On September 17th, Shandong Zhongjiaoxu Chuang Co., Ltd. (Zhongjiaoxu Chuang) announced that the company’s major shareholder reduced its holdings of the company’s stock, with the chairman cashing out 1 billion yuan. Since April 18th, Zhongjiaoxu Chuang’s stock price has increased by a cumulative 421.64%.
In the evening of September 17th, Zhongjiaoxu Chuang issued a notice regarding the change in shareholding proportion exceeding 1% integer multiples by specific shareholders and their concerted actors. The announcement stated that on September 17th, the company received notification from specific shareholders such as Suzhou Yixingfu Enterprise Management Center (Limited Partnership) and its concerted actor Liu Sheng, Suzhou Yunchangjin Enterprise Management Center (Limited Partnership), that these shareholders had reduced their total shareholding through centralized trading on the stock exchange by an amount exceeding 1% integer multiples.
The announcement detailed the quantity of shares reduced by shareholders and the proportion of shares held after the reduction.
According to a report by Daily Economic News on September 18th, since April 18th this year, Zhongjiaoxu Chuang’s stock price has surged by 421.64%. Additionally, a report by Financial Times on September 18th stated that in just the third quarter of this year, Zhongjiaoxu Chuang’s stock price skyrocketed from under 150 yuan per share to nearly 450 yuan per share. Based on the average price of around 300 yuan per share in the third quarter, the cash-out amount by Yixingfu likely exceeded 1 billion yuan. According to Tianyancha data, one of the principal actual controllers of Yixingfu is Liu Sheng, the chairman and CEO of Zhongjiaoxu Chuang.
Furthermore, public information revealed that Wang Weixiu, the actual controller of Zhongjiaoxu Chuang, and his son Wang Xiaodong had also reduced their holdings multiple times from August 27th to September 11th, selling nearly 500,000 shares at an average selling price of around 400 yuan per share, realizing approximately 200 million yuan.
On September 18th, the stock rose by 0.79%, closing at 409.4 yuan per share, with a trailing twelve months P/E ratio still exceeding 66 times and a P/B ratio approaching 20 times.
In response to this, investment advisor Li Qian from Wisdom Research and Intelligent Investment Technology Co., Ltd. analyzed to Financial Times that Zhongjiaoxu Chuang has seen a significant cumulative increase since April, and the shareholders reducing holdings around 400 yuan per share is a profit realization behavior in the early stage, which may exert psychological pressure on the stock price in the short term.
Some industry insiders are concerned that the excessive increase in stock price has overdrawn the growth rate of the performance. A fund manager of public offering told Financial Times that the valuation of the photovoltaic module sector is already at a high level, with a several-fold increase in the past six months, some of which have exhausted the future performance. Despite the good fundamentals, investors need to pay attention to the timing risk brought by major shareholders reducing holdings. If one buys in now, in case the market sentiment reverses, one might get trapped for a period of time.
Shandong Zhongjiaoxu Chuang Co., Ltd. is a company mainly engaged in the manufacturing of special equipment with its headquarters in Longkou, Shandong. It went public on the Shenzhen Stock Exchange’s Growth Enterprise Market Board on April 10, 2012, and is a leading enterprise in mainland China’s photovoltaic module industry.