After exiting the futures market, Qian'an Stock (603758.SH) suffered tens of millions of yuan in losses in just over a year after diving into the stock market.

The company's recently disclosed semi-annual report shows that as of the end of the second quarter, the book value of its trading financial assets was 64.587 million yuan, while the initial investment cost was 148 million yuan. This means that in less than a year and a half, Qian'an Stock's unrealized loss in the secondary market reached as high as 56.23%. The company's investments were in the stocks of two listed companies in the photovoltaic industry.

While suffering stock trading losses, Qian'an Stock also significantly reduced the scale of its hedging business. In the first half of the year, the effective amount of the company's hedging was only 20,300 yuan. In contrast, the semi-annual report for 2021 showed that the company's investment in futures was as high as 60.687 million yuan.

According to a staff member from the investor relations department of Qian'an Stock, market and regulatory factors are important reasons for the company to reduce the scale of its hedging business.

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Investment in photovoltaics resulted in a loss of 83 million yuan

In the first half of 2023, Qian'an Stock entered the market with an initial investment cost of 148 million yuan, purchasing shares in TCL Zhonghuan (002129.SZ) and Longi Green Energy (601012.SH), with investment amounts of 60.3272 million yuan and 87.2305 million yuan, respectively.

After Qian'an Stock's purchase, the prices of the aforementioned two stocks plummeted. TCL Zhonghuan fell from 29.08 yuan at the beginning of 2023 to 8.37 yuan by the end of June this year, a decline of 71.21%; during the same period, Longi Green Energy dropped from 41.19 yuan to 13.85 yuan, a decline of 66.37%.

As of the end of the second quarter this year, the value of Qian'an Stock's holdings in TCL Zhonghuan was only 21.8653 million yuan, and the book value of its holdings in Longi Green Energy was 42.7217 million yuan, with a total book value of 64.587 million yuan. Compared to the previous investment cost of 148 million yuan, the unrealized loss was as high as 56.23%.

The continuous downward trend in the stock prices of the investment targets directly affected the company's performance. In the first half of the year, the company's net profit was 61.8497 million yuan, a year-on-year decrease of 51.75%. Among them, the loss from fair value changes in profit and loss was as high as 44.7283 million yuan.

Why did the company choose the above targets? When the First Financial Daily reporter called Qian'an Stock as an investor, a staff member from the investor relations department said that at the time, "the leadership considered various factors and believed that the photovoltaic sector is promising, and in addition, the leading enterprises also have stable dividends."Qin'an Shares has indeed achieved certain investment returns. In the first half of this year, TCL Zhonghuan's investment income was 657,200 yuan, and Longi Green Energy's investment income was 518,000 yuan, totaling 1,175,200 yuan. However, compared to the company's investment losses, it is a drop in the ocean.

Qin'an Shares is a domestic supplier of automotive lightweight structural components with a certain scale, mainly engaged in the research and development, production, and sales of automotive engine core components such as cylinder blocks, cylinder heads, and crankshafts; transmission key components such as housings, casings, and hybrid power transmission housings, range-extender engine cylinder heads and blocks, and pure electric vehicle motor casings.

In response to Qin'an Shares' investment in photovoltaic enterprises, institutional investors have also raised doubts.

In the most recent institutional research activity, investors questioned the company's management, believing that the decline in performance was mainly due to the investment in the aforementioned two photovoltaic listed companies, and asked the company "why invest repeatedly in companies in this sector." Some investors also believe that there is no short-term solution to the issues of performance and overcapacity in photovoltaic listed companies.

Qin'an Shares explained that against the backdrop of global carbon neutrality goals, geopolitical changes, and energy shortages, the energy structure is irreversibly moving towards diversification, cleanness, and low carbon, and still believes that the solar photovoltaic industry has good development opportunities.

The aforementioned investor relations staff member stated that for TCL Zhonghuan and Longi Green Energy, Qin'an Shares still holds positions and has not sold.

Speculating in futures and participating in private placements have tasted the sweetness.

Although currently encountering a Waterloo in the secondary market, Qin'an Shares previously obtained a profit of about 30 million yuan by participating in private placements of listed companies.

Public information shows that in August 2021, Qin'an Shares subscribed to 4,926,100 shares of Fuling Power (600452.SH) with its own funds, with a subscription amount of nearly 60 million yuan. In October of the same year, the company once again invested nearly 40 million yuan to subscribe to 4,499,400 shares of Creative Information (300366.SZ) in a private placement.

By the end of December 2022, Qin'an Shares sold all of its Fuling Power shares at an average price of 14.87 yuan, with a total transaction amount of about 87.89 million yuan (including tax), achieving a net profit (after deducting taxes, transaction fees, etc.) of 26.75 million yuan, with an investment return rate of 44.58%. Earlier, in late October of the same year, the company also reduced all its holdings of Creative Information, with a total transaction amount of 42.8761 million yuan (including tax), and actually achieved a net profit of 2.6661 million yuan.In fact, before investing heavily in the stock market, the company had already sparked market controversy due to its large-scale participation in futures investments.

From April 15, 2020, to September 11, 2020, Qin'an Shares consecutively issued 21 futures liquidation announcements, all of which were profitable without any losses, with the cumulative profit from futures investments reaching 769 million yuan, which is nearly three times the cumulative net profit since the company went public.

After making profits from futures investments, the company faced significant losses in 2021. Due to the lack of strict risk control, Qin'an Shares and the relevant responsible persons were criticized and notified. According to the Shanghai Stock Exchange's disclosure in December 2021, the company continued to hold positions even after the stop-loss line was clearly set and the cumulative amount of subsequent losses had reached the liquidation stop-loss line. It was not until October 18, 2021, that the company executed the liquidation, resulting in a loss of 128 million yuan, far exceeding the previously disclosed stop-loss line.

The semi-annual report shows that, as of the end of the second quarter, the effective amount of hedging for Qin'an Shares was only 20,300 yuan, with a loss of 13,000 yuan due to the price fluctuation of industrial silicon, leaving a remaining futures account balance (i.e., hedging reserve) of 7,331.25 yuan.

According to the announcement released by the company on March 12 this year, Qin'an Shares carries out raw material and foreign exchange hedging business, and the maximum amount of margin occupied at any time within the authorized period does not exceed 120 million yuan or other equivalent foreign currencies, and the funds can be recycled and used in a rolling manner.

In response, the staff of the investor relations department of Qin'an Shares stated that because there are strict regulations in this area, regulators do not want listed companies to engage in futures speculation. "At present, we are only conducting some hedging business for raw materials based on the current situation, which will not exceed the needs of the company's daily operations, and our hedging is basically bullish," the staff member said.