(Yicai Global) July 20 -- Zhongtong Bus Holding fell by the daily limit for a second day in a row after brokerages warned that the firm’s fundamentals were unchanged though its stock price had surged five-fold in the past couple of months. The warnings are said to have followed ‘window guidance’ from the stock exchange.

Zhongtong Bus [SHE: 000957] ended today 10 percent lower at CNY20.60 (USD3.05) a share, after dropping by the same amount yesterday. But the stock is still up over 300 percent since it began to climb on May 13. 

After the market closed yesterday, a number of brokerages, including China’s largest underwriter Citic Securities, released warnings about the risk of trading in Liaocheng-based Zhongtong Bus after the recent huge run-up in the company’s shares.

A person close to the Shenzhen Stock Exchange said it had asked brokerages to clamp down on the trading behavior of clients who frequently speculate, and guide them to risk awareness and rational trading.

The SSE had previously written a letter of concern to the company, asking it to fully disclose relevant information. The firm then twice requested a trading suspension for verification due to the abnormal increase in its stock price. The bourse also monitored the stock and took strict self-regulatory steps against investors showing abnormal trading behavior.

Zhongtong Bus reported a net loss of CNY220 million (USD32.6 million) last year, and expects to have made a profit of no more than CNY25 million in the first half of this year. But the surge in the company’s stock price has far outpaced its performance.

The firm, which mainly manufactures buses, also makes a small number of medical vehicles used in Covid-19 testing that could not greatly impact the firm’s development and profitability, it said on July 6. Zhongtong Bus has produced sample smart buses that also use solar energy to extend their range, but the technology has not yet been commercialized.

Editor: Futura Costaglione