Shanghai Highly: Business Strategies That Might Help Improve Stock Performances

The profile of the company:

Shanghai Highly (Group) Co., Ltd. [600619:CH] is a Chinese based industrial company involves mainly in the research and development, production and marketing of different kinds of compressors and related refrigeration equipment. The company conducts its business activities which includes the production and marketing of refrigeration rotor compressors, automotive scroll compressors, refrigeration equipment, compressor motors. The company also engages in other businesses such as the importation and exportation of different kinds of goods and technologies, the sales of refrigeration equipment and components, auto parts, steel products and other related products. The Company conducts its business within the Chinese domestic regions and oversea regions. The company started its business as far back as April 1954 while its headquarter is located at Shanghai, China. The executive leader of the company is Jianhua Dong with up to 3,854 other employees currently working for the company.

The stock performance of the company:

A glance at the financial performance reports of the stock of Shanghai Highly (Group) Co., Ltd. [600619:CH ] highlights significant poor performances in some of the major financial indicators as compared to the performances of the major contenders in the business. From the report gathered from the market, the company’s stock is currently trading at about 8.60 CNY per stock which implies that the price trends on a 24hours price magnitude by -2.16% as compared to the price of the stock as at same time on yesterday. The price of the company’s stock as at the same period during the Fy20 period reveals that the company’s current stock price has surged significantly by 12.44% YoY. The stock of the company trades with a 52-weeks high price of 12.78 CNY per stock while the 52-weeks low price amounts to about 6.89 CNY per stock. From the report from reuters, the market capitalization of the company significantly hits about CNY7.84 billion while the total revenue generated from business conducted within the Fy20 period amounted to about CNY11.07 billion. As a result of the above figures, the stock of the company trends on an annual price to sales ratio of about 0.71x.

Analysis:

Price Against volume and Accumulation/Distribution.

From the chart above, the index widely followed as a benchmark that reflects the movement of those Chinese stocks that trade in the Chinese stock market. You can see how it peaked at June 2021 at 10.67 per stock. The bearish movement and lowest price performance of the stock was recorded at December last year at 7.15 per stock. The heavy selling volume of the July this year as it took the trading volume above 350 million.

This week’s continued unloading found a new price decrease by 0.22 percent before some buying came in and it managed to close at 8.60 CNY. Consider the extraordinary difference between the weakness of this index and the new all-time highs just seen in the S&P 500.

From the above chart, it is quite a significant fall when viewed on this time frame, isn’t it? From above 380 million volume on June this year all the way down to below 0 million at the middle September. Unlike the index that appeared on the March, 2020 pandemic low area with even greater selling volume than seen at that time.

However, the company should look into these few strategies in order to improve its financial performances for the next annual reporting periods.

Improvement strategies that might help the company:

With the recent performance of the company’s stock, there is needs to look into some of these business strategies in order to improve the performance of the company’s stock in the next reporting periods. These strategies are as follows;

1. Buying back its stock.

2. Partnering with other companies.

3. Obtaining loans and

4. Acquiring government subsidies.

References: https://www.reuters.com/companies/600619.SS/charts, https://www.bloomberg.com/profile/company/600619:CH