Bull stocks or "Zhuang stocks"?, Rocket like skyrocketing! 285 times the total market value over 3 years | Hong Kong dollars | Zhuang stocks

As of the close on August 17th, Marco Digital Technology closed at HKD 91.5, with a total market value of HKD 59.85 billion. On May 22, three years ago, the stock price of Marco Digital Technology dropped as low as HKD 0.32, with a total market value of HKD 170 million. Over the past three years, the cumulative increase in stock prices has been nearly 285 times.

Behind the rise in stock prices, there is also Marco Digital Technology's mismatched performance and highly concentrated equity. Previously, the Hong Kong Securities and Futures Commission (CSRC) has repeatedly emphasized that listed companies with highly concentrated equity may experience significant fluctuations in their share prices even if a small number of shares are traded, reminding investors to be cautious when buying and selling.

Marco Digital Technology has risen 285 times in 3 years

Against the backdrop of the overall decline of the Hong Kong stock market, Marco Digital Technology has emerged as an independent market - rising 285 times in three years, almost surprising all investors.

According to Wind data, Marco Digital Technology was listed on the main board of the Hong Kong Stock Exchange on April 15, 2020, with an issue price of HKD 1 per share and a total of 647 million shares issued. On the day of listing, it fell below the issue price and closed down 50.53% at HKD 0.47 on the first day.

In the following month, the company's stock price continued to fluctuate and decline, dropping as low as HKD 0.32 per share, with a total market value of only HKD 170 million. Since then, the company's stock price has started to skyrocket. As of the close on August 17th, Marco Digital Technology reported a total market value of HKD 91.5 billion, with a cumulative increase of 28493.75% over the past three years. During this period, the total market value exceeded HKD 60 billion.

So what about the quality of Marco Digital Technology, whose stock price has skyrocketed?

Public information shows that Marco Digital Technology is an investment holding company headquartered in China, mainly engaged in financial technology business. As an investment holding company, its subsidiaries mainly engage in digital payment related businesses in China and sell optical products and manage franchise licenses in Malaysia.

According to Wind statistics, from April 1, 2019 to March 31, 2020, April 1, 2020 to March 31, 2021, April 1, 2022 to March 31, 2022, April 1, 2022 to December 31, 2022, and January 1, 2023 to June 30, 2023, the company's operating income was RMB 243 million, RMB 159 million, RMB 351 million, RMB 553 million, and RMB 878 million, respectively. The net profit was RMB 17.868 million, RMB 15.716 million, RMB 15.2777 million, RMB 27.856 million, and RMB 40.899 million, respectively. Yuan.

From the financial report data, it seems that the company's main business revenue and net profit scale are not sufficient to support a total market value of several billion Hong Kong dollars. From the market transaction data, its transaction volume fluctuates around HKD 100 million, and the daily transaction volume is clearly inconsistent with its volume.

According to CCASS data, Marco Digital Technology has 568 million shares registered in the central settlement system, which means theoretically there are 568 million circulating shares, accounting for 87.84% of the total share capital. However, the top 20 securities firms account for 87.24%, indicating a high concentration of the company's equity. That is to say, Marco Digital Technology actually only has 0.6% of the circulating shares, which is 3.88 million shares circulating in the secondary market, so only a small amount of stocks can cause significant fluctuations in the stock price.

This seems to be in line with the Hong Kong stock market's "Zhuang stock" routine. Previously, the Hong Kong Securities and Futures Commission has repeatedly emphasized that listed companies with highly concentrated equity may experience significant fluctuations in their share prices even if a small number of shares are traded, reminding investors to be cautious when buying and selling.

On August 7th, Hong Kong's Huitao Group plummeted by over 97%, directly erasing the gains of the past two months. And Huitao Group is also a highly concentrated individual stock.

Common Routes of Hong Kong Stock Market and Zhuang Stock Market

First, issue shares at extremely low prices, coupled with high equity concentration, using only a small number of shares can cause a significant increase in stock prices. Subsequently, there was a high level of cashing out, while driving up the stock price and allowing retail investors to take over in the secondary market. This is the routine of Hong Kong stock market "Zhuang stock".

"Throughout the process, the banker has a strict and meticulous plan for time. They have a precise layout for when to push up the stock price and how much to do it, because these are all related to costs. Setting up a banker requires cost maintenance, such as transaction fees. Of course, if the concentration of equity is high, the cost of setting up a banker is low because only a small amount of goods is needed to raise the stock price and attract retail investors to enter." Senior Hong Kong stock expert Zhang Li told reporters.

Shell stocks, veteran stocks, and suspended nail households are not uncommon in the Hong Kong stock market. Yan Zhaojun, an analyst at Zhongtai International, told reporters that we can identify market stocks from the following six aspects to avoid pitfalls.

1. Looking at the fundamentals, avoid buying companies with low market value, long-term losses, or no long-term net cash flow inflows.

2. Compare the ratio of stock price to net asset value, which is the assumed value that shareholders can recover after the company is liquidated. If the stock price is too high relative to net asset value, the risk will be relatively high.

3. Pay attention to the risk of equity concentration. Investors can judge from the level of equity concentration disclosed by the Hong Kong Stock Exchange in CCASS. If the major shareholder places most of their stocks in the same securities firm, it may be that they have pledged their stocks, which may lead to a sharp drop in stocks due to being liquidated. At the same time, you can observe the "highly concentrated announcement of equity" on the website of the Hong Kong Securities Regulatory Commission.

4. If the price difference between buying and selling of shares is large, the circulation is low, and the stock price deviates from the fundamentals and rises abnormally, for example, if the company's business has not broken through, but the stock price rises almost every day, and it is not synchronized with the overall market and industry trends in the long term, or if the stock price fluctuates within a specific range every day for a long period of time, it may also be speculation by the market makers.

5. In the early stages of a rise in a stock market, there are often not many transactions, as the initial stage is mainly left handed and right handed within the market, and later on, positive news is used to push up the stock price. Usually, before a sharp drop, the stock price will rise abnormally, and the trading volume will suddenly surge, taking advantage of the opportunity to sell.

6. Avoid buying companies that frequently use financial technology, such as name changes, rights issues, rights issues, and joint ventures. Because on the eve of each rights issue or sale, major shareholders must also deposit physical stocks with securities firms. If they discover that the stock price has risen for a period of time and suddenly there is a large amount of physical stocks deposited with securities firms, it is very likely that they are preparing to sell or issue shares. For example, in the two weeks leading up to the sharp decline, Tuyi Holdings had a large amount of physical stocks deposited into Futu Securities.