I wonder if any investors still remember the slump of Changying Group (00689) in mid-2017? As the person behind the company is Sun Shouhong, the shell king, the market has many questions and puzzles about the incident. However, after a series of operations, such as the issuance of new shares by the company, the change of ownership of the CEO, the transfer of large shares and the intervention of funds from China Shipbuilding heavy Industry, there are finally some signs of the whole incident.

Review of the 60% collapse of Changying

Considering that it was the Dragon Boat Festival in 00689, Changying Group (2017) remembered qu Yuan by "jumping off a cliff". On May 29, 2017, the company's share price suddenly plunged nearly 18%, and the Dayin line crossed the 5-day, 10-day and 20-day moving average, completely cutting off a "head" of the previous trend.

At the opening of trading after the May 31 holiday, Changying Group once again halved in one day, and its share price fell by 50% to HK $0.29 per share in one breath, down 60% from its previous high of HK $0.72. What makes investors more interested is that the controller behind Changying Group is Sun Nuohong, who is known as the "shell king".

Speaking of Sun Shouhong, he is the number one person in the Hong Kong stock market. In 2007, he began to take advantage of the Yunnan tin industry, which led to a surge in Baoxing Investment (now 00263 controlled by Gaofu Group). As a major shareholder of Baoxing Investment, Sun Nuohong made a lot of money in his first bucket of gold.

Since then, Sun Shouhong made a lot of money in a number of fairy stocks by using various financial skills. He invested six years in Bailingda International Holdings (02326) and earned nearly HK $1.6 billion (the same as the unit below). It took less than four months in 2015. Berlingda achieved a terrorist increase of nearly 0.026 times from HK $0.026 per share to HK $3.19 per share.

In addition, a number of immortal stocks, such as Digital Kingdom (00547) and Yingsheng Science (00209), have the figure of Sun Changhong.

It is such a legendary man who chose to spend 200 million yuan in August 2016 to sweep goods directly in the secondary market at a price of nearly 0.168 Hong Kong dollars per share. in the end, Sun holds about 1.212 billion shares in Changying Group, with a shareholding ratio of 27.76%. This was followed by a surge of nearly 50 per cent.

At the same time, Sun coarse Hongli resisted the offer of HK $0.145 / share by Zhang Jinbing, one of the major shareholders, and issued an offer of HK $0.168 / share, which was finally accepted by Changying. In October 2016, Sun Shouhong officially became chairman of Changying's board of directors with a 58% shareholding.

After that, the share price passed smoothly until the announcement of the company's results on March 30, 2017, which opened the prelude to a big rally, announcing that the company's loss was down by as much as 90% year-on-year, and then the share price nearly tripled. This is followed by two horror lines that gobble up all the previous gains.

There was a lot of talk in the market at that time, but due to the lack of any news from the company, there was no reasonable explanation for the incident. Until 2018, behind the frequent actions of the company, it seemed to reveal some information about the slump that year.

Source: Futu Securities

Everything may have been settled in May 2017, and the investment of central enterprises may be the ultimate goal.

As the main business of the company, oil exploration has made no achievements so far. Zhitong Financial APP learned that Changying Group actually does not live up to its name. Although the company is called "Changying", the company has been in a state of loss for seven consecutive years since 2010, especially when the loss reached a terrifying 3.35 billion yuan in 2012, when the company's market capitalization was only more than 4 billion yuan.

It all starts with an oil field bought by the company.

The company spent 3.3 billion yuan on a 51% stake in an Argentine oil field in 2009, which was the source of a nightmare. Driven by economic environment, political reasons and other factors, this oil field has become a fatal injury to the company, directly leading to an impairment loss of 3.1 billion yuan in 2012. Since then, different amounts of impairment provisions have been made every year.

The company's loss shrank by 90% to 31 million yuan in 2016. in fact, it is not an improvement in the company's main business. Financial data can see that the company's revenue scale and gross profit margin are declining. the main reason for the decrease in losses is that the impairment of exploration and oil and gas assets completely disappeared in 2016, a decrease of nearly 210 million yuan compared with 2015.

The story of Changying Group in 2017 was written by Sun Shuohong. Perhaps this is the beginning of the wonderful story.

The allotment of new shares was the first big thing Changying did after the crash.On June 16, 2017, Changying Group announced that it would place a maximum of 651 million new shares to no less than six placements at a price of HK $0.308 each, a discount of about 18.95% to the closing price on the last trading day. The placing shares account for about 14.91% of the company's existing issued share capital and about 12.97% of the expanded issued share capital.

On the basis of the increase in operating profits, the company's net loss increased by 1.14 times compared with the same period last year, which seems to be an explanation for the slump to the market.During August 2017, the company announced a net loss of HK $60.943 million for the first half of the year, an increase of 1.14 times compared with the same period last year. However, looking through the financial data of Zhitong Financial APP, it was found that the company's classified performance not only changed from loss to profit of HK $16 million, but also other income became positive, and corporate expenditure decreased by 88% to HK $2.6 million compared with the same period last year. However, a total of HK $73.26 million of share-based payment expenses directly pulled the total loss to its current size.

It's like deliberately giving the market a reason to plummet before, and what happened after that almost exposed most of the company's intentions.

The great change of senior executives cooperates with the frequent increase and reduction of major shareholders' holdings, and the story comes to the most exciting part.Zhitong Financial APP learned that Chen Yuyi, the company secretary, was the first to leave on November 10, 2017, and the company announced the departure of its chief executive, Su Jiale, on January 17, 2018.

Since then, Sun Shouhong, the controlling shareholder, has been reducing his shares every day from January 22 to 26. Up to now, Sun has reduced his stake in the company by nearly 26%, and now holds 23.76% of the company.

It is significant that Changying Group was increased by China Shipbuilding Capital, a capital platform owned by China Shipbuilding heavy Industry, a large central enterprise, on January 25th, and its shareholding has now reached 7.76%. The largest increase was made by Liu Zhiyu, who announced on January 26th that he would take over as chief executive. Liu Zhiyu currently owns 20.79% of Changying Group.

This means that when Liu Zhiyu takes over most of the equity and the post of chief executive at the same time, China Shipbuilding heavy Industry, a central enterprise, has officially entered, and if coupled with the particularity of Liu Zhiyu in senior management, it seems to be able to connect all the events.

According to WIND, almost all of the current members of the company's board of directors followed Sun on October 18, 2016, except for Liu Zhiyao, who took office on May 5, 2017, which was the high point before the 60% collapse of Changying and the time when executives collectively acquired a stake, and Liu Zhiyu, the newly appointed executive, got a 1% stake, far more than anyone else.

To sum up, Liu Zhiyao appears as a key node and the protagonist of the key node, which may be an important hub for Changying Group to attract central enterprises to invest, and a series of events after May 2017 may just pave the way for central enterprises to invest. At this point, the 60% collapse of Changying Group in 2017 finally has some prospects, and we have to sigh that the routine played by Sun Nouhong, the "shell king", is really a big deal. (Wen / Jiang Songhua / tr. by Phil Newell)