Source: Broker China Author: Pei Lirui Recently, due to the long-term suspension, continuous limit down, or imminent delisting of some individual stocks, fund companies are intensively lowering the valuation of individual stocks held by their fund products.
Author: Pei Lirui

Formerly known as the first early screening stock of cancer in China.$NH HEALTH (06606.HK)$After nearly four months of suspension, the stock of Nodality Health, known as the first early screening stock of cancer in China, has recently been extensively devalued by fund companies. According to statistics from Quanshang China reporters, more than ten fund companies have recently adjusted the valuation of Nodality Health. The lowest valuation has already fallen below HKD 7 per share, which is more than a 50% drop from the stock price before suspension.

Since Nodality Health was suspected of financial fraud in August 2023, funds have successively reduced their holdings of the stock. However, a few funds still hold a heavy weight in this stock, and adjusting the valuations of the stocks held by the fund will affect the net asset value of the fund, which will in turn affect investor returns.

Over ten fund companies lowered the valuation of Nodality Health

Recently, over ten fund companies, including E Fund, Fullgoal, China AMC, and Huaxia Fund, collectively adjusted the valuations of Nodality Health, which was suspended and held under their funds. However, the valuations they gave vary, ranging from HKD 6.62 per share to HKD 11.39 per share.

For example, China AMC announced that, according to the Guiding Opinions on the Valuation Business of Securities Investment Funds issued by the China Securities Regulatory Commission and other relevant regulations, and based on the agreement reached with the fund custodian, China AMC Management Co., Ltd. will adjust the valuation of the "Nodality Health (code: 6606.HK)" held by its securities investment funds, and the valuation price will be adjusted to HKD 6.62 per share from July 10, 2024. This is the lowest valuation given by fund companies for Nodality Health so far.

Meanwhile, Xinyuan Fund announced that after reaching an agreement with the fund custodian, it will value the "Nodality Health" held by its securities investment funds at HKD 11.39 per share from July 8, 2024. This is the highest valuation given by fund companies for Nodality Health so far.

In addition, E Fund gave a valuation of HKD 8.28 per share for Nodality Health, while Fullgoal Fund, Huaxia Fund, and Bosera Fund valued it at HKD 9.9 per share, HKD 9.95 per share, and HKD 7.07 per share respectively.

Public data shows that Nodality Health has been suspended since March 28th this year, and as of the close of trading on March 27th before the suspension, Nodality Health closed at HKD 14.14 per share. The valuations of HKD 6.62-11.39 per share given by the above-mentioned fund companies represent a drop of about 19% to 53% from its stock price prior to suspension.

The above-mentioned fund companies also indicated that the company will closely monitor the subsequent business performance of the stock and other major events, conduct reasonable evaluations, and consult with the fund custodian to further determine the valuation price when such stocks reflect active market trading characteristics from now on. The valuations will then be based on the closing price of the day and will not be announced separately. Investors are requested to pay attention.

The stock price has fallen by more than 80%.

Nodality Health, a healthcare company listed in Hong Kong in 2021, has two colon cancer screening products (Changweiqing and Pupuguan) and a Helicobacter pylori detection product (Youyouguan), all of which have been approved by the National Medical Products Administration and are now commercially available. In addition, in 2023, the company's HPV cervical cancer screening product (Gongzhengqing) was also approved for listing in Hong Kong.

But over the past year, Nodality Health first suffered a financial fraud accusation from Capitalwatch, a Wall Street financial media outlet, which plunged the stock price, and then delayed the 2023 annual report disclosure time. It has been suspended since March 28th this year, and a Special Investigation Committee was established in April to supervise the investigation, but there has been no major progress so far, and it has been suspended for nearly four months.

As of the close of trading on March 27th before the suspension, Nodality Health closed at HKD 14.14 per share, a decline of 38.92% since the beginning of the year. From the high point of HKD 89.65 per share in June 2021, its share price has fallen by more than 80%. The recent valuation adjustments of the stock, which has been suspended for a long time, by major fund companies reflect the market's pessimistic expectations.

The latest news shows that on July 10th, the Shenzhen Stock Exchange announced that Nodality Health has been removed from the list of securities eligible for trading through Hong Kong Stock Connect.

A few funds still hold a heavy weight.

From the perspective of fund holding, since Nuohei Health was questioned for financial fraud in August 2023, funds have gradually reduced their holdings of this stock, but there are still a few funds that heavily hold it.

According to Wind data, as of the end of the first quarter of this year, there are still 3 funds that have a heavyweight position in Nuohei Health on the market, namely Huaxia Xingyang one-year holding, Fuguo Medical Growth 30, and Luobomai China Medical and Health A. The market value of holdings are 41.78 million yuan, 15.39 million yuan, and 2.37 million yuan, respectively, with a net asset value ratio of 2.51%, 4.46%, and 7.31%, respectively.

At the same time, some funds have reduced their holdings of Nuohei Health in the first quarter of this year, such as Everbright Sun Hung Kai Intelligent Manufacturing, Xinyuan Value Selection, etc. These funds have removed Nuohei Health from the top ten heavy holdings in the first quarter, but still issued announcements to adjust the stock valuation, or still hold a small amount of shares.

It is worth noting that when funds adjust the valuation of their held stocks, it will affect the net asset value and the net asset value per share of the fund, and the change in the net value of the fund will directly affect the investor's return.

Wang Yi, an analyst from Jinchang Investment under Geshang Wealth Management, said that when making specific investments, fund managers should try to avoid such "risk stocks", or control the proportion of their net value in a relatively small range to reduce the impact. At the same time, we should strengthen the risk identification of such "risk stocks", strengthen the value investment and long-term investment concept in investment strategies, and avoid trading and speculation of "risk stocks" due to short-term behavior.

Editor/Jadyen