding strategy for employee incentives.

Management Comments

• "The Reporting Persons hold the Class A ordinary shares they beneficially owned on trust under the Issuer's share incentive plan adopted in 2022."

Industry Context

Share repurchases are a common corporate finance strategy used by companies to return value to shareholders and can signal management's belief that the stock is undervalued. For a company like Zhihu, this could indicate a strategic focus on shareholder returns alongside growth investments.

Related Party Transactions

• Share repurchases were conducted by Plus Channel Limited and Kastle Limited, which hold shares on trust for Zhihu Inc.'s share incentive plan.
• Funds for these repurchases were provided by Zhihu Inc. from its working capital.
• Plus Channel Limited is wholly-owned by Kastle Limited, indicating a direct relationship between the reporting persons.

Stakeholder Impact

• Shareholders: Potential positive impact due to reduced share count (if shares are retired) or increased alignment of interests if shares are for incentive plans. Share repurchases can potentially boost Earnings Per Share (EPS).
• Employees: Positive impact as shares are held for the Issuer's share incentive plan, potentially increasing employee ownership and motivation.

Key Dates

Recommendation

Keywords

Zhihu Inc., Class A ordinary shares, Schedule 13D, share repurchase, beneficial ownership, Plus Channel Limited, Kastle Limited, SEC filing, ADSs, share incentive plan