Editor’s Note
This article examines the speculative surge in Shenzhen Zhonghua A’s stock, highlighting regulatory scrutiny and market volatility. It underscores the disconnect between corporate transparency and investor behavior in rapidly fluctuating markets.
Starting from January 9th, Shenzhen Zhonghua A (000017.SZ) saw its stock price surge unexpectedly, securing 12 limit-up boards within 13 trading days. During this period, the Shenzhen Stock Exchange issued two inquiry letters and placed the company’s trading under key monitoring, yet failed to curb the speculative fervor. Since January 9th, the stock has accumulated a staggering increase of 186%, earning the title of the first speculative stock of 2024.
Shenzhen Zhonghua A operates in the booming gold and jewelry industry, has loose ties to the lithium battery concept, and harbors restructuring expectations. However, these factors alone seem insufficient to justify such a frenzied stock price surge.
On January 26th, a reporter from Jiemian News visited the company’s office located on the 8th floor of the Shuibei Jinzuo Building in Shenzhen. The office houses a jewelry and gold exhibition area of approximately 200-300 square meters, featuring several large display counters.
Regarding the consecutive sharp rises in Shenzhen Zhonghua A’s stock, a staff member stated that employees within the company had also noticed the situation, but the reasons for the surge were unclear to them.
Another staff member informed the Jiemian News reporter. Regarding the background of the buying funds behind this stock price surge, the staff member added, “In our response to the inquiry letter, we conducted an internal self-inspection and found no trading of company shares. Secondary market fluctuations are influenced by many factors, and we cannot comment.”
As a bicycle enterprise established in the 1980s, Shenzhen Zhonghua A went public as early as 1992 and was once called the “first bicycle stock.” In recent years, facing the continuous decline of its original bicycle business, the company sought cross-border transformation for self-rescue.
In 2019, Shenzhen Zhonghua A ventured into the jewelry and gold business, which subsequently became its core operation. In the first three quarters of 2023, this business accounted for nearly 99% of the company’s total revenue. Specifically, the company achieved operating revenue of 349 million yuan in the first three quarters of 2023, with jewelry and gold business revenue contributing 343 million yuan, accounting for 98.55%.
However, the company’s profitability remains weak. From 2018 to 2022, the company reported losses in four out of five years, with a cumulative net loss of approximately 14.6 million yuan over this period. In the four years since entering the gold and jewelry industry (2019-2022), Shenzhen Zhonghua A’s net profit was mostly in a loss state.
Shenzhen Zhonghua A underwent restructuring in 2012 due to severe insolvency, which was completed in 2013. At that time, the company set conditions in the restructuring plan for introducing a restructuring partner, hoping to restore sustainable operation and profitability through asset restructuring. The condition was that the assessed net asset value of the partner should not be less than 2 billion yuan, with net profit in the year of the major asset restructuring implementation not less than 200 million yuan.
However, ten years have passed with no news on the restructuring matter. Amid the recent stock price surge, Shenzhen Zhonghua A’s restructuring has once again attracted market attention. The company stated in multiple recent stock abnormal fluctuation announcements that, as of now, no suitable restructuring partner has been selected.
From the perspective of secondary market performance, Shenzhen Zhonghua A was one of the stocks neglected by the market throughout 2023, with its price moving sideways for a long time. It wasn’t until January 9th, 2024, that the stock price began to rally.
Notably, before this surge, among Shenzhen Zhonghua A’s top ten circulating shareholders, natural person Liu Ligang continuously increased his holdings in the second and third quarters of 2023, accumulating an additional 416,100 shares. Apart from Liu Ligang, other major shareholders’ holdings remained unchanged since 2023. Liu Ligang first appeared in the company’s top ten circulating shareholder list in Q1 2023. By the end of Q3 2023, he held 3.2297 million shares, accounting for 0.47% of the total share capital.
The abnormal surge in Shenzhen Zhonghua A’s stock price also drew attention from the Shenzhen Stock Exchange. From January 15th to 19th, the exchange placed Shenzhen Zhonghua A on its key monitoring securities list, and continued this monitoring from January 22nd to 26th. Simultaneously, the exchange issued inquiry letters on January 17th and 23rd.
Zhang Yi, Chief Analyst at iiMedia Consulting, told Jiemian News.
Wang Zhibin, a lawyer at Shanghai Minglun Law Firm, pointed out that stock prices are influenced by multiple factors, among which a company’s fundamentals are the core factor determining its long-term stock price performance. When a stock price rises sharply in the short term without fundamental support, chasing the rise is akin to “taking a chestnut from the fire.” Ordinary investors should approach cautiously and avoid blindly following the trend.
