Shenzhen China Bicycle (000017.SZ) received a letter of inquiry, demanding an explanation on whether there have been any significant changes in the company's fundamentals.

On January 23, Shenzhen China Bicycle (000017.SZ), which had 11 consecutive trading surges, received a letter of concern from the Shenzhen Stock Exchange. The exchange requested the company to provide sufficient risk warnings regarding the recent significant fluctuations in its stock price, taking into account the valuations, price-to-earnings ratios, and stock price changes of other listed companies in the same industry. The exchange also requested an investigation into whether the company had actively catered to market trends or had inappropriate associations with market trends, and whether there were any significant undisclosed information regarding the company, controlling shareholders, or actual controllers that should have been disclosed. At the same time, the exchange required the company to explain whether there have been significant changes in its fundamentals, including its main business operations and performance over the past two accounting years. The company was also requested to analyze and provide sufficient explanations and risk warnings regarding its consecutive two-year decline in performance, while assessing whether the recent increase in its stock price is consistent with its fundamentals. It is understood that Shenzhen China Bicycle used to focus on the production of electric bicycles, but it has undergone a transformation in recent years. In the second half of 2017, the company expanded its business to include sales of lithium battery materials, and in 2019, it further expanded into the jewelry and gold business. Currently, its main business is in the jewelry and gold industry, which accounts for over 98% of its revenue. The revenue from the bicycle lithium battery material business is relatively low. Since the end of last year, international gold prices have been performing strongly. Many experts believe that with expectations of interest rate cuts by the Federal Reserve, along with the ongoing impact of global elections and geopolitical risks, gold prices may have the opportunity to reach new highs in 2024, potentially surpassing $2,200 per ounce. However, looking at the company's past performance, its profitability has been highly unstable. According to its financial reports, in 2021 and 2022, Shenzhen China Bicycle's operating income was RMB 165 million and RMB 445 million, respectively. The net profit attributable to the owners of the company was -RMB 1.99 million and -RMB 7.61 million, with a year-on-year decrease of 152.48% and 283.37% respectively. Despite the decline in its performance, Shenzhen China Bicycle's stock price has continuously hit its daily limit recently, sparking speculative trading activities. As of the close of January 23, the stock price of Shenzhen China Bicycle was RMB 12.77 per share, a 9.99% increase, and it has reached the 11-day limit. The reasons behind this surge may include its low stock price, small float, expectations of restructuring, and expectations of rising gold prices, among other factors.