CFIC Introduction
In addition to cautiously introducing plans to expand equity capital such as high transfers, listed companies should focus on improving performance and actively buying back. Investors should also pay more attention to the company's operating dynamics and invest cautiously in penny stocks.
Original title: [Financial Analysis] The alarm bell of par value delisting rings frequently, private equity: prudently invest in penny stocks
July's A-share market is coming to an end, and in the hot summer, investors have attracted the attention of both the "demon stocks" public transportation, which has risen nearly 300% in a single month, as well as the high-dividend varieties such as Yangtze River Power and the four major banks, which continue to refresh historical highs. But on the other side of the market, there are many companies whose stock prices have repeatedly hit new lows, and some of them have even continued to struggle with the red line of delisting at face value.
So, how should listed companies deal with the frequent risk of delisting at face value, and should investors set red lines to avoid the corresponding risks? A number of people in the private equity industry told Xinhua Finance that in addition to cautiously launching plans to expand equity such as high transfers, listed companies should focus on improving performance and actively repurchase. Investors should also pay more attention to the company's operating dynamics and invest cautiously in penny stocks.
Guanghui Automobile's "shell" failed to delist at face value, and the alarms came and went
As an automobile giant with a market value of 100 billion yuan, Guanghui Automobile closed on July 17, with a total market value of only 6.466 billion yuan.
In July, Guanghui Automobile's share price fluctuated sharply below 1 yuan most of the time, including July 5 and July 15, the intraday stock price once returned to more than 1 yuan, but the closing price was lower than 1 yuan.
On the evening of July 17, Guanghui Automobile announced that because the closing price of the company's shares was lower than 1 yuan for 20 consecutive trading days, Guanghui Automobile and Guanghui convertible bonds were suspended from the opening of the market on July 18.
The failure of Guanghui Automobile's "shell war" has sounded the alarm for a large number of companies whose stock prices only slightly exceed the warning line of 1 yuan.
On July 24, Yongtai Energy, a Shanxi coal power giant with a total market value of more than 20 billion, staged a shocking intraday jump, and its stock price once fell to 1.01 yuan. The company hurriedly issued an announcement at noon announcing that the repurchase ceiling would be raised to 1 billion yuan, and on the evening of the same day, Yongtai Energy announced the suspension of trading and planned major events.
On July 25, auto parts supplier Shanzi Hi-Tech fell for the fourth consecutive time, and the stock price fell below 1 yuan, and the company's stock price fell to 0.77 yuan the next day, but with the intervention of a huge amount of bottom-buying funds, it closed up more than 6% on the same day. Subsequently, Ye Ji, chairman of the company, issued a letter to all shareholders: insist on doing the difficult but right thing, apologized to investors, and said that he had applied to the board of directors to suspend personal salaries until the stock price returned to more than 1.6 yuan per share. On July 29, Shanzi Hi-Tech announced the "Rescue Entry" and announced that it had signed a "Strategic Cooperation Agreement" with Zheshang Asset Management. The company's stock has recently closed three consecutive daily limits in three trading days, returning to above 1 yuan.
As of 10:40 a.m. on July 31, among the non-ST companies still in trading, only the share price of Lingnan shares is still below the 1 yuan mark (the closing price has been below 1 yuan for 8 consecutive trading days), and many companies such as Yatai Group, Jishi Media, Oriental Group, etc., have returned to above 1 yuan, and the wave of face value delisting alarms has come to an end temporarily.
High transfer has become a double-edged sword, and doing a good job in performance and repurchase is the right way
So, what do industry insiders think about the recent emerging risk of delisting?
A number of people in the private equity industry told Xinhua Finance that par value delisting is an important part of the delisting system of listed companies, which is of great significance for improving the quality of listed companies and promoting the healthy development of the capital market. The reason why many companies face the risk of delisting at face value has a lot to do with the fact that A-share listed companies were once keen on high transfers.
Yao Xusheng, a wealth financial planner at Paipai.com, said that many listed companies in traditional industries have been keen to increase the share capital to improve the activity of the company's stock trading, but in the long run, if the company's fundamentals cannot support the high stock price, the stock price may continue to fall, increasing the risk of delisting at face value. In addition, high turnovers lead to an expansion of share capital, and if the company's profitability does not grow in tandem, earnings per share will be diluted, which will further affect the stock price.
"High transfer was once used by listed companies to attract investors and improve stock liquidity, but with the implementation of the par value delisting system, it may increase the risk of delisting." Liu Yuqi, chief investment officer of Blacksaki Capital, said that for companies in traditional industries with solid fundamentals but low stock prices, the pressure of delisting at face value may force them to reconsider their capital structure and dividend policy. "Listed companies can respond by optimizing their capital structure, increasing the dividend ratio to attract long-term investors, and buying back shares to stabilize stock prices if necessary."
"For listed companies, the focus is on improving performance, rather than carrying out high transfers to match market speculation." Yi Xiaobin, director of equity investment at Shunshi Investment, believes that the par value delisting system has also had a significant effect on curbing the high transfer speculation that was once prevalent in A-shares, and will help listed companies return to fundamentals. At the same time, he suggested that for the risk of delisting at face value, the best way for listed companies to deal with it is to take out real money for repurchase, in addition to doing a good job: on the one hand, it provides confidence for investors; On the other hand, the cancellation of repurchased shares will also increase the level of earnings per share, thereby raising the stock price.
Do penny stocks need to set investment red lines?
So, in the actual investment process, will private equity institutions set a red line for penny stock investment?
"Subjectively, we don't have a special red line for penny stocks, but in practice we do not have a position in penny stocks." Liu Yuqi said that he will still adhere to the principle of value investment, and comprehensively consider the company's fundamentals, industry prospects, market sentiment and other factors to make more comprehensive and prudent investment decisions.
Yi Xiaobin also said that the company will not set specific red lines in actual investment, because different industry standards cannot be unified. "But for penny stocks below 2 yuan, we will be more vigilant and try to participate as little as possible." He stressed that especially when the market is relatively thin and the liquidity is poor, more disposal space may be reserved to avoid unavoidable wrongful killings.
Yao Xusheng suggested that setting red lines to avoid penny stocks is a common risk control strategy, and investors can set these red lines according to their own investment strategy and risk tolerance combined with the company's fundamentals, market performance, industry prospects and other factors. "Investors should pay close attention to the business dynamics of the invested companies, and need to be vigilant for stocks with a stock price of less than 3 yuan, and adjust their positions in time to reduce risks if there is an abnormality."
Source of this article: Xinhua Finance
Author: Carrie Lam
WeChat editor: Wang Ziqing
Introduction to "Risk Warning· Financial Edition
Finance is the lifeblood of the modern economy, and financial stability leads to economic stability. Financial security is related to the overall development of national and regional enterprises, and it is necessary to maintain a high degree of vigilance against financial risks at all times, enhance the awareness of risk prevention, respond scientifically, and prevent them from occurring. Under the guidance of government authorities, relying on the advanced big data public opinion monitoring system and a professional analyst team, the "Risk Early Warning · Financial Edition" produced by China Financial Information Center summarizes, analyzes, and judges the risk public opinion in different fields and categories of the financial industry, and provides authoritative, professional, practical, timely and effective financial risk public opinion monitoring, research and judgment, early warning and response suggestions for financial regulatory departments, factor markets, financial institutions, listed companies, industry associations, various enterprises, colleges and universities, research institutions, etc. 18,000 per year, once a week, released every Friday.
Latest Report:
【July 2024 Issue 4】Issue 136: Stock Pledge Repurchase Business Becomes a "Dark Thunder" for Securities Firms
【July 2024 Issue 3】Issue 135: Ping An Bank's "disguised layoffs" turmoil
【2024 July 2nd Issue】Total No. 134: The Central Bank Makes a Move, Where Will the "Debt Cow" Go?