Years of losses and fluctuating stock prices make MINIEYE's risk high and investment value low

In order to reverse the sluggish stock price, the major shareholder of the autonomous driving solution provider MINIEYE has recently taken frequent actions, not only extending the share lock-up period but also intensively increasing shareholdings. Key Points: • The company has accumulated losses of 760 million yuan over the past 4 years. • It has conducted two rounds of equity financing within one year of listing. Liu Zhiheng On December 15 last year, the Ministry of Industry and Information Technology announced the approval for the "Changan Deep Blue" and "BAIC Arcfox" L3 autonomous driving models, which can be piloted on the roads in designated areas of Chongqing and Beijing, respectively. This news ignited speculation in the autonomous driving concept, causing the stock price of Shenzhen MINIEYE Technology Co., Ltd. (2431.HK) to explode, rising nearly 50% in just four days. However, looking back at MINIEYE's stock price, the company went public at the end of December 2024, pricing at HKD 17, and after listing, it surged to a high of HKD 39.5 in March last year, an increase of 132%. Subsequently, the stock price corrected and consolidated at high levels until last November, when the major shareholder's share lock-up period was set to expire at the end of the year, leading to a sell-off and a drop of 60% in just one month. Stock Price Fluctuations Without Profitability Until recently, driven by the market's pursuit of autonomous driving stocks, MINIEYE's stock price rebounded, further boosted by a series of positive announcements. On January 5, it was announced that the major shareholder and several executive directors would extend the lock-up period that expired on December 17 last year by 12 months, involving approximately 77.49 million shares, accounting for 18.4% of the issued shares. Additionally, two individual shareholders holding 10 million shares also committed to extending the lock-up period by six months. Meanwhile, Chairman Liu Guoqing purchased a total of 100,000 shares in the market on the 5th and 6th at an average price of HKD 13.27 per share, involving approximately HKD 1.33 million, accounting for 0.02% of the company's issued shares. As for cornerstone investor Horizon (9660.HK), it also purchased 690,000 shares in the market. Subsequently, the company disclosed that as of January 8, it had repurchased a total of 3 million shares in the market at an average price of HKD 14.94 per share, involving an amount of HKD 44.88 million. With policy stimulation, support from major shareholders, and company buybacks, can the stock price regain its upward momentum? We estimate that in the recent autonomous driving craze, MINIEYE's stock price has the opportunity to continue rising for a period of time, with the possibility of significant surges on certain days. However, the underlying driving force behind the stock price still depends on performance, and for now, MINIEYE's performance has not shown significant breakthroughs. First, the company's performance continues to incur losses, with losses increasing from 130 million yuan in 2021 to 216 million yuan in 2024, totaling 760 million yuan over four years. In the middle of last year, the losses not only did not narrow but instead expanded by 40% to 152 million yuan. In fact, the company disclosed in its listing documents: "According to our current development plan and management estimates, we do not expect to generate any net profit before 2026." It is clear that MINIEYE is unlikely to be profitable in 2025, and for this year, there are currently no obvious signs of turning losses into profits Frequent Placements and Investors' Flip-Flopping In the past year, some of the measures taken by MINIEYE have significantly affected investor confidence. Last July, just half a year after its listing, the company eagerly conducted a placement of 6.8 million shares at a discount of 14.8%, with a price of HKD 23.26 per share, raising a net amount of only HKD 155 million. By November of the same year, it conducted another placement of 14.01 million shares at a discount of nearly 10%, with a price of HKD 14.88 per share, raising a net amount of only HKD 204 million. The two placements within a year of listing clearly indicate a certain demand for funds, thus in the future, the company is likely to continue raising funds in the market, which will exert invisible pressure on the stock price performance. It is worth noting that a week before the first placement, cornerstone investor Kang Cheng Heng International, which held 31.09 million shares of MINIEYE, committed to extending the lock-up period that expired on June 25 of last year by three months, and not to reduce its holdings by more than 3.109 million shares for nine months after the original lock-up period expired. However, in August of the same year, the company announced that due to its own funding needs, Kang Cheng Heng International would increase its reduction to 9.327 million shares. This flip-flopping has led market participants to speculate and question why Kang Cheng Heng International made a commitment just days before the placement, only to backtrack a month later. Changing Auditors Just Six Months After Listing Additionally, last July, the company suddenly announced a change of auditors from PwC to RSM (Hong Kong) CPA Limited. The announcement simply explained: "Considering the company's current business operations and future audit service needs, it has decided not to renew the appointment of PwC as auditors." This change left the market puzzled, as PwC is an international major firm, and it is unclear why a change would occur just six months after listing. Even though the major shareholder recently increased its holdings to show confidence in the company, the amount was only a mere 100,000 shares, involving just over a million HKD, which is generally not representative and seems more like a show of posture than actual commitment. As for the company spending over HKD 40 million to repurchase shares, it is even more perplexing, as just over a month ago it raised HKD 200 million to develop L4 autonomous vehicle business, yet now it is using cash to repurchase shares at an average repurchase price of HKD 14.94, which is higher than the placement price. What exactly is the company's calculation?