Since 2020,$YADEA (01585.HK)$The stock price has increased more than 10 times. Securities Times reported that the implementation of the new national standard for electric two-wheeled vehicles in 2019 marked the official start of a wave of electric two-wheeled vehicle replacement, leading to a reshuffling of the market. Many small manufacturers found it difficult to survive, while Yadea Holdings, as an industry leader, fully enjoyed the "dividends".

At a time of tightened domestic IPO policies, an increasing number of companies are now seeking listings in Hong Kong.

However, at the same time, cases of companies becoming "penny stocks" after listing on the Hong Kong stock market are also not uncommon. As of the close of September 3rd, nearly 1000 Hong Kong-listed companies had stock prices below 1 Hong Kong dollar, over 1400 companies had daily stock trading volumes below 5 million Hong Kong dollars, and more than 1100 companies had daily stock trading volumes below 1 million Hong Kong dollars.

Securities Times • E Company reporters have noticed that many "super bulls" have emerged among the "penny stocks" of companies like Yadea Holdings since 2020,$ENVISION GREEN (01783.HK)$,$TIME INTERCON (01729.HK)$Among them, there are 18 Hong Kong stocks companies that have seen their stock prices increase more than 10 times. Among them, 14 Hong Kong stocks companies have achieved a 10-fold comeback with the lowest price in the range being less than 1 Hong Kong dollar.

"Penny stocks" have emerged as 10-fold high-performance stocks.

On May 19, 2016, Yadea Holdings successfully listed on the Hong Kong Stock Exchange, becoming China's first listed company in the electric vehicle industry.

But what no one expected was that Yadea Holdings was "slapped in the face" by reality after going public: the stock price simply couldn't rise. In fact, on the day before the IPO, due to insufficient subscription, Yadea's issue price was set to the lower limit of HK$1.72 per share. On the first day of listing, Yadea's stock price fell to HK$1.32 per share, with a 23.3% drop on the day.

Over the next three years, Yadea Holdings' business performance "soared", but its stock price and trading volume remained low. In November 2018, Yadea Holdings' daily trading volume was only a few hundred thousand Hong Kong dollars. In that year, Yadea sold nearly 5.04 million electric motorcycles, reaching a historical high; its revenue increased by approximately 26.3% year-on-year to 9.917 billion yuan. This also marked the fifth consecutive year that Yadea achieved a record high in revenue.

Due to the poor liquidity of small-cap stocks, institutional investors, as the main participants in the Hong Kong stock market, have low interest in relevant companies. Yadea Holdings has not been spared from this. In the third year after its listing, its stock price fell to a minimum of HK$0.88 per share, and its market capitalization once fell below 3 billion Hong Kong dollars. At the time, Yadea insiders conducted a retrospective analysis on the cold reception in the secondary market, and concluded that "the stock price couldn't rise because Yadea, as the first listed company in the industry, couldn't get a proper valuation." There were even investment institutions who said at the time that Yadea Holdings was a reference point.$CHAOWEI POWER (00951.HK)$,$TIANNENG POWER (00819.HK)$In terms of valuation - at that time, the valuations of these two companies were only 3 to 5 times, 'So calculated, Yadea's market cap is only over ten billion yuan.'

Facing this situation, Yadea Holdings Chairman, Dong Jinggui, began leading the core team members of the company to visit investors in Hong Kong, 'Going to each individual and telling them what we want to do in the future.' As the core team at Yadea Holdings actively 'went out', more and more investors actively participated in research at Yadea Holdings, 'That summer, we started interacting with investors.' Yadea Holdings director and CFO Shi Rui told Securities Times · e Company reporters that many investors have provided constructive suggestions for the company's development.

It was in 2019 when the new national standard for electric two-wheelers was implemented, marking the official start of the trend for replacing electric two-wheelers. In that year, China's stock of electric two-wheelers exceeded 300 million units, with over 250 million units exceeding the standard. Based on different city policies, these non-compliant vehicles will gradually exit the market within 3 to 5 years. After the implementation of the new national standard, the electric two-wheeler market underwent reshuffling, with many small manufacturers unable to continue, while industry leader Yadea Holdings reaped the 'dividends'.

In 2020, private equity institutions started buying Yadea Holdings, followed by public funds, and then overseas funds also began to show interest.

Since its listing, Yadea Holdings' business performance has been steadily climbing. In the first year of listing, Yadea achieved 66.68 billion yuan in revenue, with a net profit of 430 million yuan that year; in 2019, the company's revenue surpassed the hundred billion mark, reaching 119.73 billion yuan, with a net profit of 516 million yuan. In 2021, the company's net profit exceeded 1 billion yuan for the first time, reaching 1.369 billion yuan.

The right time, the right place, and the right people. Yadea Holdings, this "miracle stock," is experiencing a moment of counterattack. From March 2020 to January 2021, the company's market cap soared from 5 billion yuan to over 50 billion yuan, becoming a "tenfold bull stock".

These "miracle stocks" have also achieved super counterattacks.

In addition to Yadea Holdings, there are also multiple "miracle stocks" that have achieved counterattacks. Securities Times · e Company reporters found that there are a total of 18 Hong Kong stocks that have seen their share prices increase by more than tenfold since 2020. Among them, 14 Hong Kong stocks that started with prices lower than 1 Hong Kong dollar eventually achieved a tenfold counterattack.

Envision Green, which has expanded into the battery recycling field, has seen its share price increase by over 14 times in the past year.

Originally named "Jinlun Holdings Limited", Envision Green mainly engaged in construction business when it went public in 2018. Since then, in 2022, it obtained a complete set of licenses for power battery disposal, transportation, and export, and through the acquisition of a local leading renewable resource company, it gained core resources and technologies for power battery treatment and recycling, creating a complete ecological cycle.

On July 12, 2023, Envision Green's stock price was only 0.28 Hong Kong dollars per share, and the trading volume of the company's stock remained low, even reaching "zero trading". In August 2023, after the implementation of the European Union's "New Battery Law," Chinese battery companies exporting to Europe must meet the EU's requirements for battery material recycling and reuse. The law also requires a certain proportion of recycled materials to be used in power batteries. With the promotion of a series of new policies, Envision Green is embarking on a "charge" from a "miracle stock" to a bull stock.

On February 19 of this year, Envision Green announced its partnership with $Gotion High-tech (002074.SZ)$The wholly-owned subsidiary Heifei Gotion has reached a cooperation, and the two parties will jointly layout the overseas power battery market and plan to build a global service system for cell recycling and reuse.

On August 13th of this year, MSCI announced the index review results for August. Envision Green was included in the Global Small Cap Index, which also shows the market's recognition of the company's performance and value, and is expected to enhance the company's reputation and increase stock liquidity.

On August 27th of this year, Envision Green's stock price reached a new high, closing at HKD 5.86 per share. In just one year, the company's stock price has increased by 1483%. In the past four years, the stock price has increased by an astonishing 3173.74%.

As a supplier of customized wire interconnection solutions, Time Interconnect is also a typical representative of the "penny stock" reversal.

In its first year of listing in 2018, Time Interconnect achieved operating revenue of HKD 1.238 billion and a net profit attributable to shareholders of HKD 0.132 billion. In the following years, the company's operating revenue has been increasing year by year, but the stock price has remained low. On April 1, 2020, the lowest stock price of Time Interconnect even fell to HKD 0.25 per share. On October 20, 2021, the company's stock price closed at HKD 0.425 per share, with a daily turnover of only HKD 0.5164 million.

The surge in Time Interconnect's stock price is mainly due to its membership in$Luxshare Precision Industry (002475.SZ)$its subsidiary.

On the evening of March 16, 2022, Luxshare Precision, through its overseas wholly-owned subsidiary, acquired a total of 1.38 billion shares of Time Intercon at a price of HKD 0.80 per share, accounting for approximately 74.67% of the shares. The total consideration for the acquisition was HKD 1.104 billion, making Luxshare Precision the controlling shareholder of Time Intercon. At that time, Luxshare Precision stated that Time Intercon has more than 20 years of industry experience and has strong complementarity with Luxshare Precision in terms of sub-products, customer service, and other aspects.

In its 2022 annual report, Time Intercon stated that the strategic cooperation with Luxshare Precision can enable the company to benefit further from the development and synergies of the consumer electronics, communications, medical care, and automotive industries by integrating customer and market resources, as well as the technological and R&D capabilities of the Luxshare Precision Group in terms of products, customers, and market marketing.

In the fiscal year 2022 and 2023, the company achieved operating revenues of CNY 3.59 billion and CNY 5.765 billion, respectively, with net profits attributable to the parent company of CNY 0.168 billion and CNY 0.215 billion, respectively. Especially in 2023, the year-on-year growth rate of operating revenue reached 60.6%. In its 2023 annual report, Time Intercon mentioned that the company remains confident in its 5G-related and datacenter business and has planned to establish a new factory in Mexico to increase its market share in markets outside of China and Asia.

Backed by Luxshare Precision and benefiting from the layout of businesses such as 5G-related and datacenter, automotive industry, Time Intercon's stock price has seen a 'takeoff'. Since 2022, Time Intercon's stock price has accumulated an increase of 423.6%. If we look back to 2020, the company's stock price has increased by over 10 times.

How to get rid of the 'penny stock' label?

After going public, becoming a 'penny stock' has become an embarrassing situation faced by many Hong Kong-listed companies.

As of the close of September 3, there are nearly 1000 Hong Kong-listed companies with stock prices below HKD 1, and over 1400 companies with daily trading volume below HKD 5 million, and over 1100 companies with daily trading volume below HKD 1 million.

In sharp contrast, since 2020, there have been 18 Hong Kong-listed companies, including Yadea Holdings, with stock price increases of over 10 times. Among them, 14 Hong Kong-listed companies have achieved a 10-fold turnaround from being a 'penny stock'.

From a time perspective, among these 14 companies, 4 have been listed for more than 20 years, including$SINGAMAS CONT (00716.HK)$Among these 14 companies, there are 8 that have been listed for more than 10 years. Including Envision Green and Time Intercon, the 5 companies with the shortest time since listing were all listed in 2018, with a total of 6 years until now.

In terms of industry, these 13 companies cover a wide range of industries including electrical equipment, retail, communications equipment, medical care services, pharmaceuticals, and industrial machinery, involving hot concepts such as power battery recycling, data centers, and Tesla. In terms of business performance, most companies' revenue has shown an overall upward trend.

"The Hong Kong stock market is a very fair market." Yadea spokesperson told reporters that one should be mentally prepared for the Hong Kong stock market.

First, after listing in the Hong Kong stock market, it relies on performance. One should strive for the continued realization of performance and not just focus on the moment of listing. "If the company's future prospects are insufficient and the performance declines after listing, it will be very passive in the Hong Kong stock market. Therefore, theoretically speaking, you should go public in the rising period, ensuring steady growth in performance every year."

Second, one should find strategic partners with high-quality resources, become cornerstone investors, and participate in the listing process. This will reduce the difficulty in financing and also contribute to the stability of the subsequent shareholder structure.

Third, although the valuation given by the Hong Kong stock market is not particularly high, one should not be discouraged because the top priority is a safe listing and there should not be too high expectations for valuation at the moment. In the Hong Kong stock market, in many cases, it takes a period of time to validate and provide a reasonable valuation. "Just like us, when we went public, people thought a valuation of 8-9 times was high, but at its peak, we were given a valuation of more than 20 times."

"In the years after going public, it has been the fastest growing period for Yadea. The most crucial point is to seize the business as the main thread," Yadea insiders believe that the core reason for the increase in company valuation and market cap is that annual revenue has increased from several billion yuan to over 30 billion yuan. "If there is momentum, there will be broad space after going public. There will be peaks and valleys, and stock prices cannot always rise. The only thing we can do is to run the company well and perform well." The long-term sustained growth in performance relies on research and development and innovation to continuously enhance the core competitiveness of leading enterprises. In addition, the overall improvement of corporate governance from a general sense of listed companies to ESG is also highly valued by institutional investors."

Editor/Somer