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Leo Group plans to use no more than 3 billion yuan of its own funds for securities investment, which has sparked heated discussions in the market. The most important thing for a listed company is to operate stably. The risk factor of securities investment is relatively high. A small amount of investment can be used as part of asset management allocation, but a large investment carries the risk of gambling. In particular, Leo Group's current share price is only 1.48 yuan. Low-priced stocks cannot withstand any tossing. Once the investment suffers a major loss, the company will face the risk of delisting at par value.

The semi-annual performance forecast of Leo Group shows that the company will suffer a loss of 650 million to 800 million yuan in the first half of 2024, but the net profit after deducting non-recurring items will be 140 million to 190 million yuan, which shows that the originally profitable main business was dragged down by non-recurring gains and losses.

The company also stated in the announcement: "In the first half of 2024, the main reason for the net profit loss attributable to shareholders of the listed company was the fair value changes of the Ideal Auto shares held by the company and the total profit and loss of some Ideal Auto shares sold during the reporting period, which was approximately RMB -1.27 billion. This factor affected the net profit attributable to shareholders of the listed company by approximately RMB -953 million, which was included in non-recurring gains and losses." It is obvious that Leo Group's performance loss in the first half of the year came from losses in securities investments.

Now, Leo Group is preparing to invest no more than 3 billion yuan in securities investment. Although the company announced that this investment will not affect the company's normal production and operation, the possible investment risks will inevitably make market investors worry.

According to the first quarter report of Leo Group, the company's cash balance on the books was 3.05 billion yuan, the fair value change was -450 million yuan, the balance of trading financial assets was 3.31 billion yuan, and the equity attributable to the parent company was about 13.45 billion yuan. Even according to the data at that time, the proportion of trading financial assets was already high. If Leo Group further increases the amount of securities investment, the proportion of trading financial assets will continue to rise, which means an increase in investment risk for any listed company, which is not a good thing.

For listed companies with a high proportion of trading financial assets, the market valuation is usually more cautious. This may be one of the reasons why the share price of Leo Group has continued to fall and even fallen below its net assets.

The market's concerns are understandable. It is difficult to estimate whether the company's main business will not be affected and whether the share price of 1.48 yuan can be maintained if the huge trading financial assets encounter investment risks. Once the company's share price approaches 1 yuan, there will inevitably be investors who sell their shares to avoid delisting at par value. At this time, will Leo shares be able to maintain the share price of 1 yuan? If the operation is improper, the company cannot be ruled out from the risk of delisting.

In this column's view, the current share price of Leo Group has already reached the risk zone of triggering delisting at par value. At this time, listed companies should first seek stability and stick to their core business. Large-scale securities investment is a double-edged sword. Unless it can generate investment returns that exceed expectations, it is difficult to say that it is good for the company's stock price.

In fact, Leo Group holds a large amount of cash. Instead of investing in securities, it is better to increase the share repurchase efforts. For a company whose stock price is lower than its net asset value, the more shares it repurchases and cancels, the higher the company's net asset value will be, and the investment value will increase accordingly, which will stimulate investors to buy and hold stocks. This is much more cost-effective than investing huge sums of money in securities.

Beijing Business Daily commentator Zhou Kejing