New Stock Surge Continues: Shangda Shares Soar 10x on Debut

Another new stock soars on its debut day.

On October 16th, Shangda Shares (301522.SZ) made its debut on the ChiNext board of the Shenzhen Stock Exchange. By the end of the day, the stock price of Shangda Shares was 79.85 yuan per share, with an increase of 1060.61%, and a total market value of 29.7 billion yuan, becoming the stock with the highest increase of the day.

In the morning of the 16th, Shangda Shares opened high, and at 9:30 AM, it triggered a temporary suspension due to the transaction price rising to or exceeding 30% above the opening price for the first time. Less than one minute after resuming trading at 9:40 AM, the stock was suspended again. During the trading session, the stock price of Shangda Shares once reached 99.50 yuan per share, with an increase of 1346.22%. On the first day of listing, the total trading volume of the company's stocks reached 595,700 lots, with a turnover rate of 84.31%, and there was a clear fund game in the market.

The issue price of Shangda Shares was 6.88 yuan per share. If calculated based on holding 500 shares per lot until the end of the trading day, investors could earn approximately 36,500 yuan per lot on the first day of listing.

In recent times, many new stocks have seen a significant increase in stock prices on their debut day. Data from Tonghuashun iFind shows that since July 1, 2024, a total of 28 companies have entered the A-share market, all closing higher on their first day. Among them, three stocks, Qiangbang New Materials, Changlian Technology, and Shangda Shares, saw a first-day increase of over 1000%, and 20 stocks had a first-day increase of over 100%.

Established in 2007, Shangda Shares mainly operates in special alloy products such as high-temperature and high-performance alloys, high-quality special stainless steel, etc. In 2023, the company's top five customers included Wujin Stainless Steel, Jiuli Special Materials, CITIC Group, Aviation Industry Group, Baoyin Company, and their affiliated companies.

In recent years, Shangda Shares has seen a continuous growth in performance, with operating income of 912 million yuan, 1.286 billion yuan, and 2.035 billion yuan from 2021 to 2023; the net profit attributable to the parent company was 69 million yuan, 107 million yuan, and 151 million yuan, respectively.

According to Shangda Shares' forecast, in the first three quarters of 2024, the company is expected to achieve an operating income of 1.88 billion yuan to 1.92 billion yuan, with a year-on-year increase of 24.42% to 27.07%; the net profit attributable to the parent company is expected to be 120 million yuan to 125 million yuan, with a year-on-year increase of 1.28% to 5.50%.

According to the prospectus, for this listing, Shangda Shares plans to raise 1.25 billion yuan to be used for the annual production of 8,000 tons of ultra-pure high-performance high-temperature alloy construction project and to supplement working capital. In recent years, the demand for the company's high-temperature alloy and other products has been high, and the capacity utilization rate has also been at a high level. In 2023, the company's comprehensive capacity utilization rate was 108.58%, and the sales rate of high-temperature alloy products was 88.12%. Therefore, it is necessary to expand production capacity through listing fundraising.

However, although Shangda Shares is sought after in the secondary market, the company has not been able to raise enough funds through this listing. The issue price of the company is set at 6.88 yuan per share, and with an issuance of 93 million shares, the expected total fundraising amount is 640 million yuan. After deducting the issuance expenses of 91 million yuan, the expected net fundraising amount is 549 million yuan. The company had stated in the prospectus that if the actual funds raised in this issuance are insufficient, the company will solve the above project funding gap through self-raised funds.The controlling shareholder and actual controller of Shangda Shares is Luan Donghai. Born in 1963, Luan Donghai has served in various positions, including Section Chief of the Qinghe County Government Office, Deputy Secretary of the Chenzhuang Township Party Committee in Qinghe County, and Director of the Economic Commission. In 2007, Luan Donghai and 26 other natural persons participated in the establishment of the predecessor of Shangda Shares, known as Shangda Limited.

In 2010, Shangda Shares introduced an investor, AVIC Heavy Machinery. At that time, AVIC Heavy Machinery increased its capital contribution to the company by 65 million yuan, acquiring 38.46% of the company's shares, surpassing Luan Donghai. As a result, the controlling shareholder and actual controller of the company changed from Luan Donghai to AVIC Heavy Machinery/Aviation Industry Corporation.

Less than five years later, Luan Donghai regained his position as the controlling shareholder and actual controller of Shangda Shares. In 2015, some shareholders of the company withdrew, and Luan Donghai acquired their shares. Concurrently, the company once again increased its capital and expanded its shares, introducing external institutional investors such as SDIC High-Tech and Hebei Investment. After the completion of the share transfer and capital increase, Luan Donghai's shareholding ratio increased to 23.68%, while AVIC Heavy Machinery's shareholding ratio decreased to 21.93%, making Luan Donghai the controlling shareholder and actual controller of the company once again.

Before the company went public, Luan Donghai directly and indirectly controlled 30.82% of Shangda Shares. After the listing, Luan Donghai's shareholding ratio was diluted to 23.12%. AVIC Heavy Machinery remained the company's co-second-largest shareholder with a shareholding ratio of 13.45%. Based on the closing price of 79.85 yuan per share on the first day of listing, the market value of the shares controlled by Luan Donghai was approximately 6.863 billion yuan. The market value of the shares held by AVIC Heavy Machinery was approximately 3.993 billion yuan.