Behind the five daily limit increases of Baofeng Technology: Which funds are "going against the wind"?

Baofeng Technology (300431.SZ), which was labeled as a "monster stock", gradually lost its "mythical" color in the process of de-bubble of A-shares, but recently started a "rhythm" of continuous closing of the board, thus once again entering the market's field of vision.

As the A-share market has recovered, Baofeng Technology's stock price has "exploded" again. Many people in the industry pointed out that it was "short-term speculation by hot money". If investors chase high prices, they may be "leeks" and besieged by the main force. As for short-term manipulation of the securities market, the regulators have recently stated that they will maintain a high-pressure situation and pay attention. In terms of the investment value of the stock, although the company's stock price has shrunk significantly in the A-share market shock, the high valuation level still deters investors in the industry.

For Baofeng Technology, whose stock price has been experiencing sharp rises and falls, the industry has judged it as having no fundamental support, selling concepts, and telling stories. Even the company's recent high-profile announcement of its future strategic plan has not received praise from industry researchers.

Short-term speculation by hot money

What funds are behind the five consecutive daily limit increases of Baofeng Technology recently?

After resuming trading on July 13 this year, Baofeng Technology's stock began a fluctuating downward trend with the deep adjustment of the A-share market. The company's stock price fell from a "sky-high" price of more than 300 yuan per share to less than 100 yuan. In addition, due to the impact of the capital increase, the current share price is in the 50 yuan range.

However, just two trading days before the company's stock transfer, Baofeng Technology started to rise by the daily limit. In the five trading days from September 16 to September 22, the transaction amount increased. On September 18, the ex-rights day, the transaction amount suddenly increased to 637 million yuan, and the turnover rate reached 22.13%. The turnover rate in the next three trading days was above 13%. This means that a large amount of active funds intervened.

Judging from the recent Dragon and Tiger List data of Baofeng Technology, the data for the three trading days from September 16 to September 18 and the single trading day on September 22 showed that the top five seats on the buyer side were all sales department seats, while two of the top five seats on the seller side were institutional seats, among which Huatai Securities Xiamen Xiahe Road Securities Sales Department ranked first on the buyer side.

Some private equity analysts believe that the main force behind the speculation is hot money, which may be mainly short-term speculation to make profits in the market recovery. Another senior fund manager said that after the deep correction of A-shares, some stocks are currently in the stage of oversold rebound, and some funds may also see opportunities in this regard.

Judging from the data, some funds are indeed suspected of short-term trading. In the three transactions from September 16 to September 18, Huatai Securities Xiamen Xiahe Road Securities Branch ranked first as a buyer with 65.5983 million yuan, but on September 18, the branch ranked first as a seller with a sales amount of 54.3290 million yuan; in addition, CITIC Securities Jinhua Zhongshan Road Securities Branch bought 45.6534 million yuan in the above three trading days, and then sold 27.8617 million yuan on September 22.

Such speculation is commonplace for Baofeng Technology. Baofeng Technology's stock price has never been "low-key", and it has either soared or plummeted in most cases. The title of "monster stock" has become a consensus in the industry.

"This kind of stock has been controlled by someone, so it's best not to touch it." An institutional person who has studied the company said. According to him, the stock is related to the investigation of CITIC Securities. Some of the people involved in CITIC Securities had set up two investment companies outside and bought Baofeng Technology very accurately. The regulatory authorities may be investigating this matter. Whether it will eventually affect Baofeng Technology depends on whether Baofeng complies with the regulations.

On the evening of September 15, CITIC Securities issued an announcement confirming that General Manager Cheng Boming and three other senior executives of CITIC Securities were required by the public security authorities to accept investigation in accordance with the law for suspected insider trading and leaking insider information. Eleven people have been taken away for investigation in this incident.

At present, the CSRC has imposed administrative penalties on short-term manipulation of the securities market and stated that it will continue to maintain a high-pressure stance on short-term trading. According to the CSRC’s announcement on September 11, Ma Xinqi and Sun Guodong were fined and confiscated their illegal gains for suspected manipulation of the share prices of Quantong Education and Baofeng Technology, with a total amount of nearly 47 million yuan.

According to the CSRC's notice, the methods used in the cases were to influence the corresponding stock prices through false declarations and other methods, and then quickly sell them to make a profit. Among them, Ma Xinqi made multiple large purchase declarations on July 31, 2015, and then quickly withdrew the orders, raising the price of Baofeng Technology by not trading or trading in small quantities, and then quickly sold some of the stocks he had previously held to make a profit.

Accused of "selling concepts"

With the deep adjustment of A-shares, the share price of Storm Technology has shrunk by more than 70% from the resumption of trading on July 13 to September 22. However, "the valuation is too expensive", "the share price is difficult to be supported by fundamentals", and "love to sell concepts" have become the judgments of the industry.

Interestingly, on the second trading day (September 17) when the stock price continued to rise, Baofeng Technology held a press conference in Beijing, unveiled a new 30-member management team, and announced that the company will focus on five major business groups in the future: VR (virtual reality), TV (television), show, video and culture. Some market opinions said that the strong rebound in Baofeng Technology's stock price may also be due to this factor.

Some media quoted Feng Xin, CEO of Baofeng Technology , as saying that the company's five major business segments directly formed an organic ecosystem, each with its own independent development direction, and even going public separately in the future. "In the future, Baofeng will also engage in Internet education, medical and even financial business. When the entire ecosystem can affect 150 million people, its specifications will be comparable to BAT, and Baofeng will have a chance to overtake LeTV and Youku." Feng Xin said in an interview with the media.

However, some analysts in the media industry are not impressed. "VR business has no mature business model in China at present, and the current recognition is also recognition of the future; the show business, involving in this business, shows that the company does not have a particularly strong source of cash flow and no good projects to do, and there are some risks in the legal and regulatory aspects of this business; TV, the current market LeTV (300104.SZ) Super TV shipments are not competitive compared with the total shipments of smart TVs nationwide, and LeTV has not yet made a profit in this area, so it is difficult to say about the prospects." said the above analyst.

Baofeng Technology started out as the Baofeng Video Player for PC. Currently, the company's profit model is mainly to provide users with excellent Internet video service experience for free through products such as Baofeng Video PC and Baofeng Video Mobile APP. It has gained a massive user base and mainly monetizes user traffic through advertising.

On May 18 this year, Baofeng Video released its global "DT Big Entertainment" platform strategy, intending to gradually expand from the existing Internet video business to an Internet entertainment platform that includes value-added services such as Internet video, virtual reality, smart entertainment hardware, O2O, and Internet performing arts video live broadcast. In less than half a year, the company completed the layout of Baofeng Magic Mirror, Baofeng TV, and show business through investment.

However, according to Baofeng Technology's interim results this year, the company's net profit in the first half of the year was only 6.6994 million yuan, a year-on-year decrease of 70.73%. Among them, the development of new products and new projects has led to a rapid increase in the company's R&D expenses; the virtual reality business is in the early investment stage, and Baofeng Magic Mirror is in a loss-making state, which has affected the company's overall net profit.

In the view of an investor who has conducted research at Baofeng Technology, he is not very impressed with what the company is doing. "This company is very active and is trying to attract attention from the outside world by frequently speaking out to the outside world."

However, from the perspective of industry attributes, the above-mentioned senior fund manager expressed recognition of the industry's prospects, "It is biased towards the media field, and may later get involved in the Internet field, which represents the development direction of the industry." But specifically for Baofeng Technology, he believes that the valuation is still high. After the sharp drop, Baofeng Technology's current market value is 14.472 billion yuan, and its price-to-earnings ratio (TTM) is 561.97 times.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.