Double in five days, who will foot the bill for the soaring stock price of Pu Le Shi (02486)?

Not long ago, Puleshi (02486), which had just refreshed its record for the largest single-day increase in more than a year since its listing, was poured cold water by the market today. It was noted that on September 19, Puleshi opened low and continued to decline, with the intraday decline expanding to 17.04%. By the close of trading, the stock was at 7.23 Hong Kong dollars, narrowing the decline to 10.74%. In the previous 5 trading days, Puleshi's stock price surged from 3.87 Hong Kong dollars on September 11 to 8.1 Hong Kong dollars on September 17, with an increase of 109.3% during this period. Looking back, it is clear that since entering September, Puleshi's stock price has been unusually active. In the five trading days of September 4, 9, 11, 16, and 17, Puleshi's stock price changes were -10.26%, 8.55%, 41.6%, 11.5%, and 34.78%, respectively, with September 11 setting a new single-day increase record since the stock was listed in May last year. Interestingly, despite the recent frequent fluctuations in Puleshi's stock price, there have been no major positive or negative news triggers to cause the sharp rise or fall in its stock price. Furthermore, from a fundamental perspective, Puleshi, as a sales and marketing service provider focusing on offline retail channels, has been facing industry adjustments and declining performance in recent years, with few bright spots to highlight. Performance suffers during industry adjustment period Established in 2004, Puleshi started as a traditional offline sales and marketing services agency and then began business transformation and digitization of business processes in 2012. In 2019 and 2020, it introduced matching services and SaaS+ subscriptions. Currently, Puleshi mainly provides on-site sales and marketing solutions to top fast-moving consumer goods brands and channel distributors in supermarkets, department stores, and other offline retail stores. In recent years, with the complex international situation including global inflation pressures, economic downturns in major economies, and turbulence in international financial markets, the trend of consumption downgrading in the domestic consumer market has intensified. Offline consumer markets have been particularly affected, leading to a gradual reduction in marketing expenditures by more offline consumer companies, making the survival environment more challenging for downstream service providers like Puleshi. According to Puleshi's mid-year performance disclosure in 2024, the company achieved revenue of 343 million RMB in the first half of this year, a year-on-year decline of 18.8%. Gross profit was 48.856 million RMB, a year-on-year decline of 37.4%, with a gross profit margin of 14.3%, down 4.2 percentage points year-on-year. During the same period, Puleshi's net profit was -3.767 million RMB. Breaking down the business structure, Puleshi's revenue comes from four main segments. Customized marketing solutions are the company's largest source of revenue, contributing revenue of 265 million RMB in the first half of the year, accounting for 77.3% of the total revenue. However, due to the continued downward trend in the consumption market, the scale of the company's custom marketing solution business has significantly shrunk, with a year-on-year decline of about 18.9%. Task and marketing personnel matching services are Puleshi's second-largest business, contributing revenue of 56.296 million RMB during the period, accounting for 16.4% of the revenue, with a year-on-year decrease of about 15%, but a monthly increase of about 17%, indicating marginal improvement. In addition, Puleshi also generates some revenue from marketing personnel dispatch services, SaaS+ subscriptions, and other services. In the first half of the year, these two major businesses achieved revenues of 11.96 million RMB and 9.565 million RMB, respectively, with year-on-year decreases of 39.9% and 1.2%, and accounting for 3.5% and 2.8% of the total revenue, respectively, with relatively small scales. Mid-year performance faces challenges, and considering the lack of noticeable recovery in the domestic consumer market since the third quarter, it is difficult to achieve year-on-year growth in Puleshi's performance for the full year. Looking at a longer time frame, this also indicates that Puleshi's performance at the current stage may not be able to match the previous peak. Data shows that from 2020 to 2023, Puleshi's revenue was 414 million RMB, 416 million RMB, 618 million RMB, and 726 million RMB, with net profits of 53.897 million RMB, 59.01 million RMB, 52.702 million RMB, and 11.502 million RMB, respectively. The company's revenue and net profit reached their highs in 2023 and 2021, respectively, with the net profit indicator declining for three consecutive years and showing signs of further decline. Stock price surge may hide risks On the secondary market, if a stock lacks strong fundamental support, driving its price up usually requires the cooperation of hot concepts or active funds. However, Puleshi's situation seems somewhat unique. From the perspective of news, the company has not had any sudden positive or negative news recently. Moreover, its business deeply tied to offline retailing does not align with the current market's preference for active funds. From a trading perspective, Puleshi's stock price movements cannot be attributed to large funds. On the contrary, only a small trading volume can trigger significant fluctuations in the company's stock price. For example, on September 11, the total turnover of Puleshi was only 3.1792 million Hong Kong dollars, with a turnover rate of 0.59%. Four trading days later, on September 17, although Puleshi's stock price rose by more than 30%, the turnover was actually less than 3 million Hong Kong dollars, with a turnover rate of only 0.34%. Even today, despite the significant fluctuations in Puleshi's stock price, the final turnover was only 2.683 million Hong Kong dollars, corresponding to a turnover rate of about 0.31%. Furthermore, looking at the company's shareholding structure, as of the end of last year, Puleshi's controlling shareholders are Sun Guangjun and his family trust, holding 11.98% and 41.90% through Guangjun Sun Holdings and Guangjun Holdings, respectively, for a total of 53.88%. Xia Jingtang and his family trust hold a combined 9.72%, while the company's executive director Yang Hong and other employees or former employees hold 6.87% through Kuwei Holdings. These major shareholders collectively hold over 70% of the company's shares.It is difficult to tell that Pu Leishi actually does not hold a large number of shares for external public shareholders. In addition, the market value of the stock is relatively small, with limited total circulation, which may have provided some speculators with favorable conditions to create speculation.Looking back at the fundamentals and growth prospects, Pure Teacher, located downstream in the industry chain, relies heavily on the industry environment and the marketing willingness of its customers. In other words, the company's performance autonomy is not very high. Although Pure Teacher deliberately expanded its customer base in the first half of the year, with the number of paid brand customers and paid distributor customers increasing by 51.5% and 82% respectively, a more aggressive market strategy is still insufficient to alleviate the performance adjustment pressure caused by industry cycle fluctuations according to the interim report. Since the performance lacks creativity and lacks the support of popular concepts, the frequent fluctuations in Pure Teacher's stock price are probably just a capital speculation. Based on this, for retail investors, it may be more prudent to stay on the sidelines and watch from a distance.