What's Up (& Up) With Shandong Hi-Speed 412 HK)?

• Back on the 18th Feb 2025, Shandong Hi-Speed (412 HK) (SHS) closed its unconditional Offer for Shandong Hi-Speed New Energy (1250 HK). Shortly thereafter, SHS' share price took off.

• SHS is now up 190% in the past six months. And ~1800% since Covid.

• What gives? It's not index related. And forward earnings do not justify the move. This looks like a bubble. Short interest is on the move.

Some Recent Developments

• The MGO. Back on the 27 December, Shandong Hi-Speed Holdings (412 HK) completed two SPAs, elevating its stake in Shandong Hi-Speed New Energy (1250 HK) (SHNE) to 56.97% from 43.45%, triggering an unconditional MGO.

  • SHNE develops and constructs distributed photovoltaic power stations; and provides engineering, procurement, construction, and technical consultancy services for photovoltaic and wind power-related projects, and clean heat supply services.

  • The Composite Doc was issued on the 28th January, and the Offer closed on 18th Feb, with SHS holding 60.66%, after 3.69% tendered. Float was 21.31%; however steps will be taken to restore this to 25%. Shares were not suspended.

  • I discussed this Offer in Shandong Hi-Speed New Energy (1250 HK)'s Unconditional MGO Now Open

  • SHNE's market cap at the time was HK$4bn compared to SHP's HK$37.8bn.

    • SHNE's market cap is now HK$5.2bn and SHP's HK$108bn

• Recent numbers. FY24 top line was RMB$5.6bn, up 11.6% yoy) and bottom line was RMB$53.9mn, up from RMB$13.6mn in FY23. No final dividend was declared.

  • CapIQ points to a profit of HK$181mn in FY25E.

  • That places SHP at almost 600x forward PER; although it's not a well covered stock.

• Government support? As a player in photovoltaic and wind power, SHP has benefited from China's push toward green energy. But I don't see any specific regulatory boost of late. And if there was, why wouldn't it lift all and sundry?

  • In May 2025, Fitch upgraded SHP one notch to "a" to reflect "increased government support" and "the increased support is in line with SHS's refocusing on its policy-driven toll road business, which is likely to continue."

  • But hasn't this been the case for years - what has happened in the last six months?

• Shorts/Southbound. Just 0.211% of shares out are short (as at 1st August). Not a lot, but the highest ever.

  • 0.38% (declining) and 1.00% (increasing) of shares out are held via the Shanghai and Shenzhen southbound programs.