The floor of heaven and earth, demon stocks flash-crashed in the "spring breeze".

Never be overconfident that you won't be the last one to play the game of passing the drum.

History always bears astonishing similarities, and once again, a "demon stock" has reached the stage of passing the drum.

At 1:00 p.m. on April 22nd, the stock price of Jinhua Spring Plastic Technology Co., Ltd. (referred to as Spring Plastic Technology) opened with a series of large sell orders. Within 3 minutes, its stock price completely broke through the daily limit and plummeted at a 90-degree angle, then continued to fluctuate downwards. At 2:29 p.m., the stock price of Spring Plastic Technology was firmly pressed down to the limit, accompanied by the highest trading volume since its listing.

Prior to this, Spring Plastic Technology had risen strongly for 7 consecutive trading days. Starting from April 12th, the stock price of Spring Plastic Technology surged rapidly from 12.12 yuan to hit the daily limit, with the candlestick chart breaking through the resistance of the short and medium-term moving averages. Subsequently, Spring Plastic Technology entered a frenzy mode, continuously hitting the limit.

Interestingly, even after shareholder Fang Xiubao, who holds 0.5071% of the shares, announced on April 18th that he would divest all his shares in a clearance-style reduction from April 25th, 2024, to October 24th, 2024, Spring Plastic Technology still maintained strong performance, hitting two consecutive daily limit ups.

The performance is also lackluster. On April 19th, Chun Guang Technology released its 2023 annual report, showing that it achieved a revenue of 1.82 billion yuan last year, a year-on-year decrease of 5.28%; a net profit of 24.9964 million yuan, a year-on-year decrease of 74.6%, and plans to distribute a cash dividend of 1 yuan (tax included) for every 10 shares.

Chun Guang Technology also warned of risks, stating that the company's stock price has experienced a significant short-term increase, which may lead to a substantial decline after the rapid rise. The company has a small float, posing a risk of irrational speculative trading in the secondary market.

However, despite the continuous rise of Chun Guang Technology, some netizens in the stock forum were once very optimistic. Some even exclaimed "nine consecutive limit-up" and "12 consecutive limit-up, let's go", while others lamented missing the opportunity to buy in during the continuous limit-up. Some netizens even analyzed Chun Guang Technology in a seemingly knowledgeable manner, mentioning new productive forces, equipment upgrades, low-altitude flight new materials, overseas exports, the concept of high dividends under the ninth national policy, repurchase and cancellation, annual profit, home appliance accessories, first-quarter report of increased profits in home appliances, and robots... It seems like it's going to continue to rise.

However, there were also some rational netizens: "Chasing after a company's stock with a market value of 3 billion yuan, which only made a profit of 25 million yuan in the fourth quarter of the year, is dreaming to follow lies and expecting it to rise every day." There were also super-sensitive netizens who warned early in the morning to be cautious of a "limit-down" today.

So, who is speculating on Chun Guang Technology, and what are they speculating on?

01

Public information shows that Chun Guang Technology was founded in 1985, originally known as Chun Guang Plastic Factory in Shanghu Town, Zhejiang. It relocated to Jinhua in 1996 and is a national high-tech enterprise specializing in the main business of clean appliance hoses, accessories, and complete machines. Chun Guang Limited was established in 2000 and became a joint-stock company in 2016. On July 30, 2018, Chun Guang Technology successfully listed on the Shanghai Stock Exchange with an issue price of 18.46 yuan per share.

However, the stock price of Chun Guang Technology is a typical example of the type that peaks shortly after going public. On August 28, 2018, just one month after its initial public offering, Chun Guang Technology's stock price reached a high of 61.98 yuan and then plummeted. During the decline, Chun Guang Technology also experienced a surge in stock prices in 2021, but overall, it continued to fluctuate and trend downward. On February 8 of this year, Chun Guang Technology's stock price had dropped to a record low of 7.72 yuan, a staggering decline.

In terms of performance, Chun Guang Technology's performance after going public has been mediocre. After reaching its highest historical net profit of 142 million yuan in 2020, its net profit has declined year-on-year for three consecutive years, with the decline rate accelerating each year.

It is worth mentioning that on May 12, 2021, Chen Kai, the general manager of Chun Guang Technology, participated in a communication meeting organized by Northeast Securities for listed companies and stated that the domestic factories of the two vacuum cleaner OEM factories, SUNSTONE in Vietnam and Shangteng in Suzhou, which the company had acquired earlier, are expected to produce approximately 1-1.5 million units in 2021, with the Vietnamese factory expected to produce around 1.5 million units. The target revenue for the whole machine business is 500-800 million yuan.

Five days later, some securities firms released this positive news and calculated the additional revenue and net profit that these two companies would bring to Chun Guang Technology based on assumptions. Interestingly, just three days later, Chun Guang Technology issued a clarification announcement stating that Chen Kai's views do not represent the company, and that the data and profit forecasts from some securities research reports are inaccurate.

It is worth noting that May 12, 2021, was precisely the starting point of the accelerated surge in Chun Guang Technology's stock price. From that day on, Chun Guang Technology, which was trading around 19 yuan, rose to over 31 yuan within seven days. If the stock price surge has nothing to do with the release of this news and profit forecasts, it is clearly not convincing.

On July 28, 2021, Chun Guang Technology received a warning letter from the Shanghai Stock Exchange, which issued a regulatory warning to Chen Kai. Since then, Chun Guang Technology has largely escaped the media spotlight.

The question arises: given that Chun Guang Technology is not in a sunrise industry and has limited room for imagination, it is difficult for the capital market to tell a compelling story. Furthermore, with such performance, it is indeed difficult to boost the stock price. In this situation, why has the stock price repeatedly hit the limit down?

Some analysts believe that the recent initiative "Promoting the Replacement of Old Appliances with New Ones and Promoting the Renewal of Consumption Cycle," jointly issued by six associations including the China Household Electrical Appliances Association, has boosted the household appliance sector in the capital market. Market funds have also begun to chase after some household appliance stocks. Meanwhile, Chun Guang Technology has a relatively small market float of only 135 million shares, making it a typical small-cap stock. Typically, such small-cap stocks are the focus of short-term funds.

However, regardless of the boost from the household appliance policy, it is crucial for netizens to pay close attention to how much value Chun Guang Technology truly holds in terms of its imaginative potential, performance support, and future prospects. Especially with consecutive limit-up rises and the departure of a "capital giant," facing various reasons for optimism, ordinary investors should approach with caution and carefully examine whether there are any signs of a turning point. When things seem unusually favorable, there may be hidden risks. It's essential not to blindly follow the crowd, as it's easy to be blinded by "springtime," only to wake up to a fleeting dream.

[This article is for communication purposes only and does not constitute investment advice. Please be mindful of investment risks.]