With the performance of "flash crash of 74% on big volume," New Focus (00360) is clearly the "new focus" in the current Hong Kong stock market.
On June 3rd, the previously unknown New Focus suddenly plunged in the last trading period, fell nearly 85% during the day, and hit a new low of 0.019 Hong Kong dollars, ending the day still struggling, with a huge drop of 74.40%, closing at 0.032 Hong Kong dollars. However, the next day, on ****, New Focus staged a turbulent trend again: the stock opened low with a 12.5% decline in the morning, and then its price quickly rose to a high of 0.037 Hong Kong dollars, with an increase of over 15%. However, the so-called "fruit of victory" did not last long. Shortly after, the stock price quickly plummeted, falling over 12%, and by the end of the day, its stock price fell 9.38% to 0.029 Hong Kong dollars, with a total market value of HKD 499 million.
On the next day, ****, New Focus had a trading volume of 585 million shares, with a turnover of HKD 18.13 million. Compared with the previous dismal zero trading volume, today's trading volume of over 100 million shares means that its stock price is not without value.
In fact, as a "fractional stock" with a stock price of no more than 1 Hong Kong dollar, New Focus is prone to being eyed by speculators as a stock to manipulate, resulting in a roller coaster ride in stock prices. Most recently, this happened on October 16th, 2023, when its stock price recorded an astonishing 57% increase, followed by a 22% drop the next day.
However, as far as the investors are concerned, the recent drop in New Focus's stock price is different, as institutions played a brilliant "redemption" drama behind the stock's collapse.
On ****, New Focus had a trading volume of 585 million shares, with a turnover of HKD 18.13 million. Compared with the previous dismal zero trading volume, today's trading volume of over 100 million shares means that its stock price is not without value.
In addition, according to Tencent's stock data, the total net inflow of New Focus was 817,000, with individual investors net inflow of HKD 2.951 million and block orders net outflow of HKD 2.134 million. Obviously, behind the sharp drop in New Focus, someone is actively "salvaging."
According to the proportion of brokers' holdings of New Focus stock, on June 3rd, the closing price of New Focus saw Huafu Jianye Net Buy 64,000 shares, with a holding of 1.1569 billion shares and a shareholding ratio of 6.71%, and **** buying 180,000 shares, with a holding of 188,000 shares.
As buyers of New Focus's stock price plunge, the move by Huafu Jianye and **** is no less than that of "white knight".
However, unfortunately, the praying mantis failed to stop the passing chariot.
Why is this?
According to the observation of the Wise Finance APP on the Chinese mainland, the reason why the sharp drop in New Focus's stock price was not "propped up" is that the chips are concentrated in the hands of a small number of people.
As of December 31st, 2023, the five major shareholders of New Focus were Qingdao Guorui New Fox Investment Center (Limited Partnership), CDH Fast One Limited, Hong Kong Prosper Way Investment Ltd, Wei Law (Luo Wei), and Vantage Fund Advisor, with shareholding ratios of 60.692%, 9.379%, 8.931%, 7.371%, and 0.146%, respectively. Among them, Luo Wei reduced his holdings by 59.88 million shares on January 27th this year. Currently, his shareholding ratio is 6.96%, with a shareholding of 1.2 billion shares.
It is not difficult to see that the company's largest shareholder, Qingdao Guorui New Fox Investment Center (Limited Partnership), holds a high stake of 60.692%. As a "small-cap stock," New Focus is obviously in a state of high concentration of equity.
In general, a high concentration of equity can lead to a very small amount of shares available for circulation in the market. This means that when investors sell a small amount of shares, it will cause the stock price to fluctuate violently.
Of course, in addition to the above reasons, the long-term losses of New Focus's fundamentals are undoubtedly one of the major causes of the drag on its stock price rise.
It is understood that New Focus is mainly in the automobile dealer track, the main business is automobile sales and after-sales service, including selling cars, providing after-sales services, distributing car insurance products and financial products, as well as R&D, manufacturing and sales of automobile electronics and power products. As of the end of 2019, the company had 34 automobile dealership outlets, 9 wholesale service outlets, and 2 manufacturing factories.
Since the end of 2022, the automotive industry has been fiercely competitive. In the market environment where many car companies are cutting prices to increase sales volume, the pressure to control costs has also spread to the entire automotive industry chain. From the financial reports of several listed automobile dealers, the increase in sales volume has not led to an expansion of revenue scale, and the gross profit of both new and used cars has declined to varying degrees, and the problem of tight funds has also been further exacerbated.
This external factor's adverse impact has obviously spread to New Focus's fundamentals.
In the past five years, the company has consistently failed to break out of the loss quagmire. The performance announcement shows that the company's revenue in 2023 was about RMB 555 million, a decrease of 6.13% year-on-year; the shareholders' attributable loss was RMB 87.32 million, a year-on-year expansion of 80.03%; and the loss per share was 0.51 cents. The company stated that the increase in losses was mainly due to the increase in expected credit losses for trade receivables and other receivables.
Looking at the segmented business, the comprehensive revenue of the company's manufacturing and trading business is about RMB 412 million, a year-on-year decrease of about 8.51%, mainly due to the impact of the Sino-US tariff policy on manufacturing foreign trade customers, resulting in a decline in export sales revenue; The comprehensive revenue of the automotive sales and service business is about RMB 143 million, a year-on-year increase of about 1.45%, mainly due to the company's part of the automotive sales and service stores' income increased after the end of the COVID-19 epidemic prevention and control policy.
It can be seen that the small scale of the business and the perennial loss situation are also the biggest constraints on the rise of New Focus's stock price.
In summary, it is not difficult to find that New Focus's crash this time was not unexpected as it was not supported by Huafu Jianye and ****. However, it should be noted that New Focus, as a characteristic stock of the stock market, with obvious characteristics such as high concentration of equity, long-term light trading volume, roller coaster stock price, small market value, and long-term losses of the company, whether to save or not is just a game of the stock market, which requires caution.