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as domestic ipo policies tighten, more and more companies are seeking to list in hong kong.

but at the same time, it is not uncommon for companies to become "penny stocks" after listing on the hong kong stock market. as of the close of september 3, there were nearly 1,000 hong kong-listed companies with share prices below hk$1, more than 1,400 companies with daily stock trading volumes below hk$5 million, and more than 1,100 companies with daily stock trading volumes below hk$1 million.

securities times e-company reporter noticed that among the numerous "penny stocks", there are also many "super bulls". since 2020, there are 18 hong kong-listed companies, including yadi holdings, jinjing new energy, and huiju technology, whose stock prices have increased by more than 10 times. among them, 14 hong kong-listed companies achieved a 10-fold turnaround with the lowest price in the range less than hk$1.

"penny stock" reversed and became a 10-fold bull stock

on may 19, 2016, yadea holdings was successfully listed on the hong kong stock exchange, becoming the first listed company in china's electric vehicle industry.

but what no one expected was that after listing, yadi holdings was "slapped in the face" by reality: the stock price could not go up at all. in fact, just one day before the listing, due to insufficient subscription, yadi's offering price was set at the lower limit of hk$1.72 per share. on the first day of listing, yadi's stock price fell to hk$1.32 per share, a drop of 23.3% on the day.

in the following three years, yadi holding's operating performance continued to soar, but its stock price and trading volume continued to be sluggish. in november 2018, yadi holding's daily trading volume was only a few hundred thousand hong kong dollars. that year, yadi sold nearly 5.04 million electric two-wheelers, setting a record high; revenue increased by about 26.3% year-on-year to 9.917 billion yuan. this is also the fifth consecutive year that yadi has set a new revenue record.

due to the poor liquidity of small-cap companies, the hong kong stock market, where institutional investors are the main participants, has little attention to related companies, and yadi holdings was not immune. in the third year after listing, the lowest price fell to hk$0.88 per share, and the market value once fell below hk$3 billion. regarding the cold reception in the secondary market after listing, yadi insiders once reviewed the market, "the stock price cannot go up because yadi, as the first listed company in the industry, cannot be valued.”。at that time, some people from investment institutions even said that yadea holdings referred to the valuations of chaowei power and tianneng power. at that time, the valuations of these two companies were only 3 to 5 times, respectively. "by this calculation, yadea's market value is only more than 10 billion yuan."

faced with this situation, dong jinggui, chairman of yadi holdings, began to lead the company's core team members to visit investors one by one in hong kong, "telling them one by one what we want to do in the future". while the core team of yadi holdings took the initiative to "go global", more and more investors took the initiative to visit yadi holdings for research, "that summer, we started to interact with investors". shi rui, director and cfo of yadi holdings, told the securities times e-company reporter that many investors have made pertinent suggestions for the company's development.

it was in 2019 that the new national standard for electric two-wheelers was implemented, marking the official start of the replacement wave of electric two-wheelers. in that year, the stock of electric two-wheelers in my country exceeded 300 million, of which more than 250 million vehicles exceeded the standard. according to the policies of different cities, these vehicles that exceeded the standard will be orderly withdrawn from the market within 3 to 5 years. after the implementation of the new national standard, the electric two-wheeler market was reshuffled, and many small manufacturers could not continue. as the industry leader, yadea holdings reaped the "bonus".

in 2020, private equity institutions began to buy yadea holdings, followed by public funds, and then overseas funds also came in.

since its listing, yadea holding's operating performance has been rising steadily. in its first year of listing, yadea achieved operating income of 6.668 billion yuan and a net profit of 430 million yuan. in 2019, the company's operating income exceeded the 10 billion yuan mark, reaching 11.973 billion yuan, and its net profit was 516 million yuan. in 2021, the company's net profit exceeded 1 billion yuan for the first time, reaching 1.369 billion yuan.

with the right time, right place and right people, yadi holdings, a "penny stock", has ushered in a counterattack. from march 2020 to january 2021, the company's market value soared from 5 billion yuan to more than 50 billion yuan, becoming a "big bull stock" with a 10-fold increase.

these "penny stocks" also achieved a super counterattack

in addition to yadi holdings, there are many other "penny stocks" that have also achieved a comeback. securities times e-company reporters found that since 2020, there are 18 hong kong-listed companies whose stock prices have increased by more than 10 times. among them, there are 14 hong kong-listed companies whose lowest price in the range was less than hk$1 and finally achieved a 10-fold comeback.

jinjing new energy, which has crossed over into the battery recycling field, has seen its stock price increase more than 14 times in the past year.

jinjing new energy was formerly known as "jinlun holdings co., ltd.". when it went public in 2018, it was mainly engaged in the construction business. subsequently, in 2022, it obtained hong kong's first full set of licenses for power battery disposal, transportation and export. by acquiring local leading recycling companies, it mastered the core resources and technologies of power battery processing and recycling, and created a complete ecological closed loop.

on july 12, 2023, the share price of jinjing new energy was only hk$0.28 per share, and the company's stock trading volume continued to be sluggish, and even "zero trading" occurred. in august 2023, after the european "new battery law" came into effect, chinese battery companies exporting to europe must meet the eu's requirements for the recycling and reuse of battery materials. 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, jinjing new energy has started its "charge" from a "penny stock" to a bull stock.

on february 19 this year, jinjing new energy announced that it had reached a cooperation with hefei guoxuan, a wholly-owned subsidiary of guoxuan high-tech. the two parties will jointly layout the overseas power battery market and plan to build a global service system for battery cell recycling and recycling.

on august 13 this year, msci announced the results of the august index review. jinjing new energy was included in the global small cap index. this also shows the capital market's recognition of the company's performance and value, which is expected to enhance the company's reputation and increase stock liquidity.

on august 27 this year, jinjing new energy's stock price hit a new high, closing at hk$5.86 per share. in just one year, the company's stock price has risen by 1,483%. in the past four years, the company's stock price has risen by 3,173.74%.

as a supplier of customized wire interconnect solutions, huiju technology is also a typical example of a "penny stock" that has made a comeback.

in 2018, the first year of listing, huiju technology achieved operating income of hk$1.238 billion and net profit attributable to the parent company of hk$132 million. in the following years, the company's operating income increased year by year, but the stock price remained sluggish for a long time. on april 1, 2020, huiju technology's lowest share price once fell to hk$0.25 per share. on october 20, 2021, the company's stock closed at hk$0.425 per share, and the transaction volume on that day was only hk$516,400.

the surge in juhui technology's share price is mainly due to its becoming a member of luxshare precision.

on the evening of march 16, 2022, luxshare precision acquired a total of 1.38 billion shares of huiju technology (accounting for approximately 74.67%) at hk$0.80 per share through its wholly-owned overseas subsidiary, with a total consideration of hk$1.104 billion, becoming the controlling shareholder of huiju technology. at that time, luxshare precision stated that huiju technology has more than 20 years of industry experience and has strong complementarity with luxshare precision in terms of product segmentation and customer service.

in its 2022 annual report, huiju technology stated that the strategic cooperation between luxshare precision and the company will enable the company to further benefit from the development and synergy of the consumer electronics, communications, healthcare, and automotive industries in terms of products, customers, and marketing by integrating customer and market resources, as well as luxshare precision group's technology and r&d capabilities.

in 2022 and 2023, the company achieved operating income of 3.59 billion yuan and 5.765 billion yuan respectively; net profit attributable to the parent company was 168 million yuan and 215 million yuan. in particular, the operating income in 2023 increased by 60.6% year-on-year. in its 2023 annual report, huiju technology mentioned that the company is still confident in 5g-related and data center businesses, and has planned to set up a new plant in mexico to increase its market share in markets outside china and asia.

backed by luxshare precision, and benefiting from the layout of 5g-related, data center, automotive and other businesses, huiju technology's stock price has taken off. since 2022, huiju technology's stock price has increased by 423.6%. if calculated from 2020, the company's stock price has increased by more than 10 times.

how to get rid of “penny stocks”?

becoming a "penny stock" after listing has become an embarrassing situation for many hong kong-listed companies.

as of the close of september 3, there were nearly 1,000 hong kong-listed companies with share prices below hk$1, more than 1,400 companies with daily stock trading volume below hk$5 million, and more than 1,100 companies with daily stock trading volume below hk$1 million.

in sharp contrast, since 2020, there have been 18 hong kong-listed companies, including guoyadi holdings, whose share prices have risen more than 10 times. among them, there are 14 hong kong-listed companies that have achieved a 10-fold counterattack from "penny stocks".

from the perspective of time, among these 14 companies, 4 have been listed for more than 20 years, including singamas container, which has been listed for 31 years since 1993; 8 have been listed for more than 10 years. including jinjing new energy and huiju technology, the 5 companies with the shortest listing time were all listed in 2018, which is 6 years so far.

in terms of industry, these 13 companies include electrical equipment, specialty retail, communications equipment, healthcare services, pharmaceuticals, machinery manufacturing and many other industries, involving hot concepts such as power battery recycling, data centers, and tesla. in terms of operating performance, the revenue of most companies is generally on the rise.

"the hong kong stock market is a very fair market." a person related to yadea told reporters that one must be mentally prepared for this in hong kong stocks.

first, after listing on the hong kong stock market, what matters is performance. we must strive to achieve continuous performance, and we cannot just rush for two years of performance just for the highlight of listing. "if the company lacks stamina and its performance starts to decline after listing, it will be very passive in the hong kong stock market. so theoretically speaking, you should list on the hong kong stock market during the rising period to ensure steady growth in performance every year."

the second point is to find a strategic partner with high-quality resources to become a cornerstone investor and participate in the listing. this will make the financing process less difficult and will also be beneficial to the stability of the subsequent shareholder structure.

third, although the valuation of hong kong stocks is not particularly high, don’t be discouraged, because a safe listing is the first goal, and don’t have too high expectations for the valuation for the time being. in hong kong stocks, it often takes a period of market verification before a reasonable valuation can be given. "just like us, when we went public, people thought that a valuation of 8 or 9 times was high, and at the peak, we were given a valuation of more than 20 times."

“the past few years since its listing have been the fastest growing period for yadea. the most important point is to grasp the main line of business."yadi people believe that the core reason for the increase in the company's valuation and market value is that its annual operating income has increased from several billion yuan to more than 30 billion yuan today. "if there is stamina, there will be broad space after listing. where there are peaks, there will be troughs. the stock price cannot rise all the time. the only thing we can do is to run the company well and to achieve good results." the driving force for sustained growth in performance in the medium and long term depends on continuously improving the core competitiveness of leading companies through research and development and innovation. in addition, the overall improvement from the level of listed company governance in a general sense to esg is also an aspect that institutional investors attach great importance to.