On October 22, the trading volume active autostreets (02443) once again experienced an abnormal surge: the company surged over 40% in the afternoon, closing at 17.1 Hong Kong dollars, an increase of 28.57%.

Since its listing in May this year, autostreets has been in a long period of breaking below the IPO price, dropping to as low as 3.8 Hong Kong dollars, a decrease of over 60% from the offering price of 10.2 Hong Kong dollars. on October 9, the company saw a sudden surge in the trading session, rising to 117 Hong Kong dollars at one point, with a nearly 100% increase by the close. Subsequently, it changed from the previous lackluster trend, with trading volume exceeding 30 million for several consecutive trading days until a significant decrease was seen on October 17.

Public information indicates that the founder and chairman of autostreets is Yang Aihua, holding 12.01% of Chang Guang Investment Limited and 6.00% of World Key Investment Trading Limited, controlled by Yang Aihua and Yang Hansong (Yang Aihua's younger brother) respectively, while the second largest shareholder, the American COX Group, holds 10.81% through Manheim Investments.

On the news front, in November, autostreets will face a large amount of lock-up shares, making it the first lock-up period after the company's IPO. Can the company withstand the selling pressure given its fundamental strength?

Is the 'block orders' plate positioning chips before the lock-up release?

According to public data, today the most net selling seats come from retail investors in Shanghai-Hong Kong Stock Connect, with a net sale of 1.1894 million shares, most of which entered the market after the 10th and are now seeing some retail investors exiting with profits; followed by Fuchang with a net sale of 0.468 million shares, Hendra and AA each sold 0.1644 million shares and 121,400 shares. On the buying side, CCB International and CITIC CLSA each bought 0.2074 million shares and 89,200 shares, while retail investors from Futu and Shenzhen-Hong Kong Stock Connect ranked lower.

Based on the data from the past 60 days, as of the 21st, Fosun Intl sold 9.444 million shares, Futu Securities, Morgan Stanley, and CMBC Yilong Banks sold 0.554 million shares, 0.4632 million shares, and 254,400 shares respectively; Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect bought 7.2156 million shares and 3.8236 million shares, respectively, being the largest buyers.

It is worth noting that today Autostreets has a relatively active trading volume, with the stock price jumping from HK$14 to HK$18 in the afternoon, and the trading volume also rapidly increasing. At the same time, the turnover ratio of the company reaches 4.59%, much higher than similar stocks, such as Futu Auto Index (LIST1040) turnover ratio of 0.44%, Auto Parts Index (LIST1041) turnover ratio of 0.08%, and Car Retailer Index (LIST1269) turnover ratio of 0.08%.

Public information shows that when Autostreets was listed, the total amount raised was HK$0.153 billion, with a global placement of 15 million shares. However, only 20% of the public offering was allocated, with a small floating market value and no cornerstone investors, making the stock price of a typical small-cap stock susceptible to manipulation and speculation.

On the news front, Autostreets will face 0.55 billion shares being unlocked on November 27, accounting for 66.1% of the total share capital. Under the pressure of unlocked selling, if there are no buyers to absorb, a rapid price drop on that day is not impossible, as seen with previous cases like Lehuayou Entertainment (02306) plummeting by 77.84% and Junshengtai Pharmaceuticals (02511) by over 61%.

With a relatively small floating market value combined with an unusually high turnover ratio, the market speculation is getting stronger. Considering the impending unlocking date, under the appearance of rising stock prices and high trading volume, the intention of block orders pushing up the stock price to attract retail investors to enter, and then seizing the opportunity to "harvest" is becoming very apparent.

Is the industry leader's performance 'not living up to its name'?

According to the Securities Times app, Autostreets is a trading intermediary connecting buyers and sellers of used cars, mainly providing a platform for used car transactions for buyers and sellers through an auction model.

According to the half-year performance previously announced by Autostreets, the company's revenue in the first half of this year was approximately 0.191 billion yuan, a decrease of 15.5% year-on-year; gross profit was approximately 0.124 billion yuan, a decrease of 14.8% year-on-year; and the net loss attributable to the parent company was approximately 0.148 billion yuan, an increase of about 1.96 times year-on-year.

The announcement stated that the decrease in revenue was mainly due to the impact of the new car price decline and fluctuations, and the reduction in second-hand car auction commission and service fees due to the decrease in second-hand car auction trade prices; the decrease in the number of consumer car exchange transactions and the average single-car income, resulting in a decrease in the revenue from the arrangement of auto sales; and the decrease in the marketing demand of the dealers group and the main factory, resulting in a decrease in exhibition business revenue.

Looking at a longer time frame, Autostreets' revenue and profits have been declining in recent years, with a more pronounced downward trend in profitability 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%; the gross profit was approximately RMB 0.426 billion yuan, 0.285 billion yuan, and 0.312 billion yuan respectively, with a compound annual growth rate of -14.31%; the annual net income was approximately RMB 0.165 billion yuan, 68.98 million yuan, and 9.269 million yuan respectively, with a compound annual growth rate of -76.30%.

Over the past three years, Autostreets' gross margin has fluctuated around 60%, at 62.8%, 60.9%, and 63.5% respectively, while the net profit margin has declined to single digits, reaching only 1.9% by 2023, indicating poor profitability performance.

According to Zhuoshi Consulting's data, in terms of trading volume in 2022, Autostreets is the largest second-hand car trading service provider in the country. However, from the performance of core financial data, the halo of Autostreets being a leading company in this industry seems somewhat misleading. With insufficient future profit expectations, the upward potential of the company's future stock price is clearly limited.