"Major Shareholder Cashes Out HK$1.7B on Good Performance; Bosideng Plummets Over 15%"
Following the disclosure of revenue and net profit for the previous fiscal year that greatly exceeded expectations, a major shareholder swiftly cashed out a substantial amount, exceeding 1.7 billion Hong Kong dollars, which is nearly 1.6 billion yuan in Chinese currency. On the morning of July 3rd, after the news of the major shareholder's substantial cash-out was revealed, Bosideng's stock price plummeted by more than 18% during trading.
Bosideng disclosed on June 26th that for the fiscal year 2023/2024, the company's revenue and net profit rose by 38.4% and 44.7%, respectively. After the performance was announced, the stock price rose for two consecutive days. However, on the morning of July 3rd, the company announced that the major shareholder planned to sell 400 million shares to the buyer at a price of 4.31 Hong Kong dollars per share.
As soon as the news of the major shareholder's cash-out was disclosed, Bosideng's stock price immediately plummeted. By the midday closing on July 3rd, Bosideng's stock price had dropped by 15.51%, closing at 4.03 Hong Kong dollars, which had already fallen below the price at which the major shareholder cashed out, and the total market value had retreated to 44.3 billion Hong Kong dollars.
Total cash-out of 3.64% of the total shares
Bosideng announced on the morning of July 3rd that Yingxin International Investment Limited (hereinafter referred to as "Yingxin International"), which is indirectly wholly owned by the group's founder, chairman of the board, and controlling shareholder, Gao Dekang, has signed a block trade agreement with the placement agent to sell 400 million shares to the buyer at a price of 4.31 Hong Kong dollars per share, representing approximately 3.64% of Bosideng's total issued shares.
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As of now, Yingxin International holds about 15.6% of Bosideng's shares. After the placement is completed, the shareholding ratio will be reduced to 11.96%, and Gao Dekang will remain the controlling shareholder of the company. According to the placement price, the funds obtained from Gao Dekang's sale of Bosideng shares this time will exceed 1.7 billion Hong Kong dollars.
Bosideng stated in the announcement that the seller's placement is mainly to optimize the shareholder structure, release the market liquidity of shares, and introduce more high-quality domestic and foreign investors. The funds obtained from the placement will be mainly used for the seller's capital needs and the development of charitable causes.
A well-known analyst in Hong Kong analyzed for the First Financial Daily reporter that after the performance was favorable, the placement price had a certain gap from the previous high point, which some investors could not accept, thinking that the major shareholder was taking advantage of the good news to cash out in a big way. After the major shareholder's reduction, because it was a placement, it is estimated that the volume is still relatively large, so it also caused a larger discount, leading to a significant drop. If investors do not hold shares, they can continue to wait and see; investors who already hold shares need to consider taking the opportunity of the rebound during the trading day to stop the loss, thereby reducing the risk.
A similar situation to Bosideng also occurred with Li Auto (02015.HK). On February 26th of this year, after Li Auto disclosed annual performance that far exceeded market expectations, the stock price soared by 25.45% the next day, and on the 27th, it approached 183 Hong Kong dollars. About a month later, Wang Xing, the CEO of Meituan-W (03690.HK) and non-executive director of Li Auto, reduced nearly 4 million shares from March 26th to March 28th, with an average reduction price of about 120 Hong Kong dollars, cashing out about 500 million Hong Kong dollars in three days. In the following quarter, Li Auto incurred an operating loss, and the delivery guidance for the second quarter was only slightly more than 100,000 vehicles, and it once fell below 70 Hong Kong dollars at the end of June.
After the performance, securities firms "tout the stock"On the evening of June 26, Bosideng (3998.HK) disclosed its annual report for the fiscal year 2023/24 (ending March 31, 2024). During the reporting period, the company's revenue reached 23.21 billion yuan, a 38.4% increase; net profit was 3.12 billion yuan, a 44.7% increase. Compared to the past, this performance has set a new high for Bosideng in recent years.
According to the disclosure, in the fiscal year 2023/2024, all four of the company's main business units achieved rapid growth. Among them, the brand down jacket business remained the largest source of revenue for Bosideng, with revenue of about 19.521 billion yuan, accounting for 84.1% of the total revenue, a year-on-year increase of 43.8%; the OEM processing management business revenue was 2.67 billion yuan, accounting for 11.5% of the total revenue, a year-on-year increase of 16.4%; the women's wear business recorded revenue of 820 million yuan, accounting for 3.5% of the total revenue, a year-on-year increase of 16.6%.
After the performance was disclosed, several securities firms expressed optimism about Bosideng in their research reports. Its stock price rose for two consecutive days on June 27 and 28, with an increase of more than 5% each day.
Tianfeng Securities analyst Sun Haiyang said on June 30 that Bosideng, in terms of product innovation, insists on category innovation and expansion of incremental business for its main brand, strengthens the positioning of functional clothing, "continuously wins the consumer's mind," and continues to strive to achieve the goal of brand leadership perception and maximizing product sales.
Guoha Securities analyst Ma Chuanqi believes that Bosideng brand down jackets' online revenue increased by 41.3% year-on-year to 6.84 billion yuan. The brand has made efforts on multiple online platforms to achieve rapid and high-quality growth. In the future, it will "continue to innovate products through iterations," expand incremental business, further upgrade channel quality, and solidify the efficiency of single-store operations. Therefore, he "is optimistic about the company's continuous improvement in product strength and brand strength to achieve higher profit margins" and maintains a "buy" rating.
However, after a sharp decline in the morning of the 3rd, Bosideng's market value fell significantly. As of the midday closing, the total market value of the stock was 44.3 billion Hong Kong dollars, and the stock price broke below the price at which major shareholders sold their shares.