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As December begins, Shanzi Hi-Tech (000981.SZ) has entered its second wave of strong momentum, hitting six daily limit-ups in seven trading days and surging over 93% in just 10 days to reach a new high of 3.35 yuan. However, just six months ago, the company’s stock price had plunged to a low of 0.77 yuan amid concerns that its "car manufacturing plan" might be stalling, triggering a delisting warning due to its face value. In a bid to rescue the stock, the major shareholder made an emergency commitment to increase holdings, marking a dramatic turnaround in just half a year.11

As the only remaining "new force in car manufacturing" in Northeast China, Shanzi Hi-Tech has been releasing monthly vehicle production and sales data for three consecutive months to boost investor confidence and stabilize its stock price. However, the recent surge in its stock price is rooted in a somewhat "surreal" reality: the company’s vehicle sales have been declining month by month, it suspended the release of November sales data, and there has been no progress on its promised share buyback. Despite the cold, hard numbers, the market seems to have brushed aside these concerns. During the five trading days when Shanzi Hi-Tech briefly broke above 3 yuan, the total trading volume exceeded a staggering 30 billion yuan, marking the highest in the company’s history.

In just 92 trading days, Shanzi Hi-Tech has skyrocketed from the brink of delisting to the precarious heights of overvaluation. However, as the stock has recently begun to pull back, multiple pressures are starting to surface. hello

The company’s major shareholder, Ye Ji, and his Chiji Holdings are also facing significant challenges, including frozen shares, enforcement actions, and restrictions on high-value spending. Whether the promised share buyback and increased holdings will materialize remains uncertain.

Additionally, the massive volume of trapped funds above the 3-yuan level, a market cap bubble exceeding 20 billion yuan, and the uncertain performance of its car manufacturing efforts could all exert continued pressure on the stock’s upward momentum.

The Reality of the "Car Manufacturing Dream": Monthly Sales Down 31%

Shanzi Hi-Tech, formerly known as Yinyi Co., was founded in 1993 by Xiong Xuqiang, once the richest man in Ningbo. The company initially entered the real estate market by acquiring unfinished buildings and eventually ranked among China’s top 500 private enterprises. However, as the real estate market cooled in 2016, Yinyi Co. spent 13 billion yuan in 2017 to acquire U.S.-based ARC, Japan’s Aisin AW, and Belgium’s Punch Powertrain, thereby stepping into the automotive components sector. Unfortunately, the acquired companies underperformed the following year, with earnings falling 21.81%, while the real estate business plummeted by 50.74%. These setbacks ultimately led to the collapse of the "Yinyi Group," and in 2019, Yinyi Co. declared bankruptcy.

In December 2020, Ye Ji, the actual controller of a listed company, invested 3.2 billion yuan to participate in the restructuring of Yinyi Co., Ltd., during which several instances of funding defaults occurred. Subsequently, capital from companies such as Geely and Haier joined the effort, and Yinyi completed its restructuring in February 2022. The company’s actual controller changed from Xiong Xuqiang to Ye Ji, and later that year, ShanZi Auto was established. In January 2023, Yinyi Co., Ltd. was renamed ShanZi High-Tech.

As a result, ShanZi High-Tech’s core business shifted to automotive parts held by ARC Company and Belgium-based Punch Powertrain. On June 29 of this year, ShanZi High-Tech sold 100% equity and related debt of Yinyi Real Estate, valued at 1.314 billion yuan, for approximately 600 million yuan, fully divesting from the real estate sector.

Due to the underperformance of its automotive parts business, Ye Ji focused on transitioning the company toward complete vehicle manufacturing after taking control. In 2023, ShanZi High-Tech acquired the Xingtai Hongxing Automobile Factory for 107 million yuan, securing a license for complete vehicle production. By the end of 2023, the company was introduced to and settled in Harbin Economic Development Zone, where it began renovations on the former site of Hafei Auto.

On December 3, 2023, ShanZi High-Tech established Yunfeng Auto as a wholly-owned subsidiary. Following the renovation of equipment and infrastructure at the Hafei Auto production base, the first batch of vehicles rolled off the production line in July this year, with the company projecting an annual production and sales volume exceeding 120,000 units.

(Yunfeng Auto KS02 SUV)

Additionally, leveraging the Xingtai Hongxing Automobile Factory, ShanZi High-Tech developed its first pure electric urban logistics vehicle, the BOX1, which began mass production in 2023. The vehicle has an annual production capacity of 30,000 units and provides vehicle leasing and sales, logistics information, and charging/swapping maintenance services to clients such as Meituan and Lalamove. Notably, the Hongxing Automobile Factory, which ShanZi High-Tech acquired, had been sold off by Do-Fluoride Chemicals Co., Ltd. (002407.SZ) in 2020 after years of losses.

(Hongxing BOX1, image source: Hongxing Auto official WeChat account)

Vehicle manufacturing and sales have thus become the company's new core business. According to the third-quarter report, vehicle sales contributed 606 million yuan in revenue during the reporting period, accounting for 33% of total revenue. However, in the 2024 semi-annual report, this figure dropped to 160 million yuan, representing only 7.45%.

Yet, when the TMTPost App analyzed the company's vehicle sales data from August to October, it found that after an initial strong start in August, sales for "Yunfeng Auto" and "Hongxing Auto" declined month by month. Their monthly sales figures were 2,165 units, 1,855 units, and 1,493 units, respectively. By October, sales had fallen nearly 31% compared to August. Production volumes were 1,502 units (July), 1,705 units, 2,093 units, and 1,200 units, respectively.