The stock market is witnessing a "cliffhanger" plot, with Guanghui Auto playing the lead role.

Judging from its share price performance, the company is at risk of being delisted due to its share price falling below the par value. According to the "Shanghai Stock Exchange Listing Rules," if a company's stock closes below RMB 1 per share for 20 consecutive trading days, its listing may be terminated.

From June 20 to July 12, 2024, Guanghui Auto's share price has been below RMB 1 for 17 consecutive trading days. As of July 12's close, the share price was reported at RMB 0.96 per share, up 10.34%.

Upon closer inspection, this share price surge may be related to a piece of news.

It is reported that on July 10, Guanghui Auto received a "Notice on Planning the Matters Related to the Change of Control of Guanghui Auto" from its controlling shareholder, Xinjiang Guanghui Industry Investment (Group) Co., Ltd. (hereinafter referred to as "Guanghui Group"). Currently, Guanghui Group is planning the equity transfer of Guanghui Auto with Xinjiang Jinzheng New Material Technology Co., Ltd. (hereinafter referred to as "Jinzheng Technology"), and this transaction may trigger a change in the company's control.

This new shareholder comes with a certain reputation. According to Tianyancha, Jinzheng Technology was established in 2008 and specializes in serving enterprises' digital transformation. Its controlling shareholder is Xinjiang Jinzheng Industry Group Co., Ltd., which is primarily engaged in technology, energy and chemicals, construction, trade, and logistics. As of 2023, the group's asset scale exceeded RMB 30 billion, with annual revenue exceeding RMB 35 billion.

Based on this, insiders have revealed that the new shareholder is confident in pushing Guanghui Auto's share price "above RMB 1." In this regard, Jinzheng Technology's emergence is nothing short of a timely assistance for Guanghui Auto.

Shifting our focus from the stock market to the sales market, Guanghui Auto still holds a leading position in development. According to data from the China Automobile Dealers Association, in 2023, Guanghui Auto ranked first in passenger vehicle sales among dealer groups and second in revenue scale. So, why is it now on the brink of delisting?

This is largely due to the intense competition in the automotive sector. Guanghui Auto's revenue is primarily contributed by traditional luxury fuel-powered brands. Its annual report shows that as of December 31, 2023, Guanghui Auto operated 735 outlets, with over one-third specializing in the sale of luxury vehicles such as Mercedes-Benz, BMW, and Audi, while only 68 outlets sold new energy and independent brands.

However, it is well-known that traditional luxury fuel-powered brands are facing some decline amid the robust development of new energy vehicle brands. Data shows that in the first five months of 2024, BMW's cumulative sales were 294,100 units, down 6.9% year-on-year, while Mercedes-Benz's cumulative sales were 285,000 units, down 9.6% year-on-year.

To boost sales, these brands are actively participating in the "price war" in the automotive sector. It is understood that as of June 2024, the prices of models such as the Mercedes-Benz C260 and GLC have dropped to as low as RMB 200,000, compared to their official starting prices of RMB 334,800 and RMB 427,800, respectively.

The significant price drops of these brands' products undoubtedly put pressure on dealers like Guanghui Auto. According to its financial report, in the first quarter of this year, Guanghui Auto's revenue was RMB 27.79 billion, a decrease of 11.49% year-on-year, and its net profit attributable to shareholders was RMB 70.94 million, a steep decline of 86.61%.

It can be said that Guanghui Auto's transformation is imminent. Even if its share price returns to RMB 1, what truly inspires market confidence is the company's development strength.

Currently, focusing on new energy vehicle dealership has become a certain development path for Guanghui Auto. It is understood that as of the end of June this year, Guanghui Auto has applied for authorization for 70 new energy outlets. Undeniably, the new energy vehicle market is continuing to heat up. Data from the China Association of Automobile Manufacturers shows that from January to June 2024, China's new energy vehicle production and sales reached 4.929 million and 4.944 million units, respectively, up 30.1% and 32% year-on-year, with a market share of 35.2%.

However, the impact of the "price war" persists. Industry insiders have stated that "the unrelenting 'price war' in the new energy vehicle sector is a known fact." Against this backdrop, Guanghui Auto's path forward remains fraught with challenges.