【Comment】Under the crisis of delisting at face value, penny stocks should play a more powerful self-help "combination punch"

Interface News

2024-06-30 15:04Official account of Interface News

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01 HNA Holdings' share price touched the red line of 1 yuan, facing the crisis of delisting at face value, and penny stocks should play a more powerful self-help "combination punch".

02 At present, there are 41 stocks whose stock prices are below the red line of 1 yuan, and 195 stocks between 1 yuan and 2 yuan, of which 8 large-capitalization companies are operating well.

03 Due to the delisting rules at par value, the rapid decline in the stock price of penny stocks reflects the panic psychology of the market, and listed companies should do a good job in information disclosure management and repurchase cancellation as soon as possible.

04However, some penny stock listed companies lack sincerity, determination and strength in the process of self-rescue, resulting in a continuous decline in stock prices.

05 To this end, the regulatory authorities can consider suspending some stocks, giving time to raise funds to buy back to save themselves, or introduce relevant policies to allow profitable companies to merge shares.

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Interface News Reporter | Yin Jingfei

On June 28, HNA Holdings (600221. SH) plummeted 6.42% to close at 1.02 yuan per share, touching the red line of 1 yuan, with the latest market value of 44.08 billion yuan. Since June, the share price of HNA Holdings has accelerated and fluctuated lower, falling by 25% in the month. Once the closing price of HNA Holdings is lower than 1 yuan per share for 20 consecutive trading days, it will be forced to delist in accordance with the relevant rules.

There are voices in the market that the current one-yuan shares have increased significantly, and the two-yuan shares are rapidly moving closer to the one-yuan shares, and the three-yuan shares are magnetically attracted into two-yuan shares. In the face of the "1 yuan delisting" rule, once the company's stock price falls to a low level of 2 yuan, it is easy to cause panic, leading to the market "irrational killing", resulting in a lose-lose tragedy for listed companies and investors.

From a fundamental point of view, as the fourth largest airline in China, HNA Holdings turned losses into profits last year, and its net profit increased by more than three times in the first quarter of this year. Specifically, the company's net profit attributable to the parent company in 2023 will be 311 million yuan, compared with a large loss of 20.247 billion yuan in the same period last year. Net profit in the first quarter of this year reached 687 million yuan.

As of the close of trading on June 28, there were 41 stocks with stock prices below the red line of $1, and 195 stocks between $1 and $2. Among them, the share price is less than 1.5 yuan / share but the market value of more than 10 billion yuan of non-ST companies up to 8, in addition to HNA Holdings, the other 7 companies are Baotou Steel Co., Ltd. (600010. SH), Liaogang Co., Ltd. (601880. SH), Yongtai Energy (600157. SH), Greenland Holdings (600606. SH), BBMG Group (601992. SH), Shanzi Hi-Tech (600981. SZ) and Shandong Iron and Steel (600022.SH), of which Baotou Iron and Steel has the highest total market capitalization, about 63.6 billion yuan.

As of the close of trading on June 28

What do you think about the delisting crisis of the par value of these penny stocks? First of all, we should see that in the process of perfecting the capital market, we should not "choke on food."

In the past few years, the A-share market has been a mixture of listed companies. As one of the criteria for triggering delisting, par value delisting is relatively objective, operable and measurable, which can eliminate inferior companies from A-shares in a timely manner and promote a virtuous cycle in the market.

Judging from the current objective effect, on the surface, the company was delisted because the par value did not meet the standard, but the root cause of its delisting may not be the case. Behind the delisting of 1 yuan, many companies have many problems and disadvantages in terms of business strategy and financial status, or involve internal control, or involve finance, or face major uncertainties in operation.

Judging from the data, since the beginning of this year, more than 30 A-share companies have touched the par value delisting standard, among them, except for Zhengyuan shares (600321. SZ), Zhongyin Cashmere (000982. SZ), all of which are ST and *ST shares, and these companies have many problems and risks.

Taking *ST Chaohua (002288.SZ) as an example, on June 26, *ST Chaohua has locked in the "face value refund", and the company's performance has begun to lose money since 2022, and the 2023 financial report has been issued with no opinion, and the internal control report has been issued with a negative opinion, and at the same time, the shares of the controlling shareholder and the actual controller have been enforced, and the company and the actual controller have been placed on file for investigation.

Second, for penny stocks that are "lying on the gun", the rapid decline in stock prices is more a reflection of confidence issues and market panic. At present, the more core and urgent question is how to respond to these low-stock companies with growth potential in a timely and rapid manner, so as to reduce or even avoid the stampede effect triggered by the low stock price as much as possible, and thus avoid delisting at par value.

These listed companies should quickly play a "combination punch", rather than relying on a single move to deal with it mechanically.

First, under the premise of legal compliance, do a good job in the management of information disclosure. Focusing on institutional investors through roadshows, the company's value is quickly and effectively delivered to the market.

The eight large-capitalization companies such as Baotou Iron and Steel Co., Ltd., Liaoning Port Co., Ltd., and Yongtai Energy Co., Ltd., which are mainly held by institutions, are mainly held by institutions. For example, as of the end of the first quarter of 2024, the top ten shareholders of Baotou Iron and Steel Co., Ltd., Greenland Holdings, and Liaoning Port Co., Ltd. are all institutions, with a total shareholding ratio of 61.76%, 79.18%, and 79.53% respectively; The top 9 shareholders of BBMG Group are all institutions, with a total shareholding ratio of 74.62%.

Institutional shareholding means that the difficulty of roadshows for listed companies will be reduced, and the effectiveness of roadshows will also be improved.

Second, whether a benign company with a low stock price can increase and stabilize its stock price depends on the sincerity, determination and strength of the listed company and even the major shareholders, directors, supervisors and senior executives behind it to save themselves.

Listed companies should do a good job of repurchase and cancellation, rather than flickering repurchase and slogan repurchase. For example, a low-stock listed company said that it would repurchase in the next 3 to 6 months, but only 20 trading days after the stock price touched the red line of 1 yuan to save itself, and the repurchase within 3 to 6 months shows that its self-help motivation is insufficient; Some saw that the stock price did not rebound after buying back, so they immediately died down. The sincerity and determination to save themselves are insufficient, and they can only bear the end of the continuous decline in stock prices.

Taking Baotou Steel Co., Ltd. as an example, the stock price closed at 1.4 yuan per share on June 28, with a market value of 63.6 billion yuan, a circulating share capital of 31.5 billion shares, a circulating market value of 44.1 billion yuan, and a market value of 39.3 billion yuan corresponding to the shareholding ratio of the top ten shareholders. As of June 19, 2024, Baotou Steel has repurchased a total of 12.9 million shares, and the total amount paid is 20.0026 million yuan. As of the end of the first quarter of this year, the monetary funds on its account reached 8.137 billion yuan, and Baotou Steel Co., Ltd. can also come up with greater repurchase sincerity to enhance and stabilize the stock price.

Of course, it cannot be ruled out that the listed company itself has no sufficient funds to repurchase and write. Taking HNA shares as an example, as of the end of the first quarter of 2024, it has 9.375 billion yuan of monetary funds on its books, but the non-current liabilities due within one year are as high as 14.65 billion yuan. In this case, is the major shareholder behind HNA shares determined enough to come up with real money to save itself?

From a policy perspective, in the face of potential companies with low stock prices, their own funds are not enough to drive the stock price, the regulatory authorities can consider suspending some stocks and giving them a certain period of grace to raise funds to repurchase to save themselves; Or introduce relevant policies to allow profitable companies or companies with continuous dividends to merge shares.

For low-stock price companies, how to really attract patient capital and establish long-term investor confidence is more about running the company itself and letting the investment see long-term value.

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