On June 24, Weigao Orthopedics (688161) fell more than 6% in intraday trading, reaching as low as 19.87 yuan per share. The stock price hit a record low and had already fallen below the issue price. As the stock price continues to fall, Weigao Orthopedics will soon be listed for three years, and a large proportion of restricted shares will be lifted. On June 24, the relevant person in charge of Weigao Orthopedics said in an interview with a reporter from Beijing Business Daily that the lifting of the ban involves shareholders who currently have no plans to reduce their holdings. The company will strive to pass good performance, standardized corporate governance, and stock repurchases in accordance with laws and regulations., Timely mid-term dividends, etc., to give back to investors. In addition, affected by the impact of the collection shock wave, Weigao Orthopaedics 2023 performance fell sharply, in urgent need of repair. On June 24, Weigao Orthopedics replied to the inquiry letter of the Shanghai Stock Exchange's annual report, giving further explanation on the operation in 2023.

Share price opens low to record low

on June 24, weigao orthopedic shares plunged more than 6%, hitting a record low again in intraday trading.

Trading market shows that on June 24, Weigao Orthopedics opened 1.56 lower, with an opening price of 20.88 yuan per share. The stock price fluctuated downward during the session, and finally closed down 6.13, closing at 19.91 yuan per share, with a total market value of 7.964 billion yuan.

It is worth mentioning that Weigao Orthopaedics dropped to a minimum of 19.87 yuan per share on June 24, a record low in the company's share price after the resumption of power. Oriental Wealth shows that in the past three years since its listing, Weigao Orthopedic's share price has fallen all the way, and its share price has fallen by more than 80% compared with the beginning of the listing. From June 30, 2021 to June 24, 2024, Weigao Orthopedic's share price fell by 82.49 percent in the form of post-recovery, compared with a 17.07 percent decline in the broader market over the same period.

According to the data, the issue price of Weigao Orthopedics is 36.22 yuan/share, and the company's latest post-restoration closing price is 20.84 yuan/share, which has already fallen below the issue price.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, believes that if companies face stock price pressure, they need to continue to do a good job in company operations and improve performance to enhance market confidence in the company's prospects. At the same time, it is necessary to actively communicate with investors, explain the situation, and convey company confidence to ease market panic.

In response to the company's stock price, the relevant person in charge of Weigao Orthopedics said in an interview with a reporter from Beijing Business Daily that the company will deepen the field of orthopedic medical devices, continue to improve operations, promote refined management, and expand a viable product matrix through innovation. Improve the company's industry competitiveness. In addition, the company will strive to repay the majority of investors through good performance, standardized corporate governance, stock repurchase in accordance with laws and regulations, and timely interim dividends.

over 80% of shares welcome lifting of ban

In the short term, the sharp drop in Weigao Orthopedic's share price may limit the impact of the release of shares. Weigao Orthopedics, which will be listed for three years, will soon usher in a large-scale initial release of restricted shares on July 1.

The announcement shows that the initial restricted shares in circulation this time involve a total of 4 shareholders, and the corresponding number of shares is 0.323 billion, accounting for 80.83 of the company's total share capital.

The shareholders involved in the lifting of the restricted shares of Weigao Orthopedics are Shandong Weigao Group Medical Polymer Products Co., Ltd. (hereinafter referred to as "Weigao shares"), Weigao International Medical Co., Ltd. (hereinafter referred to as "Weigao International"), Weigao Group Co., Ltd. (hereinafter referred to as "Weigao Group"), Weihai Hongyangrui Information Technology Center (limited partnership), the number of shares released this time accounted for 50.63 per cent, 16.88 per cent, 7.5 per cent and 5.83 per cent of the company's total share capital, respectively. Among them, Weigao is the controlling shareholder of the company, Weigao International is a wholly-owned subsidiary of Weigao, and Weigao Group is the controlling shareholder of Weigao.

Xu Minsui, partner of Chengluo Capital, told reporters in beijing business today that in the long run, there is not necessarily a link between the lifting of the ban and the rise and fall of the lifted stocks. There may be some short-term impact. In recent years, venture capitalists and PEs are more likely to sell after the release of the ban because of the fund's duration restrictions. Whether the controlling shareholder sells after the lifting of the ban depends on the shareholder's own capital needs, stock valuation status and company fundamentals.

According to Zhou Di, a national science and technology expert from the Ministry of Science and Technology, the lifting of the ban on restricted shares may cause investors' concerns, cause stock prices to fall, and have an impact on market sentiment.

In an interview with a reporter from Beijing Business Daily, the relevant person in charge of Weigao Orthopedics said that the listing and circulation of this part of the initial restricted shares will not adversely affect the company, and the relevant shareholders currently have no plans to reduce their holdings.

Performance under pressure from centralized procurement

affected by the collection, Weigao Orthopaedics's recent results have fallen sharply, with net profit falling by more than 80% year-on-year in 2023. In the company's response to the annual report inquiry letter disclosed on June 24, the impact of the relevant business was further explained.

Financial data show that in 2023, Weigao Orthopaedics achieved operating income of about 1.284 billion yuan, down 37.63 per cent from the same period last year, while the corresponding attributable net profit was about 0.112 billion yuan, down 81.3 per cent from the same period last year. In the first quarter of this year, Weigao Orthopedics achieved operating income of about 0.348 billion yuan, a year-on-year decrease of 10.74; the corresponding attributable net profit was about 0.035 billion yuan, a year-on-year decrease of 62.92.

In the reply to the annual report inquiry letter, Weigao Orthopaedics further disclosed the specific impact of the collection on the company's spine, trauma and joint product lines, of which spine products accounted for the highest proportion of revenue in 2023. In 2023 and the first quarter of 2024, the sales price of Weigao orthopedic spine products decreased by 48.66 percent and 67.16 percent year-on-year, respectively; corresponding sales increased by 0.33 percent and 64.77 percent year-on-year, respectively; operating income decreased by 48.49 percent and 45.9 percent year-on-year, respectively. Weigao Orthopedics said that due to the national centralized procurement results of spine products since 2023, the decline in the winning price of the centralized procurement has also led to a decline in the ex-factory price of the product, which has a certain adverse impact on the company's operating income of the product.

In addition, the sales prices of Weigao orthopedic trauma and joint related products in 2023 decreased by 48.58 percent and 10.33 percent year-on-year, respectively, and the corresponding operating income decreased by 53.89 percent and 35.29 percent year-on-year, respectively.

However, in the first quarter of 2024, the sales revenue of Weigao orthopaedic trauma and joint products has rebounded, increasing by 7.42 and 82.34 respectively compared with the same period last year.

May 2024, a new round of artificial joint continued procurement bid opening. The relevant person in charge of Weigao orthopedics told the Beijing Business Daily that the company won the bid in the new round of artificial joint procurement. According to the procurement demand publicized in the artificial joint continuation procurement documents, the number of winning bids, the company's joint products Weigao Starfish, Weigao Yahua agreement annual procurement demand accounted for 9.23 of the total demand.

"The company's total joint sales volume in 2024 is expected to continue to grow as the company's contracted demand continues to rise in 2024. In terms of winning bid prices, the core backbone product categories are all significantly higher than the winning bid prices of the previous round of centralized procurement. It is expected that the implementation of the renewal of centralized procurement in the second half of 2024 will further improve the overall revenue and gross profit level of the company's joint business," the staff said.