Stimulated by the news of Zijin Mining's shareholding, on September 23, Longgao Shares opened with a daily limit up.

The night before, the company announced that its controlling shareholder, Longyan Investment Development Group, and shareholders holding more than 5% of the shares, Longyan Wenlv Huijin Group, plan to transfer part of the company's shares to strategic investor Zijin Mining through an agreement transfer, transferring 32.96 million shares held before the initial public offering.

The subject of the share transfer is Zijin Mining Group Southern Investment Co., Ltd., a wholly-owned subsidiary of Zijin Mining.

According to the relevant agreement, Minxi Xinghang State-owned Assets Investment and Management Co., Ltd. plans to transfer 2.88 million shares of the company it holds to Zijin Southern Investment Company.

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After the completion of the above equity transfer, Zijin Southern Investment Company will hold a total of 20% of Longgao Shares and promises not to reduce the shares it holds within the next six months.

It is worth noting that before this, the stock price of Longgao Shares has already shown some unusual movements.

On September 18, Longgao Shares hit the daily limit up; on September 20, the company's stock rose by 6.78% again.

That week, the company's stock price rose from around 14.5 yuan to about 17.5 yuan, with a cumulative increase of 19.32%.

In contrast, there was no significant positive news during the period of the company's stock price increase.

The only semi-annual equity distribution implementation announcement was released after the market closed on September 20.

Looking at the capital flow, the data on the Dragon and Tiger list on the 18th showed that there were many business department seats of speculative funds on the day of buying and selling Longgao Shares, including CITIC Securities Dongyang Wuning West Road Business Department, Zhongtai Securities Changzhou Huiguo Road Business Department, etc.

Some market views believe that the unusual movement of Longgao Shares' stock price was affected by the concept of state-owned enterprise reform in the near future.

At present, the company's largest shareholder is Longyan Investment Development Group, holding 60.04% of the shares, and the actual controller is the Longyan State-owned Assets Supervision and Administration Commission of Fujian Province.

The controlling shareholder of Zijin Mining is Minxi Xinghang State-owned Assets Investment and Management Co., Ltd., which is also the third largest shareholder of Longgao Shares.

Zijin Mining's actual controller is the Finance Bureau of Shanghang County, Longyan City, and Shanghang County is a jurisdiction of Longyan City.

It is not difficult to see that there is a certain connection between the equity of Longgao Shares and Zijin Mining.

Although Longgao Shares has been listed for three years, the overall state-owned shareholding ratio is still relatively high.

As of the end of June this year, the top three shareholders of the company are all local state-owned capital in Fujian, with a total shareholding ratio of more than 73%.

For this strategic investment, Longgao Shares also pointed out that "it is to introduce strategic investors who recognize the company's intrinsic value and are optimistic about future development, optimize the equity structure, and promote the strategic development of the listed company."

Under the above background, Zijin Mining, which is also under the Longyan state-owned assets and has strong strength, has become its strategic investor naturally.

For Zijin Mining, the risk of strategic investment in Longgao Shares is relatively controllable.

First, as a leading enterprise in the sub-sector, although Longgao Shares is not a large company, its operating trend has been very stable in recent years.

At present, the company's business is mainly high-grade kaolin ore, comprehensive utilization (porcelain stone, high silicon stone) and high-grade kaolin concentrate, and the revenue proportion of kaolin mining and processing business has been maintained at more than 99%, and all the revenue comes from the domestic market, and the company is a relatively typical "integrated" enterprise.

Since 2017, the gross profit margin of the company's kaolin mining and processing business has always been maintained at more than 62%, and the fluctuation range of the gross profit margin during the same period is not more than 7 percentage points, which also reflects the strong stability of its operation.

Looking at the company's operating performance, after going public in 2021, Longgao Shares' profit margin has slightly decreased, but with the increase of its revenue scale, the company's profit scale has also increased compared to before going public.

Secondly, as the subsequent holding entity, Zijin Southern Investment Company has been established for 20 years and has become an important investment platform under Zijin Mining.

According to the business information, the company's business scope includes investment in mines, hydropower, and transportation infrastructure.

Up to now, in addition to investing in many local enterprises in Fujian, Zijin Southern Investment Company also includes Sichuan Pingwu Zhongjin Mining Co., Ltd., Luoyang Kunyu Mining Co., Ltd., Xinjiang Habahe Ashele Copper Industry and many other enterprises outside the province.

According to the announcement, the price of Longgao Shares obtained by Zijin Southern Investment Company this time is 14.93 yuan/share (the arithmetic average of the daily weighted average price of the 30 trading days before the announcement).

According to the total of 35.84 million shares accepted, the total amount of this strategic investment is 535 million yuan.

Compared with the scale of Zijin Mining and historical investment projects, this scale is not too large.

As of the closing on September 23, Longgao Shares continued to hit the daily limit up, and the stock price reached 19.23 yuan.

Equivalently, Zijin Southern Investment Company has already achieved a floating profit of nearly 30%, which can also provide a higher safety margin for the latter.

More importantly, after the completion and production of the first half of the year's investment projects, Longgao Shares has a strong expectation for external mergers and acquisitions.

Longgao Shares' regular report points out that "since its listing, the company has formed an external expansion model led by the investment department and coordinated by various departments, actively expanding kaolin and other non-metallic mineral resource projects nationwide."

Data shows that in 2023, the company collected 129 project information, conducted in-depth investigations on 34 projects, and landed Chaozhou Feitianyan Porcelain Clay Mine and Luoyang Shengyong Mining Group.