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after a 98% plunge, shengneng group issued an announcement stating that some shareholders' shares were forced to sell and the stock resumed trading today.

shengneng group announced on the hong kong stock exchange this morning that a total of 370 million shares of otautahi capital inc (accounting for approximately 36.64% of the company's total issued share capital as of the date of this announcement) were forcibly sold by securities companies on the open market through margin securities accounts on september 3. immediately after the completion of the forced sale and as of the date of this announcement, the number of shares held by otautahi capital inc was 212.3 million shares, accounting for 21.02% of the company's issued share capital. the board of directors confirmed that the group maintained normal business operations and there were no significant changes in the group's business operations and financial position.

public information shows that shengneng group is a manufacturer of ultra-high power graphite electrodes and graphite anode materials. its technology and products provide guarantees for the low-carbon transformation of the steel and energy industries. in january 2023, the group was listed on the main board of the hong kong stock exchange.

the company's stock price gradually rose after its listing. after may this year, the stock price accelerated its rise, rising from hk$3.76 to hk$21.15. it was a standout in the sluggish hong kong market. however, the company's stock fell sharply after opening at hk$18.98 per share on tuesday morning, with the highest intraday decline reaching 99%. at 14:50, shengneng group suddenly suspended trading. the decline before the suspension was 98.4%, and the market value was only hk$328 million.

shengneng group stock price trend

hong kong securities regulatory commission points out that equity concentration is too high

the company's stock price plummeted due to an announcement from the hong kong securities and futures commission. on the evening of september 2, the hong kong securities and futures commission issued an announcement showing that as of august 19 this year, 25 shareholders of shengneng group held a total of 279 million shares, equivalent to 27.65% of the issued share capital; there were 49.31 million shares (accounting for 4.88% of the issued share capital) that were not deposited in the central clearing and settlement system and were not in the hong kong shareholder register of shengneng group. the relevant equity, together with the 582.5 million shares held by the controlling shareholder (accounting for 57.67% of the issued share capital), is equivalent to 90.2% of the issued shares.

therefore, only 98.94 million shares (accounting for 9.8% of the issued share capital) of shengneng group are held by other shareholders.

the announcement of the hong kong securities and futures commission also showed that between may 2 and august 19, the closing price of shengneng group rose 463% from hk$3.76 to hk$21.15. after the market closed on august 13, the company issued a profit warning, expecting to record a net loss attributable to the owners of the company of no more than us$16.5 million in the first half of this year, compared with a net loss of approximately us$4.2 million in the same period last year.

the hong kong securities and futures commission stated that given the high concentration of equity among a small number of shareholders, the company's share price may fluctuate significantly even if a small number of shares are traded. shareholders and potential investors are advised to act prudently when buying and selling the company's shares.

shengneng group: some of the shares held by shareholders were forcibly liquidated

on september 4, shengneng group announced on the hong kong stock exchange that the company was informed by otautahi capital inc that a total of 370 million shares (accounting for approximately 36.64% of the company's total issued share capital) were forcibly sold by securities companies in the open market through margin securities accounts on september 3. immediately after the completion of the forced sale and as of the date of this announcement, the number of shares held by otautahi capital inc was 212.3 million shares, accounting for 21.02% of the company's issued share capital. the company's shares will resume trading today. shengneng group closed down 98.4% yesterday.

on the morning of september 3, shengneng group issued a statement in response, saying that the company's shareholding situation was indeed as disclosed in the announcement of the hong kong securities regulatory commission. as for the situation that there is no balance in the central settlement system and no balance in shengneng group's hong kong shareholder register, shengneng group stated that it understood it to refer to the shares deposited in the cayman islands share transfer registry.

as of august 19, the five shareholders of the cayman islands share transfer office only held approximately 42.61 million shares (accounting for 4.22% of the issued share capital). together with the controlling shareholder and 25 shareholders, they held a total of 89.53% of the shares.

shengneng group also stated that based on available information and to the best of the knowledge of the directors after making all reasonable enquiries, the directors confirmed that as of august 19, 2024 and the date of this announcement, no less than 25% of the issued shares are held by the public, and the company has maintained sufficient public shareholding in accordance with the requirements of the securities listing rules of the stock exchange. in addition, due to the high concentration of equity, the company's securities may not have a real market, or its equity may be concentrated in the hands of a few shareholders.

in addition to the concentrated ownership, the company's performance is not ideal. the 2024 interim performance report shows that shengneng group's revenue in the first half of the year was us$32.1 million, a year-on-year decrease of 26.5%; the loss attributable to the company's owners was approximately us$14.4 million, compared with a loss of approximately us$4.2 million in the same period last year. in the first half of the year, the average selling price of its graphite electrodes fell by approximately 27.1% compared with the same period last year.

hong kong securities and futures commission continues to warn of equity concentration risks

the hong kong securities and futures commission disclosed in august that the equity of two listed companies was highly concentrated, but the share prices of these two companies at that time did not fluctuate as much as that of shengneng group.

on august 4, migao group (09879.hk) announced that the hong kong securities regulatory commission conducted an investigation into the company's equity distribution, and the results showed that the company's equity concentration reached 99.04%, which means that only 0.96% of the company's shares are held by other shareholders.

another company named by the hong kong securities and futures commission is lecang logistics (02490.hk). the hong kong securities and futures commission's investigation results show that as of june 21, 18 shareholders held a total of 126 million shares of the company, equivalent to 44.11% of the issued share capital. the relevant shareholders, together with the company's three controlling shareholders, held 159 million shares (accounting for 55.39% of the issued shares), equivalent to 99.5% of the company's issued share capital. therefore, only 1.44 million shares of the company are held by retail investors in the secondary market.

however, after being named by the csrc, the stocks of the two companies have not been greatly affected and have only fluctuated slightly so far.