Recently Yahoo News on-line reported the following:
Chinese Cement Maker Halted After 99% Crash in 15 Minutes
Bloomberg News
Wed, April 10, 2024 at 12:35 a.m. PDT
(Bloomberg) -- A Chinese cement producer was in the
spotlight after it suspended stock trading Wednesday, following a selloff that
nearly wiped out all its market value in the final 15 minutes of the previous
session.
China Tianrui Group Cement Co. said trading in its Hong
Kong-listed shares has been halted from 9 a.m. local time, pending an
announcement related to inside information, according to an exchange filing.
Based in the central Henan province, Tianrui’s stock plunged 99% to about HK$0.05 Tuesday, cutting its market capitalization to HK$141 million ($18 million). During the selloff, about 281 million shares, or a third of the firm’s free float, changed hands. Of that amount, more than 80 million shares were traded during the final few minutes of the session known as the closing auction.
Tianrui’s abrupt and dramatic stock rout is a reminder of the risks associated with obscure Chinese firms with a high concentration of shareholding and those that engage in financing practices such as using shares as debt collateral. The loss-making company’s woes also come at a time when an unprecedented housing crisis is causing increased stress among the country’s property developers and construction firms.
“When there is a relatively large selling order, it is easy to trigger panic since there are not enough buyers,” said Steven Leung, executive director at UOB Kay Hian in Hong Kong, adding that penny stocks are prone to sudden plunges given thin liquidity. “It could also come from margin calls if the major shareholder pledged the stocks.”
Tianrui’s controlling shareholder Li Liufa and his spouse jointly own approximately 70% of the company, according to a filing in January. The cement producer also announced at that time that it pledged 97 million shares, or 3.3% of its total, to secure a 12-month loan of up to 166.5 million yuan.
The company’s investor relations officials couldn’t be reached for comment when contacted by Bloomberg. It also didn’t immediately respond to a written request for comment.
Tianrui swung to a net loss of 634 million yuan ($87.7 million) last year, from a profit of 449 million yuan in 2022. It cited weak demand resulting from China’s property downturn, intensifying market competition and high raw material costs as reasons.
Listed in Hong Kong in 2011, the company has an annual cement output capacity of about 58 million tons, with its business primarily focused on central and northern China, according to its official website. It also said its products were used in major domestic infrastructure projects such as high-speed rail lines.
Translation
（彭博）— 週三，一家中國水泥生產商暫停股票交易，該公司在前一交易日最後 15 分鐘的拋售中幾乎抹去了其所有市值，該公司成為眾人關注的焦點。
根據一份交易所備案文件，中國天瑞集團水泥有限公司表示，其在香港上市的股票已於當地時間上午 9 點起停牌，等待與內部消息相關的公告。
天瑞總部位於河南省中部，週二股價暴跌 99%，至 0.05 港元左右，市值降至 1.41 億港元（1,800 萬美元）。 在拋售期間，約 2.81 億股（即該公司自由流通股的三分之一）易手。 其中，超過 8000 萬股在收市競價交易時段的最後幾分鐘進行了交易。
天瑞的股價突然暴跌提醒人們，股權高度集中、不知名的中國公司以及從事以股票作為債務抵押品等融資行為的公司所面臨的風險。 這家虧損公司陷入困境之際，前所未有的住房危機正在給該國的房地產開發商和建築公司帶來更大的壓力。
香港 UOB Kay Hian 執行董事 Steven Leung 表示，「當賣單相對較大時，很容易引發恐慌，因為沒有足夠的買家」。他補充說，由於流動性低，細價股很容易突然暴跌。 「如果大股東抵押了股票，突然暴跌也可能來自追加保證金」。
根據1月的文件，天瑞的控股股東 Li Liufa 及其配偶共同擁有該公司約70%的股份。 該水泥生產商當時也宣布，它抵押了9,700萬股股份，佔總股本的3.3%，以獲得高達1.665億元人民幣的為期12個月的貸款。
彭博社未能接觸該公司投資者關係官員請求置評。 它亦沒有對請求書面評論作出立即回應。
天瑞從2022年的4.49億元利潤轉向去年的淨虧損6.34億元人民幣（8,770萬美元）。原因包括中國房地產低迷、市場競爭加劇和原材料成本高導致需求疲軟。
據其官網介紹，該公司於2011年在香港上市，水泥年產能約5,800萬噸，業務主要集中在華中和華北地區。
該公司還表示，其產品是被用於高鐵等國內重大基礎設施項目。
So, Tianrui’s abrupt and dramatic
stock rout is a reminder of the risks associated with obscure Chinese firms
that have a high concentration of shareholding. This company is making a loss due
to an unprecedented housing crisis that causes stress to property developers
and construction firms.
Note:
1. China Tianrui Group Cement
Company Limited (中國天瑞集團水泥) was
founded in 2000 by Li Fashen and Tianrui Group Casting Co., Ltd. Its business focuses
on the domestic mining and utilization of limestone, as well as the production
and sales of cement. The headquarters is located at Ruzhou City, Henan
Province, China.
2. Closing auction (收市競價交易時段),which
allows execution at the closing price, is a trading mechanism commonly used in
securities markets across the globe.
During a closing auction, market participants interested in trading at
the closing price may input buy and sell orders. Then their orders interact with each other to
form a consensus closing price for each security, and orders are executed at
that price. (https://www.hkex.com.hk/Global/Exchange/FAQ/)
3. According to IFEC (投委會)in Hong Kong, a closing auction session (CAS) was introduced by
the HKEX on 25 July 2016. It extends trading by an extra 8-10 minutes to all
equities and funds to meet the needs of some investors, such as index fund
managers, to trade at the closing price. (https://www.ifec.org.hk/web/tc/investment/investment-products/stock/stock-trading/)
For comparation and clarity purposes, a Chinese version of the
above paragraph is attached:
收市競價交易時段 (closing
auction session) 是一種以單一價格競價的交易機制，買家和賣家在該時段輸入買賣訂單，而交易系統在收集有關的訂單後，會因應訂單的互動，得出一個可以完成最多交易的價格，即收市價。之後，按照買賣盤類別、價格和時間的排序，買賣訂單會以這個單一價格依次進行配對和交易。(https://www.ifec.org.hk/web/tc/investment/investment-products/stock/stock-trading/)
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