Longzhu Technology’s Share Price Plummets After Sudden Termination of Listing Transferral to ChiNext
On December 10, Longzhu Technology, which is listed on the Beijing Stock Exchange, announced its decision to terminate an application for transferring to the ChiNext at the Shenzhen Stock Exchange (SZSE). This marks a temporary end to Longzhu’s efforts to carry out a board transfer since August this year.
On December 11 and 12, at the investor briefing on the termination of the transfer, many investors said that it was precisely because of the transfer that they bought shares of Longhu. The sudden announcement of the transferral’s termination definitely influenced its stock price.
When the market opened on December 13, the first trading day after the termination of the transfer, the stock price of Longhu dropped sharply to 20.5 yuan per share, significantly lower than the previous trading day’s 24.78 yuan per share, and finally closed at 23.1 apiece that day, falling by 7.08%.
Longzhu Technology is a home furnishing enterprise established in Nanping City, Fujian province in 2010, formerly known as Longtai Home. It is a foreign trade export-oriented joint-stock company engaged in the design, production and sales of bamboo furniture and bamboo household goods. It highly depends on IKEA, which accounts for 90% of its sales – all bamboo tableware sold by IKEA comes from this company.
The announcement said that the application for a transfer to the ChiNext of SZSE was terminated because the construction of the production capacity of the bamboo straw material center was in a critical period, and if the timing of building the capacity was abandoned or suspended and the substantial time was devoted to the work of transferring to ChiNext instead, the lost business opportunities would affect the subsequent development of the enterprise. The company will achieve faster and better development with the capital market, the North Exchange, and will continue to expand its bamboo FMCG business, mainly with bamboo straws.
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Previously, after going public on the BSE, Longzhu Technology quickly purchased real estate and land in Shanghai and Nanping, Fujian. The property in Shanghai is intended for the establishment of a brand operation center and also to promote the domestic, European and American markets. Additionally, the industrial land it purchased in Nanping is to be used as a bamboo straw material center, with an estimated plant area of 120,000 square meters and an estimated annual production capacity of 5-10 billion bamboo straws.
