Haixin Group Reports Strong Negative Improvement In Some Its Business

The profile of the company:

Shanghai Haixin Group Co. Ltd. [600851:CH] is a Chinese based industrial company that focuses mainly in the production, marketing and distribution of textile products and pharmaceuticals. Some of the business activities of the company are the production and marketing of plush fabric and clothing and pharmaceutical products. The company also involves in other businesses such as financial investment business and industrial plant rental management business. The company conducts its business within the Chinese domestic region and overseas as well. The company was formed and issued a business license on June 1991 with its headquarter situated at Shanghai, China. The executive head of the company is Minhua Fei with up to about 1,121 other employees currently working for the company.

The stock performance of the company:

According to the report from the Chinese stock market reveals positive performances from the stock of Shanghai Haixin Group Co. Ltd. [600851:CH]. The market report highlighted that the company’s stock is performing positively better than some of the major contenders in the business. From the report gathered from the market, the company’s stock is currently trading at about 10.48 CNY per stock which implies that the price trends on a 24hours price magnitude by 2.95% 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 12.80% YoY. The stock of the company trades with a 52-weeks high price of 10.64 CNY per stock while the 52-weeks low price amounts to about 6.50 CNY per stock. From the report from reuters, the market capitalization of the company significantly hits about CNY8.88 billion while the total revenue generated from business conducted within the Fy20 period amounted to about CNY932.73 million. As a result of the above figures, the stock of the company trends on an annual price to sales ratio of about 9.52x. The performance of the stock of the company as regards to its PSR on annual basis is vastly supported by the significantly decreased revenue that was generated from business conducted within the Fy20 period. The financial performance of the company during the Fy20 period was a huge downtrend as the pandemic period affected most of the financial indicators.

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 this month at 1048 per stock. The bearish movement and lowest price performance of the stock was recorded at January this year at 7.03 per stock. The heavy selling volume of the December last year as it took the trading volume above 150 million.

This week’s continued unloading found a new price increase by 1.22 percent before some buying came in and it managed to close at 10.48 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 50 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 can still try these few strategies in order to improve the financial performance of the company in the next reporting periods.

Improvement strategies:

From a look at the financial data recorded from the different business specialties of the company, the company’s main businesses (pharmaceutical and textile business) were all seen on a strong and serious negative magnitude where others like investment and transformation business stood positively. This means that the company needs to work seriously on improving the production rate of pharmaceutical products and textiles.

References:

https://www.marketscreener.com/quote/stock/SHANGHAI-HAIXIN-GROUP-CO-9950185/company/

https://www.reuters.com/companies/600851.SS/charts