Under the fluctuation of performance and the soft stock price, CANGGANGRAILWAY (02169) may face the risk of being excluded from the Stock Connect.

This railway stock, which has been relatively unknown in the Hong Kong stock market, may face the risk of being removed from the Hong Kong stock connect. According to data, from January 1, 2025 to December 31, 2025, the average market value of CANGGANGRAILWAY stock was HK$4.96 billion, which is less than the threshold of HK$6.007 billion for removal from the Hong Kong stock connect, placing it in a substandard state. Additionally, although the trading activity of the company's stock has been fluctuating, it experienced a significant decline (a cumulative drop of over 36%) from 2024 to 2025, leading to the stock price being consistently weak and in a low trend, resulting in the stock liquidity not meeting the standards since 2025. With these two factors of not meeting the standards combined, CANGGANGRAILWAY is expected to face the risk of being removed from the Hong Kong stock connect at the next regular review. Once removed, this will undoubtedly be a major negative signal for CANGGANGRAILWAY. The main impact is that on one hand, the company will lose eligibility for southbound funds, and on the other hand, liquidity will deteriorate further, as southbound funds are an important source of liquidity for the Hong Kong stock market. Losing this channel will reduce potential buying power, potentially leading to thinner stock trading. Additionally, market confidence is expected to be further undermined. In October 2020, CANGGANGRAILWAY successfully listed on the Hong Kong stock market, becoming the "first stock of local railways." However, after reaching a high of HK$3.262 on October 25, 2023, the company's stock price has been in a downward trend. As of November 27, 2025, its stock price was only HK$0.75, with a total market value of HK$3 billion, facing the risk of removal from the Hong Kong stock connect. How did the company come to this situation today, and how can it alleviate it in the future? Performance fluctuation, extremely reliant on coal transportation demand It is understood that CANGGANGRAILWAY was established in 1979 and began operations in 1982, mainly operating a main railway line, the Canggang Line. This line starts from Cangzhou and ends in the Bohai New Area (including Huanghua Port), and connects with two branch lines, the Shuo-Huang Line and the Han-Huang Line, with a total length of 216.6 kilometers. The Shuo-Huang Line is one of the core freight railway lines for China's "west coal east transport" strategy; Huanghua Port is the main outlet for the second largest channel of China's west coal east transport, undertaking about 30% of the coal export task for national energy groups. The company's core business is railway freight transportation, contributing over 85% of its revenue, with coal transportation being the dominant category, while also transporting bulk goods such as ore, steel, and chemicals; auxiliary services contribute about 15% of revenue, providing a range of support services around the core freight business, such as loading and unloading services, road transportation, etc. Through this business layout, CANGGANGRAILWAY has built a regional railway freight network centered on the Canggang Line, connecting national railway trunk lines, serving important ports and industrial parks, but its performance characteristic of "prosperity comes from coal, worries also come from coal" is also very evident. In the first half of 2025, the company achieved a revenue of RMB 131.7 million, a slight decrease of 0.3% from the same period in 2024. The main reason for the decline was a slight decrease of 0.5% or RMB 60,000 in revenue from the core railway freight business due to a decrease in building materials volume, which was offset by a 1.2% increase of RMB 200,000 in revenue from auxiliary services. Compared to stable revenue, the growth momentum of CANGGANGRAILWAY's net profit during the period was relatively good. In the first half of the year, the company achieved a net profit attributable to shareholders of RMB 30.88 million, an increase of 17.2% year-on-year. The profit growth was mainly due to cost control and operational efficiency improvement. During the period, the company actively implemented the "reduce costs and increase efficiency" policy, reducing operating expenses from RMB 91.7 million to RMB 88.2 million, a decrease of 3.8%. However, looking at a longer period, CANGGANGRAILWAY's performance also showed significant fluctuations. For example, in the full year of 2024, the company achieved a revenue of RMB 259 million, a decrease of 25.82% year-on-year. This was mainly due to the impact of reduced demand in the coal market that year, leading to a decline in revenue from the core railway freight business and some auxiliary businesses. This also exposed the risk of overdependence on the coal industry in its business structure. Although coal is currently the most realistic engine driving this "future giant ship," the impact of energy structure transformation, such as the "dual carbon" goal pushing energy structure towards clean, low-carbon direction fundamental transformation, and tightening environmental policies, factors such as these will negatively affect coal demand to a certain extent. Continuous reduction in holdings by senior management, where is the breakthrough? Interestingly, recent actions of continuous reduction in holdings by senior management of CANGGANGRAILWAY seem to indirectly reveal concerns about the fluctuating performance and poor liquidity of the stock. According to data from the Hong Kong Stock Exchange, Chairman and Executive Director Liu Yongliang of CANGGANGRAILWAY has been reducing holdings frequently since September of this year. On September 25, Liu Yongliang reduced his holdings of CANGGANGRAILWAY by 385 million shares, with a remaining holding of 1.929 billion shares, a holding percentage of 48.22%. On the 26th, 29th, and 30th of September, Liu Yongliang further reduced his holdings by 297 million shares, 16 million shares, and 2.752 million shares respectively, with his latest holding percentage being 40.34% as of the 30th. The continuous reduction in holdings by senior management also indirectly conveys a signal of lack of confidence in the company as someone who is most familiar with the company's operating conditions, the reduction actions of the chairman of the board are usually easily interpreted by the market as a lack of confidence in the short-term prospects or current valuation of the stock, which is often a key factor affecting investor sentiment. Fortunately, contrasting the reduction in holdings by senior management is the significant increase in holdings by the Hebei Cangzhou Jiaokong Group during the same period, which is quite significant. On September 25, Hebei Cangzhou Jiaokong Group increased its holdings by 125 million shares, with a holding percentage of 10.67%. The next day, the group increased its holdings by 422 million shares, with a holding percentage reaching 28.78%. As a local state-owned asset, the multiple increases in holdings during the same period may indicate that the local state-owned asset views CANGGANGRAILWAY as an important infrastructure platform, and its increased holdings aim to stabilize market confidence, strengthen control, and support its long-term development, to a certain extent offsetting the negative impact of the senior management's reduction in holdings. However, compared to the "backing" of local state-owned assets, the real way to alleviate market "doubts" about CANGGANGRAILWAY is likely still its own strength. Of course, CANGGANGRAILWAY has not "stood still." In the future outlook, the company has proposed several key points: one is the promotion of branch line construction: a new branch line approved by the Hebei Provincial Development and Reform Commission started construction at the end of 2024, which will expand business coverage and enhance capacity once completed; the second is infrastructure upgrades: RMB 24.3 million has been invested in the upgrading and renovation of the Canggang Line infrastructure, improving safety and carrying capacity; the third is market expansion: continuing to deepen the "railway+" strategy, actively developing new types of freight such as sand, ore powder, etc., to counterbalance the impact of the traditional decline in building materials volume. At present, CANGGANGRAILWAY is trying to address these challenges by constructing new branch lines and technological innovation. However, the intensity and speed of its transformation will directly determine whether it can break away from the passive situation of "eating coal and watching the sky" and achieve truly sustainable development in the future. For investors, whether the company can successfully "reduce coal" and find a second growth curve is the core key to evaluating its long-term value.