Source: Glonui.

Since October 8, the Hong Kong stock market has been continuously adjusting. Today, the Hong Kong stock market continued to weaken, as of the close,$Hang Seng TECH Index (800700.HK)$ and $Hang Seng China Enterprises Index (800100.HK)$ dropping more than 4%, $Hang Seng Index (800000.HK)$ down 3.76%.

Despite the market generally suffering heavy losses, some stocks have bucked the trend and achieved astonishing gains.

Today, in the Hong Kong stock market $AUTOSTREETS (02443.HK)$ surged over 88% at one point, closing with a 75.87% increase, at 11.66 Hong Kong dollars per share, with a latest market cap of 9.709 billion Hong Kong dollars and a turnover of 0.504 billion Hong Kong dollars.

It is worth mentioning that on October 9th, during a large market pullback, the stock also showed an independent trend, surging by 344% at one point during trading.

It is reported that Autostreets is a trading intermediary connecting buyers and sellers of used cars, mainly providing a platform for second-hand car transactions through an auction model.

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Upon analysis, Autostreets has had several instances of sharp increases followed by market makers cashing out at high levels through dumping tactics.

On September 9, the Shanghai Stock Exchange and the Shenzhen Stock Exchange issued announcements adjusting the list of securities eligible for the Hong Kong Stock Connect. Among them, Autostreets was officially included in the Hong Kong Stock Connect, effective from September 10, 2024.

However, after Autostreets was officially included in the Stock Connect on September 10, the company's stock plummeted by 17.65% on the 11th, welcoming investors.

Subsequently, the stock traded sideways for about 10 trading days, with daily trading volume of less than one million Hong Kong dollars. Despite the broad rally in the Hong Kong stock market starting on September 30, Autostreets did not experience consecutive sharp increases in line with the trend. Moreover, after rising by nearly 12% on September 30, it dropped by about 7% on October 2.

Until October 8, Autostreets surged by 344%, then rapidly dropped, narrowing the gain to around 95%, indicating signs of selling to escape loss.

Looking at the trading seats on that day, the top five sellers were CM Bank International, Fosun Intl, Cisi Fin, Futu Securities, and Morgan Stanley, selling 1.0816 million shares, 0.7866 million shares, 0.608 million shares, 0.3138 million shares, and 0.2208 million shares respectively. China Investment (SH-HK Connect) and China Chuangying (SZ-HK Connect) were the first and second largest buyers, purchasing 2.3762 million shares and 1.8594 million shares respectively, indicating that most of the holders absorbing the shares were mainland retail investors from the Hong Kong Stock Connect.

Taking a longer view, Fosun Intl has been the largest seller of Autostreets in the past 60 days, selling a total of 7.7936 million shares, and further reduced holdings significantly by 1.8114 million shares yesterday.

Continuous decline in performance

Data shows that Autostreets, established in 2014, was jointly initiated and funded by Cox Automotive, a US-based auto trading platform and used car auction company, a national core dealers group, CM Bank, and others. In terms of trading volume in 2022, Autostreets is the largest second-hand car trading service provider in the country.

It is worth noting that in the first half of this year, there is a noticeable chill in the second-hand car market. According to the data from the Automobile Circulation Association, since March this year, the monthly transaction volume of second-hand cars nationwide has been continuously declining. It was not until July that the transaction volume and amount finally showed some signs of recovery.

However, the transaction prices continue to decline. Data from the China Automobile Dealers Association shows that the average price of used cars has dropped from 0.0696 million yuan in February this year to 0.0642 million yuan in September, persistently hovering at a low level. The continuously decreasing prices have also led to reduced profits for car dealers, and even resulted in a loss.

As a leader in the second-hand car market trading platform, Autostreets also cannot escape the dilemma of poor performance. In the first half of this year, Autostreets achieved revenue of approximately 0.191 billion yuan, a year-on-year decrease of 15.5%; gross profit of approximately 0.124 billion yuan, a year-on-year decrease of 14.8%; the attributable net loss of the parent company is approximately 0.148 billion yuan, with losses continuously expanding.

In fact, the company's performance decline has long been evident. Over the past three years, Autostreets' revenue and profits have been declining, especially with profits decreasing year by year.

From 2021 to 2024, the company's revenue was approximately 0.678 billion yuan, 0.468 billion yuan, and 0.492 billion yuan respectively, with a compound annual growth rate of -14.80%; gross profit was approximately 0.426 billion yuan, 0.285 billion yuan, and 0.312 billion yuan respectively, with a compound annual growth rate of -14.31%; net income was approximately 0.165 billion yuan, 68.98 million yuan, and 9.269 million yuan respectively, with a compound annual growth rate of -76.30%. The gross margin was 62.8%, 60.9%, and 63.5% respectively, fluctuating around 60%.

However, the net profit margin has been declining to single digits, and by 2023, it was only 1.9%, indicating a significant decline in profitability.

Editor/jayden