Hainan Haoyao Co., Ltd. (600521.SS), a Chinese pharmaceutical company, experienced a dramatic fall on the stock market, plummeting to a halt on September 18, 2024, thus ending its six-day winning streak. The stock closed at 4.89 yuan, with the halt order reaching nearly a million hands and the trading volume exceeding 200 million yuan.
This sudden downturn came as a surprise to investors, given the company’s recent impressive performance. However, Hainan Haoyao had already issued a warning on September 17, 2024, stating that its stock price had significantly deviated from the market trend and was at risk of overheating due to market sentiment.
The company emphasized that there had been no major changes in its fundamentals, and no material information had been omitted. Despite this, its stock price had surged, and it was currently trading at a premium to the market value of the pharmaceutical manufacturing industry. In the first half of 2024, Hainan Haoyao was in a loss-making situation.
The company’s main business is the research and development of human cell preparation, storage, and application technology, as well as drug development. Its subsidiary, Hainan Youni科尔 Biotechnology Co., Ltd., has been investing heavily in research and development and market expansion, yet it has not yet turned a profit. As of December 31, 2023, Hainan Haoyao had written off 17.15 million yuan in asset impairment provisions for its investment in Youni科尔, and the subsidiary’s book value was zero.
The future of the company’s products remains uncertain due to potential technological and competitive challenges. Moreover, the industry is subject to various factors, such as changes in market demand, industry, and national policies, which could also impact its performance.
The recent surge in Hainan Haoyao’s stock price was attributed to the growing interest in the Hainan Free Trade Port, which has been a hot topic in the Chinese market. However, as the company’s warning indicated, investors should be cautious about the potential risks associated with its rapid price increase.
First Financial, the source of this report, noted that the halt order on the stock market reached nearly a million hands, indicating strong investor interest in the stock. However, the sudden drop in the stock price suggests that investors are becoming increasingly concerned about the company’s future prospects.
In conclusion, the dramatic fall of Hainan Haoyao’s stock price serves as a reminder for investors to remain vigilant and cautious when dealing with high-risk stocks. The company’s warning about the potential risks associated with its rapid price increase should serve as a warning to other investors in the market.
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