Following a phenomenal surge in the A-share market, over a hundred listed companies have announced plans to reduce their holdings, including leading stocks in the semiconductor, photovoltaic, electric power, and non-ferrous metal industries such as Advanced Substrates (688234.SH), Trina Solar (688599.SH), Sichuan Gold (001337.SZ), Loongson Technology (688047.SH), and China West Electric (601179.SH).

The announced reduction plans cover减持 targets including actual controllers of listed companies and their concerted action persons, directors, supervisors, senior executives, and industrial investment shareholders. Regarding the purposes of major shareholders' reductions, there are those like the National Big Fund and other industrial funds that reduce holdings to recover investment costs, as well as actual controllers of listed companies reducing holdings to repay equity pledge reductions. There are also shareholders of "poor performance stocks" who are opportunistically planning to cash out funds.

It should be noted that what has been announced so far are reduction plans, and the actual reduction actions will only take effect 15 trading days after the announcement date.

"Poor performance stock" shareholders are busy reducing holdings

Among the hundreds of reduction plans announced in succession, shareholders of some "poor performance stocks" are eager to announce their reduction plans. After West Test (301306.SZ) went public on the Growth Enterprise Board in 2022 and its performance "turned ugly" with losses the following year, the company's net profit attributable to the parent company lost 49.1357 million yuan in the first half of this year, a sharp year-on-year decrease of 686.46%.

Advertisement

From September 24 to October 8, West Test's stock price soared by 57.73%, and shareholders Ningbo Meishan Free Trade Port Area Fengnian Junyue Investment Partnership (Limited Partnership) (hereinafter referred to as "Fengnian Junyue") and its concerted action persons Chengdu Chuangtou Fengnian Junchuan Military Industry Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Fengnian Junchuan"), and Ningbo Meishan Free Trade Port Area Fengnian Junhe Investment Partnership (Limited Partnership) (hereinafter referred to as "Fengnian Junhe") plan to reduce holdings by no more than 2.11 million shares, accounting for 2.5% of the total share capital.

This is the second reduction by Fengnian Junyue and its concerted action persons since West Test went public. The last one occurred in July 2023, when the reduction plan was terminated early due to the three concerted action persons exceeding the reduction ratio by 0.08%. According to West Test's latest price of 36.81 yuan, the reduction amount for the aforementioned shareholders this time is approximately 77.6691 million yuan.

In the context of a general market rise, almost all individual stocks in the market have benefited, and some ST stocks with generally poor fundamentals have also recorded significant increases in this wave of the market. As of the time of writing, *ST Huawang (603007.SH, hereinafter referred to as "Huawang Shares") has issued a reduction announcement.

Huawang Shares' natural person shareholder Wu Qun holds 25 million shares of the listed company, accounting for 6.14% of the total share capital. Recently, the company announced that Wu Qun plans to reduce holdings by no more than 12.2054 million shares due to his own funding needs. On October 9, Huawang Shares hit the daily limit up, with the stock price closing at 7.25 yuan. Based on this calculation, Wu Qun's reduction and cash amount is approximately 88.4891 million yuan. At the beginning of September this year, Huawang Shares initiated an upward trend, with a cumulative increase of 41.88% from September to the present, during which there were 8 daily limit up days. It should be noted that Wu Qun's last reduction plan was announced in May 2022, but ultimately no shares were reduced.

Huawang Shares is mainly engaged in the design and construction of landscape engineering in the fields of municipal administration, tourism landscape, roads, and real estate. Since 2020, the company's performance has fallen into a loss "quagmire". In four and a half years, the net profit attributable to the parent company after deducting non-recurring gains and losses has a total loss of about 1.163 billion yuan, of which the loss in 2022 was 597 million yuan, creating the highest loss amount since its listing. In the first half of this year, Huawang Shares' revenue scale continued to decline, down 23.19% year-on-year, reaching 38.571 million yuan, the lowest level since its listing; the net profit attributable to the parent company after deducting non-recurring gains and losses lost 61.7412 million yuan. After several years of consecutive losses, as of the end of the second quarter, Huawang Shares' undistributed profit loss was 595 million yuan, meaning that since its listing in 2016, it has not made any profit.After individual stocks' share prices soar, some controlling shareholders plan to repay loans and equity pledge funds by reducing and cashing out shares. The controlling shareholder and holding shareholder of Huhua Shares (003002.SZ), which is engaged in the civil explosion industry, Qin Yuezhong, plans to reduce the company's shares by no more than 6 million shares, which is no more than 3% of the total share capital, to repay loans and equity pledge funds. As of the announcement date, 10 million shares held by Qin Yuezhong are pledged, accounting for 24.27% of his shareholding ratio. Since September, Huhua Shares' share price has soared by 78.83% in total. According to the latest price of 19.01 yuan, Qin Yuezhong's reduction amount is about 114 million yuan.

So far in this round of market, the increase in the TMT sector is astonishing, among which the semiconductor sub-sector has performed eye-catchingly. Even on October 9th, when the overall market rebounded, the stocks of leading companies still rose sharply. As of press time, Tianyue Advanced, Hehui Optoelectronics, Loongson Technology, and Wantai Technology have all released reduction plans.

With the sharp rise in share prices, some industrial investors have begun to recover funds. As an industry benchmark, the National Integrated Circuit Industry Investment Fund Co., Ltd. (hereinafter referred to as "Big Fund") plans to reduce its holdings in Zhongdian Port (001287.SZ) by 1.9531 million shares, accounting for 0.257% of the total share capital. The Big Fund holds a total of 80.7903 million shares in Zhongdian Port, making it the second-largest shareholder. This is also the first time the Big Fund has reduced its holdings in Zhongdian Port, with an estimated cash-out amount of about 39.4331 million yuan.

Wan Tai Technology's shareholder, Zhuhai Ronglin Equity Investment Partnership (Limited Partnership) (hereinafter referred to as "Zhuhai Ronglin"), originally planned to reduce its holdings by 12.4281 million shares. On the evening of the 8th, the listed company announced the addition of a reduction implementation entity, namely Zhuhai Ronglin's joint action person Gree Electric Appliances (000651.SZ). Currently, Gree Electric Appliances holds 35.859 million shares of Wan Tai Technology, accounting for 2.89% of the total share capital.

Gree Electric Appliances' shareholding ratio in Zhuhai Ronglin is 91.27%, and it has a significant influence on major decisions of Zhuhai Ronglin. After adding the reduction entity, Gree Electric Appliances will directly reduce its holdings in Wan Tai Technology through a centralized bidding method, with an estimated reduction amount of 430 million yuan.

As an early investor in Hehui Optoelectronics, Shanghai Integrated Circuit Industry Investment Fund Co., Ltd. (hereinafter referred to as "Integrated Circuit Fund") and Shanghai Science and Technology Venture Capital (Group) Co., Ltd. (hereinafter referred to as "Science and Technology Venture Capital") are joint action persons, holding a total of 1.811 billion shares of the company, accounting for 13.09% of the total share capital. Since September 24th, Hehui Optoelectronics' share price has risen by 23.15% in total. The two major industrial capitals plan to recover part of their investments. According to the announcement, the Integrated Circuit Fund and Science and Technology Venture Capital plan to reduce their holdings by a total of 276 million shares, no more than 2% of the total share capital. According to the latest closing price of Hehui Optoelectronics at 2.5 yuan, the reduction amount is 690 million yuan.

From a fundamental point of view, Hehui Optoelectronics, which is engaged in the semiconductor display panel industry, has gone public on the Science and Technology Innovation Board in an unprofitable form and has not yet achieved profitability. As of the end of the first half of the year, the company's undistributed profit loss is 8.305 billion yuan, of which the net profit attributable to the mother company after deducting non-recurring gains and losses in the first half of this year is a loss of 1.306 billion yuan, a year-on-year reduction of 3.43%; the operating income is 2.394 billion yuan, a year-on-year increase of 74.36%.