At the afternoon close, the stock price of Henglong finally closed at 6.52 Hong Kong Dollar, a drop of 10.68% for the whole day, and Trading Volume increased by 60% compared with usual.
Analysis reports after the closing began to come out one after another.
CICC first gave a brief review to the market:
"Henglong Group Today's stock price adjustment mainly reflects the market's concerns about the company's future Control structure.
After the completion of Rights Issue, the shareholding ratio of Zhao Chen increased significantly, forming a two-headed pattern with its parent Zhao Jianguo.
In the short term, the company may face uncertainty in its governance structure, but in the long term, the appointment of young management may bring new development ideas to the company.
Maintain 'neutral' rating."
Morgan Stanley View:
"Although the funding doubts have not completely dissipated, the company's timely clarification and proactive cooperation with supervision have alleviated market concerns.
The current valuation has reflected some pessimistic expectations, and the Rights Issue price of 6.2 Hong Kong Dollar provides strong support. It is recommended to pay attention to the progress of the Zhao Jianguo case, as the outcome of this incident will have a decisive impact on the corporate governance structure."
Retail investors' views (selected by Stock Bar):
"I finally understand. Zhao Chen's operation is a typical 'Open Scheme' - use Rights Issue to dilute dad's shares, use Rights Issue to acquire Rights Issue at a low price to increase his holdings, and then use Whitewash Waiver to evade the offer. Every link is linked, clever!"
"But the question is where did he get so much money? 700 million in cash! To put it bluntly, even if he is really a genius and made money by investing in Bitcoin, he still has to have capital! Where did the initial capital come from?"
"Could it be that...Zhao Chen is just White Glove? Is there someone else behind it?"
"I also suspect that the script of a 20-year-old college student going from zero to controlling a company with a market value of billions in half a year is too fantasy."
"But if it is really White Glove, then who is the financial backer behind him? Why should he be chosen? And will the financial backer allow him to give shares worth nearly Two Hundred Million to his girlfriend?"
"So it is more likely that he is really capable. Although it is difficult to accept, the capital market never lacks miracles."
The market is in confusion, speculation, and wait-and-see, waiting for the arrival of the next catalyst.
And everyone knows that the catalyst is the Zhao Jianguo case.
The next day, June 1st, Zhou Xi.
Before the official opening of Hong Kong Stocks.
Hong Kong Securities Regulatory Commission and Stock Exchange issued a rare simultaneous announcement, formally responding to Henglong Group Rights Issue and related funding issues.
Securities Regulatory Commission Announcement Summary:
"The Association has reviewed the documentation describing the source of funds of the actual controller and relevant supporting materials submitted by Henglong Group (stock code: ×××××).
After preliminary verification, the source of funds for Mr. Zhao Chen's participation in Rights Issue is clear, relevant cross-border capital flows have gone through necessary reporting procedures, and no violation of <Securities and Futures Ordinance> has been found.
The Commission will continue to pay attention to market dynamics and perform regulatory duties in accordance with the law."
Stock Exchange Announcement Summary:
"The Hong Kong Joint Stock Exchange confirms that Henglong Group's Rights Issue procedures comply with the relevant provisions of <Listing Rules> and the "Code on Corporate Acquisitions, Mergers and Share Repurchases".
Whitewash Waiver's motion was approved by Independent Shareholder's vote, and the procedures are compliant and valid. Rights Issue shares will be listed and traded as scheduled on June 2."
Although the two announcements were carefully worded, the signals they sent were clear:
The supervisory authorities recognized the legality of the Zhao Chen funds and the compliance of the Rights Issue program.
At 9:30 a. m., Henglong's stock price opened at 6.60 Hong Kong Dollar, up 1.23% from yesterday's closing price of 6.52 Hong Kong Dollar.
After the market opened, Buying Pressure continued to pour in, and the stock price continued to rise:
9:45,6.75 Hong Kong Dollar(+3.53%)
10:15,6.82 Hong Kong Dollar(+4.60%)
At 10:45, the intraday high hit 6.85 Hong Kong Dollar (+5.06%)
In Chairman's Office, Chen Xi stared at the screen:
"Institutions are covering their positions. Especially the foreign funds that reduced their holdings before are buying today."
Zhao Chen looked at Time-sharing Chart in the office:
"It makes sense. The regulatory stance has eliminated the greatest uncertainty, and funds that were previously on the sidelines will naturally enter the market."
"But the increase narrowed in the afternoon." Su Wantang reminded softly, "Now it has fallen back to around 6.65."
Indeed, starting at 11 a. m., the stock price slowly fell back from its high point.
By the afternoon close, Henglong closed at 6.64 Hong Kong Dollar, an increase of 1.84% throughout the day, and the transaction volume increased by 80% compared with yesterday.
Market analysis follows quickly:
<Wall Street News>Quick review:
"The regulatory stance has brought an end to the Henglong capital dispute, but market concerns have not been completely eliminated.
The narrowing of gains in the afternoon showed that investors began to turn their attention to another issue - the company's future Control ownership."
Bloomberg Terminal leaked institutional views:
"The funding problem has been resolved, but the governance issue has just surfaced. The equity confrontation between Zhao Chen and Zhao Jianguo will become a key variable affecting the mid- to long-term valuation of Henglong."
Stock Bar hot post was pushed to the homepage:
"The regulatory hurdle has been passed, but the real test is yet to come.
What will happen to the 30.35% shares of Zhao Jianguo after the one-year authorization expires? If the criminal case against Zhao Jianguo is severely sentenced, will the shares be forcibly disposed of?
If the sentence is light, will he snatch Control from his son? These uncertainties are the fundamental reason why the stock price cannot rise."
On June 2, Friday, the new shares were officially listed for circulation.
As the total share capital expanded from 400 million shares to 560 million shares, the market value calculation basis of Henglong has changed.